wmeubank@ocp.kcmo.com
BARNES BROKERAGE CO., INC.
30 S. Wacker,
Chicago, Illinois
(June 11, 1997) SOYBEANS: "Caught between a rock and a hard place" that's where the beans are--and this position makes for tricky analysis. On one hand, the old-crop July beans are succumbing to bearish technicals with a potential head and shoulders too and a downside bread-out from a 3-month trading range. On the other hand, new-crop Nov. beans seem like pretty attractive property in the $6.50 area with no weather premiums built-in and the crop just emerging now because of an unseasonably cold spring.
You long-in-the-tooth producers know that mid June is way too early to write an obituary for November beans especially when the cold sunless spring has totally offset the initial advantage of an early plant. In addition, a record crop has already been dialed in, setting the market up only for disappointment if there are any problems along the way. Finally, the soybean complex has grown accustomed to big crops--the last 3 years have averaged well over 2 billion bushels and still the carry-over has been whittled down to 20-year lows.
Things to watch
1) USDA Reports--Tomorrow's monthly and the quarterly on 6-30-97 will move the market for a while before the omnipotent "Big W" takes over again.
2) Cargill/Brazil--The "Grain Giant" has hacked off more than a few producers with its unprecedented actions. Others, with a shrug of their shoulders, say in a world market, you take the good with the bad. We say they're simply borrowing ahead against future supply and this will "come home to roost" sooner than you think.
3) The "Big W"--Of course, it always comes down to weather--so you ask, "How can you predict the markets if you can't predict the weather?"
The answer is occasionally the market falls out of equilibrium while anticipating certain weather situations. We feel this is exactly the case with November beans--contact our office for a call options strategy to capture this imbalance.
William D. Moore
Added to the WWW 06-14-97
Last updated on 06-14-97
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com