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COMMODITY RESOURCE CORPORATION
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Minneapolis, Minnesota
(June 12, 1997) WHEAT: OUTLOOK--The wheat market continues to follow the normal seasonal pattern. Recall, our research indicates most years there is a price peak in the mid to late April period.
Prices then erode into late June-mid July. Kansas City futures peaked this year on April 21st at just under $5/bushel. Minneapolis and Chicago futures registered their highs on the same day. This was when the `freeze scare' was at it's height. Markets always top out on very bullish news, and usually bottom out on bearish news.
Last week, I indicated the market was due for a bounce and it now looks as if we have had it. If the normal seasonal pattern continues, and at this point there's no reason not to believe it will, look for wheat prices to spike down one last time. This final spike, which I anticipate will come in the next 2 to 3 weeks, projects to be the lows for the year!
STRATEGY--HEDGERS: Winter wheat farmers who followed previous suggestions are 75% sold in the July KC futures at between 380 and 430. Hold. Cover the hedges simultaneously as you sell your new crop. Sell it out of the field. To maintain ownership we can buy calls or futures at that time.
TRADERS: Gamblers can look to go short July KC above 390, risking a close above 402, for a move to 372.
George Kleinman
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