wmeubank@ocp.kcmo.com
ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
(October 31, 1997) SOYBEANS: Friday's rally reflects a change in the barge freight and might have improved the chart picture. However, a study of 30 years patterns suggests a decline is coming. A close below 688 projects a move towards 667 in November and 679 in January with the potential to move 654. With Brazil canceling U.S. beans, a likely increase in the next USDA production estimate, and increasing acreage estimates from South America, the bulls are getting scared and therefore the market is vulnerable. End user interest is from 675 to 650 and we expect a bottom somewhere in that range. Near term, sell futures or buy puts. Long term, we want to own the market for an acreage or El Nino rally. If you have beans in the bin, buy July 675 puts. If you sold cash, you can look to buy calls or a call spread. Or consider buying puts now, an then buying futures on the break. The result is a covered position (just like a call) but it is cheaper than a call.
Bill Biedermann
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(816) 252-4080
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