wmeubank@ocp.kcmo.com
COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
(November 12, 1997) CORN: OUTLOOK–USDA took the steam out of what was shaping up to be a bullish corn market when they released their November crop estimate last week. By raising the crop size 50 million bushels, and lowering the prospective demand, the party goers started to leave the party. I don't feel their estimate is all that accurate, but then who am I to dispute it? They actually raised their yield estimates in Kansas and Nebraska, two of the states which were hard hit by a freak storm last month. Clients tell us this storm did hurt standing corn. Recall, last year the USDA surprised the market with a bear number for beans in the fall, only to admit their mistake and revise it downward in the January (final) report. In any case, without much else to go on, this number has taken the bloom off the rose for now. Look for a sideways affair over the coming weeks.
STRATEGY–HEDGERS: If you took our advice, that is to maintain ownership of this year's production using March at the money call options, you now understand the benefits when prices fall. Your risk is limited, and never more than the cost of the options. You already have been able to use the cash received from the sale of your crop to pay down debt or earn interest income. Your upside potential remains open for the longer term.
TRADERS: Sell the March futures (previously recommended in the 290-295 range). We will definitely consider reentry at some future date, once the trend turns back up.
George Kleinman
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(816) 252-4080
sysop@kcmo.com