wmeubank@ocp.kcmo.com
IRA EPSTEIN & COMPANY
626 West Jackson, Chicago, Illinois
(November 11, 1997) SOYBEANS: Over the past two weeks the soybean market has been very volatile to say the least, the January 98 contract has traded as low as 687 on 10/30/97 with a contract high of 748 on 11/11/97. Although there has not been a lot of favorable news for soybeans over this period of time, the large commercials and funds, going long in soybeans, have forced the market up nearly 60 cents per bushel. After speaking with several seasoned traders at the Chicago Board of Trade, they are even surprised at the bullish attitude of the large positions that they have taken. According to the U.S.D.A., nearly 95% of the beans have been harvested in the U.S. and farmers are elated at the prices, with some of them even holding their crop for a better return for their efforts.
One indication of the market support at these levels could be the South American soybean planting season which is currently underway. Due to very unsettled weather, planting is running at a pace of only 20% completed, most agree more soybeans will now have to be imported from the U.S. later in the year and early in 1998. Prices for the small amount of soybeans remaining in Brazil continue at all-time record highs, according to South American sources. This reflects both the shortage of the product and also that plantings are being delayed by the adverse weather.
It appears for now that this market will continue to trade in a range of 715 to 750 January basis for the near term. Without substantial news, pro or con, this presents a market more suited for the day trader in futures and the options trader for the longer time period.
RECOMMENDATION–I suggest the short side of the bean market.
Rick Schultz
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