wmeubank@ocp.kcmo.com
BARNES BROKERAGE CO., INC.
30 S. Wacker, Chicago, Illinois
(November 12, 1997) SOYBEANS: The market aims to please as it offered a little something for everybody this week! How about the bears–well, they were clicking their heels after meal got body slammed to the limit down Monday after a neutral crop report. How about the bulls–well, they were pounding their chests when meal completely reversed on “turn around Tuesday” hitting limit-up late in the session! Some suggest these types of wild swings are topping action indicating a reversal is imminent. We say they reveal the bullish resiliency and plain old volatility inherent in a market where everyone is well acquainted with the great fundamentals! This is the age of the information super highway! More people know things quicker than at any other time. This doesn't mean the market won't ultimately gravitate to its bullish fundamentals, only that its route may be more circuitous due to the excesses fund participation creates.
USDA November Crop Report
USDA Average USDA 1996 Nov 10 Estimate Oct Final Soybeans 2.736 2.737 2.722 2.382 Carry-Out Today's October 1997-98 1997-98 Soybeans 0.255 0.270
OBSERVATIONS AND FUNDAMENTALS–1. USDA Report–go figure! The 11-12-97 numbers looked fairly tame at the onset, but surprisingly unleaded a vicious downside assault that pushed meal limit down and bludgeoned corn into an 8 cent loss.
2. Why?–An overbought market, improving planting conditions in South America and a massive fund exodus triggered the down–thereafter it fed on its own negative momentum.
3. Harvest–Is a wrap with the major states (Illinois, Iowa, Nebraska) over 90% done.
4. Chinese Corn Sales–Continue to be a thorn in the market's side as fears grow that their exports will undermine ours. The USDA carryout and today's 5-week low close (December corn) suggest just that.
5. South American plus Asian Markets–Will be the two major fundamentals to be monitored closely as we move into 1998. Of course, South American represents the next major supply and timely planting is essential. Asian markets reflect export stability–whole importance goes without saying!
November beans reached 748 on Tuesday, November 11, only 2 cents off its contract highs. This dizzying upside rise was fueled mostly by two 8-day bullish explosions, one in early October (620-730) and the other in early November (680-745). Although this bull move has recently been compromised by a slumping December corn (5-week low close) and December wheat (3-month low close), it has nonetheless made a statement this fall about its intention for 1998! The velocity and steepness of these rallies, for this time of the year is unheard of–and once again highlights the simple fact that there is absolutely no margin for error in 1998!.
William D. Moore
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