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COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 18, 1997) CORN: SHORT TERM–The grain with upside prospects is corn, but if weakness persists in beans and wheat, it may be difficult for corn to maintain gains. Commercial selling has been noted. Exports may be improving, but have been poor in the recent past. Asian economic problems are another negative. On the positive side, corn stocks are tight and El Nino may be rearing its head in South Africa. However, recent rainfall takes quite a bit out of the drought story for now. China has had problems with their crop this year, so they may eventually remove themselves from the export arena. Corn stocks are still very tight, and should new buying emerge, or if there are crop problems, corn could have solid upside, which could carryover also to wheat and the bean complex.
RESISTANCE–Resistance basis December is near 278-282, 286, 289-290, 295, and 298.
SUPPORT–Support remains near 272-274, 266-268, 262, 264, 258, 252-255.
RECOMMENDATION–The chart remains negative, but the recent reversal was suggestive of at least a near-term low. If you're an aggressive bull, consider buying December corn near current levels with stops under 271. Look for a rally to the 282-285 area, but be alert for a failure near the low 280's. The 50-day moving average is about 275. This is important, as the funds keep an eye on the long-term averages. If it is taken out, new near-term lows, possibly a break to the 250's could occur. In any event, there is still the potential for a break back to the low 270's, possibly 265 or so. Positives for the long side are the tight supply and the fear of El Nino. Longer-term traders could consider buying March or May futures or calls for the long pull. Option traders should take advantage of any further decline to buy calls.
M. Steven Morgan
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