wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 18, 1997) SOYBEANS: A poor expiration for November beans and improved growing weather in Brazil are weighing on the beans. Current weather in Brazil is dry, which is allowing planting to proceed. Thus far the crop is about 30% planted, versus an average of 37%. Oil World reported that meal exports will have to increase to about 5.0-5.1 million tonnes in the October-March period versus last year's .9-1.0 million tonnes. Tight supplies in Latin America and an increase in usage are cited as the reasons. Too bad the meal chart doesn't reflect that at this time. Support is coming from strong demand for oil. However, on the negative side, reduced exports are weighing on beans. Since September, exporters have shipped nearly 295 million bushels of beans, versus about 219 last year, which underscores the solid demand. Choppy markets may very well be the landscape for the near term, with good demand buying for dominance with the huge crop harvested in the U.S. as well as the large crop anticipated in Brazil. El Nino remains a back-drop bullish factor, as yet to really be realized. A hazard to higher prices are the economic problems that may be emerging in Asia. They may not have the buying power that has been counted on.
SHORT TERM–RESISTANCE–Resistance basis January remains near 724, 726-728, 733, 737, 741-742, 748.
SUPPORT–Support basis January beans remains near 715, 711, 705, 700, 690-695, 675.
RECOMMENDATION–Until such time as beans can score highs and hold them, I would be skeptical of their ability to trend higher. The chart is somewhat negative. Aggressive short-term traders might sell January beans on rallies to the mid 720's with stops of 5-10 cents or over 748. Look for a decline to 705-710, and traders could consider taking profits in that area with the idea of re-entering later. In any case, be alert for buying that may emerge in that area. Long term, the low 620's cannot be counted out, especially if El Nino turns out to be a dud, or if Asian buying dwindles due to financial problems. Conversely, solid evidence of El Nino problems will send the beans sharply higher. Option traders should buy puts on rallies.
M. Steven Morgan
|
|
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com