wmeubank@ocp.kcmo.com
COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(November 13, 1997) SOYBEANS: It was an ugly week for the grain complex with soybeans off 15 cents a bushel, corn off 12 cents a bushel and wheat prices off 18 cents a bushel. Oat prices did better, but here too prices ended lower for the week. March futures fell three cents from one Friday to the next.
From a fundamental standpoint not much has changed in the long-term outlook for grain prices to justify such a sell off. What did happen was a break-down in prices for most all commodity markets. This week's sell off in grain prices was more the result of a price decline for commodities in general, rather than a change in the long-term fundamental outlook for the grain complex.
Nevertheless, grain prices took a hard hit this week as the infamous commodity funds along with small speculators continued to liquidate long positions placed at higher levels. It is interesting to note that the best buyers all week long were commercials and end users. Obviously, they have not been buying enough to keep prices from sliding. But the fact that they continue to absorb all the selling by the funds is positive for the long run. And my work suggests that over the long run, grain prices are much headed higher.
For the next five days, buy (1) March wheat at $3.51 and (1) January soybean at $7.16. Also buy (1) July corn at $2.90. My work suggests a low in the grain complex should be established on Monday or Tuesday.
Jerry R. Welch
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