wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 25, 1997) ORANGE JUICE: SHORT TERM–The NYCE reported that specs are long 37,215 contracts of orange juice, and short 5,382 contracts. The hedgers are long 6,549 and short 36,382. Hmmm. I wonder if the hedgers think that the upside is limited due to the huge supply of orange juice. Brazil reported orange juice stocks and production figures this week. Stocks were 695,145.4 metric tonnes of orange juice, versus last years 453,778.4. Production is 47,265.3 versus last years 35,473.1. I wonder how they're doing on rum or vodka. Obviously, these are not bullish numbers, and orange juice may not even remotely be too cheap. On the other hand, these numbers were not a surprise. While we are entering the winter fear period, it is very early for a frost or hard freeze in Florida. Bide your time or buy deferred calls.
RESISTANCE–Basis Jan. is 8275, 8325- 8425, 8540, 8630, 8700, 8875.
SUPPORT–Near 7800, 7620-7650, 7410-7450, 7300 or so.
RECOMMENDATION–Most traders should curb their bullish attitudes. However, if you like the idea of being long OJ, consider buying Mar. or May calls. Don't buy Jan. options, as there may not be enough time for any frost fear to get the market rallying. Jan. options expire Dec. 19. If an experienced option trader, consider selling Jan. slightly out of the money calls and risk 100-200 points. Otherwise, trade off the resistance/support levels. Since OJ is in a fundamental vacuum, with no news for what seems like centuries, it is very much a technician's game. We probably need to get further into Brazil's growing season and our winter before buying interest of substance appears in the OJ.
M. Steven Morgan
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