wmeubank@ocp.kcmo.com
ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
(November 24, 1997) CORN: The 270 up trend held this week and we rallied off of that. It is possible that the low is in for this move. However, the public remains very long and the commercial does not seem interested in chasing strength. The exports were huge at 1.2 mmt but year to date sales are only 32% of total projected exports for the year. Last year we were at 50% and in 1995 56%. So commercial buyers see strong sales and shrug it off as long as resistance stops the rallies. The Asiatic crisis is the reason sales are so far behind. Historically, our biggest world competitors have been Argentina, South Africa and China. Now we see Eastern Europe as a supplier. Between eastern Europe and China, the U.S. might have lost as much as 2.5 mmt of export business to South Korea. That is 30% of the total South Korea buys. Beginning to realize the seriousness of this situation, USDA has begun the process of putting together a GSM package that will be offered to South Korea. However, South Korea is typically not a country that wants debt, they want cheap feed. For instance, last year the U.S. offered them 154 million dollars of GSM and they utilized less than 15%. Thus we have a corn market that is loaded with public ownership, a commercial sector that is only buying breaks, odds of bigger ending stocks on the next report and a holiday trade atmosphere. The chart objective at 265 remains in tact. Sell rallies for now. Long-term, we will look to reverse to a long position as world stocks remain below 1996 levels and there is always El Nino.
Bill Biedermann
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