COMMODITY REVIEW AND OUTLOOK

195 Route 6A, Suite 6, Orleans, Massachusetts

(November 21, 1997) CORN: SHORT TERM–Fears of another Asian meltdown, poor exports, commercial selling and fund selling suggest that corn has the potential for new lows, especially with it being the end of the month and the time when many funds square their books. It is unlikely that recent lows will hold, and traders should look for further selling. If weakness persists in beans and wheat, it may be difficult for corn to maintain gains. Exports may improve, especially if China stops exporting, but have been poor in the recent past. I'm not sure I would look to see them improve in the near future. Asian economic problems are negative. China has had problems with their crop this year, so eventually they may remove themselves from the export arena. Corn stocks are still very tight, and should new buying emerge, or if El Nino becomes a problem, corn could have solid upside, which could carryover also to wheat and the bean complex.

RESISTANCE–Resistance basis Mar. is near 285, 288, 295-297, 302-304.

SUPPORT–Support basis Mar. remains near 281, 275-277, 272, 268, 265.

RECOMMENDATION–The chart remains negative. The prospect of El Nino-induced problems suggests that one keep an eye on the market for bullish developments, but the chart says sell. If bullish or a longer-term trader, or even if near-term bearish, traders might consider buying calls on this weakness in the event of improved exports or weather problems abroad. The 50-day moving average was recently taken out to the downside which may encourage more aggressive fund selling. A break to the 260's could occur. In any event, there is still the potential for a break back to the mid 270's or so. Aggressive short-term traders could sell Mar. corn in the low 280's with stops over 285 or 288. Longer-term traders could consider buying May calls on weakness for the long pull. Option traders should take advantage of any further decline to buy calls.

M. Steven Morgan

Consensus National Futures and Financial On Line Index

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