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GLOBAL ASSET MANAGEMENT
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(November 26, 1997) CORN: The corn complex remained fixed in a sideways to lower mode with pressure stemming from continued fear that the USDA will increase carryover stocks on future reports, along with weaker-than-expected weekly export inspections. The reasoning for a lower carryover stems from a good suspicion that U.S. export will not be near earlier expectations for the current marketing year. With one check of weekly export inspections, it is clear that the current pace is running below year-ago levels, and well below the 4-year average. There continues to be ideas on the street that China still has some corn to export which will probably take business away from the U.S., given the fact that their product is cheaper and the freight is a lot more inviting for importing Asian nations. Overall, market internals remain in a weak state as the speculation of further USDA increases in carryover continues to keep a cap on the market's attempt to stage a rally. Until demand rears its head in a strong manner, look for market action to be sideways to lower. The final factor that should keep pressure on price activity is the fact that U.S. farmers are just about to finish reaping the third-largest corn crop record. Technically, March corn is in a downtrend; the trend will turn up on a close over $2.85¾.
FUTURES STRATEGY–Short CZ at $2.85. Maintain a protective buy stop close only at $2.97½, and also enter a target of $2.65. Short CH at $2.84½. Maintain a protective by stop close only at $2.95½.
OPTIONS STRATEGY–Sell CH $2.90 calls at $.07 or better. If filled, enter a protective buy stop at $.19.
Tony Montini
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