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COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(November 23, 1998) SOYBEANS: It was a mixed week for grain prices with soybeans dropping 19 cents for the week while corn and wheat prices gained a bit more than 3 cents a bushel each. But Friday's close was the lowest settlement price for soybeans in three weeks while soy oil prices actually fell to a one-month low at one time during the day. All in all, it was not an especially positive week for grains.
But then again, few commodity markets did well this week. With petroleum prices collapsing along with gold and copper, the Goldman Sachs index slipped to its lowest level since August 27. And the CRB index dropped on Thursday to its lowest level since September 22 thanks to a sloppy grain complex, a fall in the value of most tropical commodities and a pork complex, that rolled over late in the week.
It's no wonder the grains are struggling! Why should grain prices do well when every market on the board is doing poorly? In the last issue of this newsletter I stated, “this week's sell off in grains 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.” For the record, last week's statement is good for this week as well.
On balance, the, fundamentals for grains this week were bullish. My work suggests the fundamentals will become more bullish as 1998 approaches. For the next five days, buy (1) January bean a $7.09, (1) March wheat at $3.57, and (1) March oat at $1.61. Risk 15 cents a bushel, intra-day from entry point on all three trades.
Jerry F. Welch
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