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GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(December 4, 1997) CORN: The corn complex remained fixed in a sideways to lower mode with pressure stemming from weak exports and fear that the USDA will increase carryover stocks on future reports. The reasoning for a higher carryover stems from a good suspicion that U.S. exports will not be near earlier expectations for the current marketing year. One check of weekly export inspections and it is clear that the current pace is running below year-ago levels and well below the 4- year average. The market also seems worried 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 only possibility for a change will be if new demand comes into the market which does not seem likely for now. 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 on 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 buy stop close only at $2.95½.
OPTION STRATEGY–Short CH $2.90 calls at $.07. Maintain a protective buy stop at $.19.
Tony Montini
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