wmeubank@ocp.kcmo.com
R.J. O'BRIEN & ASSOCIATES, INC.
555 W. Jackson Blvd., Chicago, Illinois
(December 5, 1997) SOYBEANS: Our fears were confirmed this week as the bean market slides back under the $7.00 mark, in part courtesy of the funds liquidating long positions. Fundamentally, exports remain robust and we had no trouble with that on our last letter. The problem was the funds were top heavy long the entire bean complex and they lost one critical edge: Brazil pulled an Australia on them: So America oilseed weather has turned from too wet/too dry to what's been termed ideal. And looking for a record crop should those conditions continue. Will they? Who knows? Probably not and any hiccup after the first of the year there will have a dramatic effect here. We keep in mind that they don't harvest until March at the earliest. A lot can go wrong and we'll keep some premium alive. For the near term, we've been looking at a downside objective in the January at $6.85 mark and with it a recommendation to buy. We'd expect no major downside problems unless and until all the weather comes together perfectly first in South America, then later in the U.S. One interesting technical thing: Are we setting up a broad head and shoulders top in the beans?
John W. Kleist
Commodity Consultant
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