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COMMODITY REVIEW AND OUTLOOK
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(December 4, 1997) WHEAT: SHORT TERM–Commercial selling, carryover selling from beans and skepticism that China had bought U.S. wheat all combined to press the wheat market. Talk that last week's low and subsequent rally was a double bottom is encouraging buying. An uptick in exports is also positive, with Egypt coming in as a buyer. Argentina, Australia, and Canada all remain aggressive competitors. El Nino stories are beginning to emerge again regarding Australia, and South Africa lowered their wheat production due to El Nino problems. If El Nino becomes a real problem rather than potential, wheat could have plenty of upside. However, if corn and beans have problems, they may very well carry over to the wheat market.
RESISTANCE–Resistance basis March lies near 360, 365, 370, 373, 380, 385, 391.
SUPPORT–Support basis March remains near 352, 344, 330, 323.
RECOMMENDATION–If an aggressive bull, consider buying March wheat near the mid-lower 350's with stops under 352 or of 5-10 cents. Be alert for failures in the 360's. However, most traders should consider selling March wheat in the upper 350's, lower 360's with stops over 365 or 370 or of 5-10 cents. Look for a decline to new lows, possibly to the mid 330's. If exports don't improve or if there are no crop problems of note, a move to 310-320 can't be counted out. If you are a long- term bullish option trader, consider buying March or May calls for the long pull on current weakness. Objective is open.
M. Steven Morgan
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