wmeubank@ocp.kcmo.com
R.J. O'BRIEN & ASSOCIATES, INC.
555 W. Jackson Blvd., Chicago, Illinois
(December 5, 1997) WHEAT: Wheat prices continue to erode on several factors. While the U.S. exports in total aren't that bad, they are a lot of little ones combined. We noted before that every bounce from a new swing low was a result of export buying interest that comes in then quickly backs off. And why not? After having to deal with the Australian bounty, with the China increases, with the Argentine competition, it appears Europe decided to release some intervention stocks and up the subsidy as they do so. They had to. They waited for the El Nino deal, got caught, and found themselves with supplies that were starting to drag on the market. At least now some of that's moving. Corn was also a factor in the break. When the corn failed to live up to $3.00 expectations, hopes of dumping plentiful feed wheat supplies were dashed. On top of that, wheat conditions from North Africa to Argentina to the U.S. are under no fear alerts yet. Rallies then seem difficult to sustain from a user and from a production standpoint globally. While we have specific ideas in mind for the corn and the bean prices, we're tentative on the wheat. The Asian crisis is a bit of a factor, but that's for U.S. imports in general, and not just grain related. Economic indicators appear deflationary. Overall, we've been neutral/negative and will stay that way for the near term.
John W. Kleist
Commodity Consultant
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