COMMODITY INSIGHT

152 Ennis Lake Road, Ennis Montana

(December 3, 1997) SOYBEANS: Due to the early week sell off for the grain complex I have decided to publish this issue of Commodity Insight a few days ahead of time. Normally, this issue would have been written and distributed on a Sunday so it would be available before Monday's opening. But Tuesday's hard break has forced me to move things up a bit.

Though grains continue to stumble (along with most commodities), my long-term work continues to suggest that higher prices are coming. Higher prices will be brought about by the threat of the strongest El Nino on record as well as outstanding demand for soybeans and soy products. Not to mention tight stocks of corn.

Demand for corn and wheat continue to be less than I would like to see. But if this week's rumors of China buying U.S. wheat prove to be accurate, wheat prices should rise and corn follow. In addition, if China is indeed buying U.S. wheat for the first time in two years, I am guessing that soon they will exit the corn exporting business and possibly turn corn importer. That, too, will prove to be market friendly.

I would like to buy (1) March soybean at $7.11 and more at $7.07. Stops on both trades should be $6.85 on a close only basis. Also, buy (1) March meal at $217.00 with a $205.50 intra-day stop.

On Tuesday, when soybean prices dropped a hard 15 to 18 cents a bushel, all my long positions were stopped out with either small profits or a small loss. All I am doing at this time is reinstating those trades here at lower levels. My work is suggesting that the low set for beans on Wednesday could be a long- lasting low.

Jerry F. Welch

Consensus National Futures and Financial On Line Index

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