wmeubank@ocp.kcmo.com
ASIA
Prepared by
Commodity Review And Outlook
Many traders are focusing on the Asian economic crisis as being bearish to the stock market, and rightly so. However, the fallout may affect U.S. grain exports to Asia, and with Japan and South Korea being large customers, this could be seriously bearish. Currency considerations could send buyers where they get the most bang for the buck or ying for the yen. I don't think that is the U.S.
It is also bearish to the meats, as we export an enormous quantity of pork and poultry products to Asia. If producers lose customers overseas, it suggests dumping on U.S. markets. If chicken is dirt-cheap, then pork prices begin to fall. If there is too much competition from pork, beef prices fall. If livestock prices fall, production suffers, and feed prices fall.
On the positive side, there is the implication that investment capital will shun Asia for the near term, and production of sugar could suffer longer term. Perhaps cocoa could benefit as well, although that is a bit murky. Don't assume El Nino will be the savior of the markets. I'm still trying to find someone that can adequately forecast next week's weather, much less the hypothetical effects of a long-term weather system. Be careful, and let the charts point the way.
December 11, 1997 M. Steven Morgan
Commodity Review And Outlook
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