wmeubank@ocp.kcmo.com
BRADFORD & CO., INC.
330 Commerce Street,Nashville, Tennessee
(December 11, 1997) CORN: The USDA released the December Supply/Demand report this week with mostly “cosmetic” changes occurring. Feed consumption was raised 25 M.B. to 5.650 B.B. whereas exports were lowered 50 M.B. to 1.875 B.B. This resulted in an increase of ending stocks by 25 M.B. to 953 M.B. World corn production was increased by 3.5 million metric tons which resulted in a 2.0 million metric ton increase of ending stocks to 67.25 million metric tons. China's imports and exports were left unchanged. The report came as no surprise to the trade, and it should be back to business as usual with weather in the southern hemisphere and U.S. export sales the key to price direction. Traders have been bearish the past few weeks due to financial concerns in the Far East and the impact it could have on U.S. exports to that region. However, I would stress that this is not a situation that has developed overnight, and I believe that a slowdown in their economy has already been reflected by the reduction in exports to that area. After all, our export sales are already running 25 percent below a year ago. Keep in mind that our exports only comprise 20 percent of total usage whereas domestic feed consumption is the bulk of our demand. Somehow, I just do not foresee the masses in the Far East continuing to purchase CD's and cassette players and listening to their favorite “rap music” while they slowly wither away from starvation! Export inspections this week were above expectations at 33.3 M.B., while sales were 28.7 M.B. After bottoming last week at 276.75, March corn rallied to 285 this week. From here, prices turned lower and broke last week's low. The market is due for a recovery, but the technical action from this week's top looks weak and trade attitudes are bearish. There is not much direction that can be drawn from the seasonal pattern as it is flat until the end of December. Failure of 276.75 is negative for the intermediate term and suggests that prices will work lower to 265 with a bottom expected around December 19 or possibly around the 23rd or 26th. From here, a longer-term rally can be expected into March.
Dewey Strickler
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