wmeubank@ocp.kcmo.com
COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
(December 11, 1997) CORN: OUTLOOK–I continue to look for a trading-range affair in corn, between about 270 on the low side, and 295 on the top (March futures). Currently, there is one potentially bullish development which is still in the rumor category. The rumor is China has stopped exporting corn. I have not been able to confirm this at press time. If true, this is (longer term) quite bullish. Recall, the 1995-96 bull market in corn began when Asia's largest exporter turned into an importer. If this happens, and if El Nino does eventually cause crop problems, corn will again move over three dollars. In the meantime, until market-moving news can be confirmed, look for listless market action until about mid- January.
STRATEGY–HEDGERS: Our hedging advice remains basically the same, that is to maintain ownership of this year's production using March at the money call options. If prices fall further, your risk is limited to, never more, than the cost of the options. You can use the cash received from the sale of your crop now to pay down debt or earn interest income. Your upside potential remains open for the longer term.
TRADERS: Traders, look to buy March futures under 272, and/or go short above 290. Risk 11¢ for a 15¢ profit objectives.
George Kleinman
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