COMMODITY RESOURCE CORPORATION

P.O. Box 8700, Incline Village, Nevada

(December 11, 1997) SOYBEANS: OUTLOOK–Until the market is assured of a large and safe South American crop I would be surprised if we see any real weakness in soybean prices. If weather problems do develop in South America, prices will soar. The Brazilians really have had no crop problems for many years now, and I hate to say they are overdue, but they are. This year, of course, the El Nino raises the odds of adverse weather, both south of the equator as well as in our country this summer. The water band in the Pacific posted a new record reading, up 8.8 degrees Fahrenheit last month. In the last EN year, it was in January the weather started to turn strange. World crops were adversely affected and prices soared. I see no real reduction in demand coming, as the U.S. is now the only world supplier of beans, so if the supply side turns more bullish this could be a very interesting, perhaps historic, year.

STRATEGY–HEDGERS: I still feel it makes sense to maintain ownership of beans in one form or another to take advantage of any upcoming “weather scare” rallies. The best form, my opinion, is not by storing cash beans, but via the purchase of March call options. This way you can benefit if prices go up, but have a predetermined risk if prices don't. You do not worry about storage costs, and have the use of the cash now instead of later.

TRADERS: We remain long the January futures at 632. The stop remains 680 which locks in a nice profit (worst case). Continue to leave the upside profit objective open at this time.

George Kleinman

Consensus National Futures and Financial On Line Index

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