wmeubank@ocp.kcmo.com
COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
(December 11, 1997) WHEAT: OUTLOOK–It looks as if the “holiday market,” which we see most years around Christmas, just might have started early this year. Volume in the futures markets seems to have dried up, and I think it will take some market-moving news to snap the markets out of their doldrums. After first of the year, there could be some increased movement of cash grain by farmers. In the northern Plains this movement has already begun due to good weather. This temporary increase in supply could blunt price rallies, but then again export demand looks to be picking up as well. This should “floor” price breaks. Basically, I would look for a trading range affair, but do not envision much additional weakness from current levels.
STRATEGY–HEDGERS: At the risk of sounding like the proverbial broken record, I want to once again repeat my advice to farmer/hedgers. I recommend farmers not own cash wheat. With stored grain, your risk is not predetermined, plus there are opportunity costs lost. Rather, maintain ownership of wheat on paper using call options. Farmers who did this experienced very little suffering during the recent price weakness. Their downside risk was strictly limited. Upside potential remains intact, since option values increase in bull markets.
TRADERS: Look to bottom pick March Chicago futures under 355, or Minneapolis under 383. Be prepared to risk at least 15¢/bushel and leave the upside objective open at this time.
George Kleinman
|
|
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com