wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(December 18, 1997) CORN: The corn complex remained fixed in a sideways to lower mode with pressure stemming from weak exports and fear that the USDA will increase carryover stocks even further on the USDA Annual Crop Production report in January. The market appears to be reasoning that the recent reduction in exports on the last USDA report all but indicates future foreign sales will not materialize. One check of weekly export inspections and it is clear that the current export pace is running below year ago levels and well below the 4- year average. The market also seems worried that China still has some corn to export which will probably take business away from the U.S. given the fact that their product is cheaper and the freight is a lot more inviting for importing Asian nations which an looking for anything cheaper after the financial debacle they have experienced in the past few months. Overall, market internals remain fairly weak with the only possibility for a change coming from some kind of new demand which does not seem likely for now. The final factor that should keep a cap on any attempts at strong price advances will be the fact that weather conditions for the new South American. Early estimates show a very good possibility for a record harvest. Technically, March corn is in a downtrend; the trend will turn up on a close over $2.78¾.
FUTURES STRATEGY–Short CH at $2.84¼. Move protective buy stop close only down to $2.85½.
OPTION STRATEGY–Short CH $2.90 calls at $.07. Maintain a protective buy stop at $.19.
Tony Montini
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