wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
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(December 18, 1997) WHEAT: The problem with wheat is that there is too much of it around, and unless exports improve or we see weather problems in Australian or Chinese wheat growing areas, it will be difficult for the wheat to sustain a good move higher. Especially if beans and corn continue their slide. The Asian economic problems are also bearish. On the positive side, El Nino stories are beginning to emerge regarding Australia, and South Africa lowered their wheat production due to El Nino problems.
RESISTANCE–Resistance basis March lies near 352, 360, 365, 370, 373, 380, 385.
SUPPORT–Support basis March remains near 344, 330, 323.
RECOMMENDATION–Sell March wheat in the mid-low 350's. Use stops of 5-8 cents. If March wheat takes out 365, it implies that a rally into at least the 370's is underway, so traders might consider reversing to the long side if that occurs. If exports don't improve or if there are no crop problems of note, a move to 310-320 can't be counted out. If you are a long-term bullish option trader, consider buying May calls for the long pull on current weakness. Objective is open. Seasonals suggest higher prices, but they have for some time now.
M. Steven Morgan
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