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COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(August 14, 1997) CORN: For now, buy (2) July corn and sell (2) December '98 corn at the market. If the spread between those two grains narrows to 10 cents or less, add (2) more spreads.
On Tuesday, the USDA released the August Crop Production report and it was considered very bullish for corn. The production figure of 9.276 billion bushels was 400 million bushels below what most analysts expected. Following the report, corn prices were locked limit-up all day. If the government is correct in their estimate of U.S. corn production, new-crop prices should rise quickly to $3.00 a bushel. However, my upside target (for now anyway!) remains $3.30 for corn, $4.30 for wheat and $7.30 for beans. And if the USDA lowers the crop estimate again in the September report as I expect, $3.75 corn is possible.
Additional fundamentals could surface in the days ahead pushing corn and other grain prices higher still. News such as a wet harvest, an early frost, more crop woes in Australia or unexpected import demand from China for corn will underpin the grain complex in the weeks ahead. Grain prices are headed higher over the next 8 to 12 months. Only when the market has an understanding of the condition of the 1998- 99 crop, can prices trend lower. This bull market is alive and well.
Jerry F. Welch
Added to the WWW 08-15-97
Last updated on 08-15-97
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