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COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
(August 14, 1997) CORN: OUTLOOK–I turned bullish corn a few weeks ago based on deteriorating weather in some areas of the belt which hurt yields. Some people were previously looking for a 10 billion bushel, crop, not us. Yet, I wasn't looking for a crop under 9.3 either, which is what the USDA apparently is looking for. The Crop report shocked the market last week, and probably underestimated the crop in some areas which are (generally) looking good [notably MN, SD, IA and WI]. Look for a two-sided affair over the coming weeks, well supported on breaks.
STRATEGY–HEDGERS: Last week we suggested moving all new-crop hedge coverage totally out of futures and into put options. We remain 60% hedged at an average price of about $2.67 using at the money puts. Puts protect your downside without placing limits on upside potential.
TRADERS: The risk to reward ratio appears too high at present. Stand aside.
George Kleinman
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