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(August 14, 1997) CORN: The trade during the past week in the corn sector was fairly wild as the market was pressured early by the possibility of moisture, but once the USDA unleashed a surprising report which caught the market off-guard huge gains were realized. The USDA released its monthly supply/demand and production reports for July and the corn reports were very different from early estimates. The most drastic change came in the yield figure as the USDA took off nearly six bushels per acre versus the last release which sent the market to limit gains, but the day after there was no real follow-through. The probable reason the market did not hold the rally was the fact that it does not believe the USDA figure. No one will argue that the crop condition has fallen some in recent weeks, but not enough to warrant such a wild cut in the yield estimate. Overall, it appears that the market has found a trading range between the $2.30 to $2.70 area and if than are no real weather concerns between now and harvest the $2.30 level might not hold the market. Technically, December corn is in an uptrend; the trend will turn down on a close below $2.58.
FUTURES STRATEGY–Sell CZ at $2.65¼; maintain a protective buy stop close only at $2.78½.
OPTION STRATEGY–Short CU $2.80 calls at $.09; maintain a protective buy stop at $.21,; Short CZ $2.60 sells at $.08; maintain a protective buy stop at $.21.
Tony Montini
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