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(August 14, 1997) SOYBEANS: OUTLOOK–In their August Crop report, the USDA took some of the wind out of the bean sails. The market was recovering nicely from a July low. The rally was based on good near-term demand, tight supplies, and selective weather problems. Then the crop number was released and it was a big one. The government statistics imply a big crop with a big yield (above 39 bushels) on bigger acreage. This may happen, I don`t know, but I do feel the market will not collapse to 560 or lower as some predict. In fact, there should be good support around $6 since demand projects to be record large this fall. Our biggest global competitors, the South Americans, will be importing from the U.S. at a record pace. The Chinese will be back as well. I caution against getting too bearish at this time.
STRATEGY–HEDGERS: We are 50% sold in new-crop November futures at an average price of about $7.02. No additional hedges are recommended at this time.
TRADERS: Since the market never moved back above $6.50 in the November futures, our entry point was never elected, and this saved us from the recent rout. Stand aside at this time.
George Kleinman
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