Prepared by

Prudential Securities, Inc.

NOVEMBER/MARCH ORANGE JUICE

This market has been plagued by steadily eroding price action for more than a year. Indeed, prices have been cut in half, failing to about 70 cents per pound from $1.40. The fundamentals behind this steady price erosion include: (1.) production prospects for a record large Florida crop this year; and (2.) a continued upward trend in Brazilian juice production. As a result of this generally bearish price outlook, nearby spreads have remained weak, with front-month contracts trading close to their full carrying charge discounts to the deferreds.

Despite the overall negativity, the nearby contract has gained rather substantially against the more distant deliveries on occasion this year, mostly due to nearby demand in the last month of a contract's life. The most recent instance was when the recently expired September delivery moved to a premium against the November and narrowed to a 200-point discount against the January contract (four months away). Therefore, we recommend buying November and selling March at 700 points November discount, looking for a narrowing to a 300-point discount. Risk 150 points from entry.

DECEMBER SILVER/GOLD RATIO

Even as outright precious metals prices languish at lower levels–primarily due to the lack of inflationary pressures in the economy–there has been some movement in the relationship between gold and silver, with the movement trending irregularly in favor of silver. In mid- July, when outright prices hit their lows of $4.15 per ounce for silver and $315 per ounce for gold, the ratio was about 76:1. Since then, the ratio has narrowed to its current level of about 68:1. This move has been a function of gold prices languishing just above, the summer lows, while silver prices have rallied somewhat, probably due to a perception that the economy has been strengthening.

If this ratio were to return to the area of 72:1 to 73:1, we recommend buying silver and selling gold, looking for an eventual narrowing to the 66:1 level. We would risk a widening of the ratio to the 77:1 level.

LONG MARCH/SHORT MAY WHEAT

At 3 cents May premium, with an objective of 10 cents May discount, risking to 12 cents May premium.

LONG DECEMBER/SHORT FEBRUARY CATTLE

At 160 points February premium, with an objective of 100 points February discount, risking to 360 points February premium.

SHORT 2 SEPTEMBER S&P 1020 CALLS/

SHORT 2 SEPTEMBER S&P 700 PUTS

A 35 points credit, collected twice, with an objective, of zero, holding the position as long as the market is above 700 or below 1020.

SHORT 2 SEPTEMBER S&P 1020 CALLS/

SHORT 2 SEPTEMBER S&P 725 PUTS

At 35 points credit, collected twice, with an objective of zero, holding the position as long as the market is above 725 or below 1020.

SHORT 2 SEPTEMBER S&P 1020 CALLS/

SHORT 2 SEPTEMBER S&P 720 PUTS

At 35 points credit, collected twice, with an objective of zero, holding the position as long as the market is above 720 or below 1020.

LONG 2 SEPTEMBER S&P 650 PUTS/

SHORT 2 SEPTEMBER S&P 755 PUTS

At 25 points credit, collected twice, with an objective of zero, holding the position as long as the market is above 755.

September 17, 1997Don Selkin

Prudential Securities, Inc.

One New York Plaza, New York, New York

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