wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(March 26, 1997)
CORN:
The Taiwanese pork problems may reduce Taiwanese imports of corn by
up to 200%. Conversely, a number of traders believe that U.S. hog production
will increase as a result of that moratorium on pork exports, and therefore
domestic consumption will fill the gap. Exports have been strong. High
bean prices may encourage farmers to plant beans at the expense of corn
acreage, so it is possible that the upcoming USDA Crop report will be bullish
to new-crop corn. Charts are a bit ambivalent, but for the time being I
would be a buyer of July corn in the 300 area with stops under 290 or of
5-10 cents. Option traders could consider buying calls. Look for a rally
to the 325 level. Weather this year will remain an issue, and while it
is a bit premature to focus on ground being too wet or potential flooding,
these are still issues that shouldn't be ignored. A hazard to being long
corn is that it has primarily been a follower of beans. If Brazil corrects
their shipping problems, or if the Argentines become more aggressive sellers,
a short-term top could occur. China remains a question mark. If they buy
it will be viewed very positively, selling will be negative. Use stops.
I would also consider buying December corn on dips to the 288-290 area
with 5-10 cent stops. Objective is open.
M. Stephen Morgan
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