wmeubank@ocp.kcmo.com
COMMODITY RESOURCE CORPORATION
400 South Fourth Street, Minneapolis, Minnesota
(March 26, 1997)
CORN:
OUTLOOK
The corn market continues to be supported by a strong soybean market. Yet, the corn fundamentals do not support continued strength here, my opinion. At this writing there is no confirmation of a technical top, so I am not yet recommending shorting corn. However, I believe it is time to be very alert for a change in trend. There have only been three years when corn was above $3 in the early spring. Two were drought years; the third was last year. Last year we were running out of corn, China was an importer, and it took five-dollar corn to ration demand. This year there is no drought, at least not yet. China is an exporter, and we have corn. Different years, different markets.
STRATEGY"
HEDGERS:
New-crop hedgers are up to 40% sold in December futures at an approximate average of $2.75 (or by using at-the-money December puts for <<20 cents). Hold off on additional hedges until a technical top is confirmed.
TRADERS:
Look to sell July corn short on a two-consecutive-day close under $2.95. Risk to $3.06 for an objective below $2.70. George Kleinman
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