wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(October 23, 1997) WHEAT: SHORT TERM–Fund selling appeared, possibly as a hedge against a corn or bean selloff. There is little news of note in this market right now. Chinese interest in wheat is probably only minimal. A token purchase is more likely, as they are in a trade meeting with the U.S., and this gives a warm fuzzy impression. Egypt buying wheat from the U.S., rather than Australia, was also positive. However, an announcement that Australia's crop forecast has been raised to 17.6 million tonnes from 16.2 million is bearish. Wheat remains a follower of beans and corn, but may be nearing the end of its current rally.
RESISTANCE–Resistance basis Dec. lies near 376, 380-384, 389-390, 395.
SUPPORT–Support basis Dec. remains near 372-374, 363 368, 355, 350, 348, 342, 335.
RECOMMENDATION–Short-term traders should stay with the range approach for now. Aggressive traders might sell the mid-upper 370's with stops over 380 or 384 or of 5-10 cents, and/or consider buying Dec. wheat in the low 360's with stops under 348 or of 10 or so cents. Longer-term traders or trend traders should buy the dips to the low 360's with stops under 348. Option traders should buy March or May calls for the long pull. Objective is open.
M. Steven Morgan
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