wmeubank@ocp.kcmo.com
COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(October 20, 1997) SOYBEANS: For the week, nearby soybean prices closed down 8½ cents a bushel, off 38 cents a bushel from the high they set on Monday. Corn prices ended the week off 6½ cents, down 13 cents a bushel from the high they set on Monday as well.
Actually, the grains were doing well from Monday through Wednesday. But when the mighty Dow Jones began to unravel on Thursday and again on Friday, grains followed suit. Few markets did well on the upside after Wednesday. My work suggests that the sell-off for grain prices on Thursday and again Friday was a direct result of a sharply lower U.S. equity markets and nothing more.
With the USDA now estimating ending U.S. corn stocks of less than 800 million bushels, I am raising my upside target for corn from $3.30 a bushel to $3.55 basis July futures. If the November report shows another sharp reduction in this year's crop, I will be forced to raise my objective for corn prices once again.
The long term fundamentals for grains are becoming more bullish. As a result, I wish to be more aggressive on the buy side. For the next five days buy one (1) July corn at $3.01, and one (1) more at $2.98. In addition, buy one (1) January bean at $6.96 and one (1) more at $6.85. Finally, buy one (1) December meal at $214.00. My work is strongly suggesting that a major low in the grain complex will be set this week. Trade accordingly.
Jerry F. Welch
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