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COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(October 29, 1997) CORN: SHORT TERM–Ideas that already poor exports would decline further are weighing on the corn market. Fund selling has also been a feature, which could send corn much lower. Don't forget, harvest is also a factor. El Nino fears and fund buying may continue to support this market. What was important in the last Grain report was not so much production as ending stocks, which are very tight. Much higher corn prices appear possible. I remain very bullish corn, and traders should begin to focus on this trade. However, don't let bullish long-term fundamentals blind you to poor price action.
RESISTANCE–Resistance basis December is near 286, 289-290, 295, and 298.
SUPPORT–Support remains near 278-282, 272-274, 266-268, 262, 264, 258, 252-255.
RECOMMENDATION–The chart is still on the negative side. If December corn takes out 280, traders will begin to consider the double- top formation, and selling could become more aggressive. Aggressive traders might consider selling December corn in the 286-288 area with stops above 295. Aggressive bulls could consider buying the low 280's with stops under 278, but the potential for a break to 265 or so can't be counted out. More conservative traders should stay on the sidelines for now. Option traders might buy Mar, 280, 290, or 300 calls on breaks to the 280's basis March, or if more conservative, hold out for a decline to the low 270's. Experienced option traders might buy March or May calls and sell December calls for the time premium.
M. Steven Morgan
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