wmeubank@ocp.kcmo.com
ING DERIVATIVES CLEARING
209 South LaSalle, Chicago, Illinois
(October 31, 1997) CORN: DEMAND QUESTIONS SURFACE–As we've been pointing out, corn export demand has been “routine” for several weeks. The sales have been running roughly 1/2 mln. M/T's a week. To us, that has indicated that there was little to justify $2.90 to $3.00 corn. Sometimes the funds do however make water run uphill. The Asian situation has created some jitters on demand from there but go back the last several weeks...there wasn't much to begin with. China has been using this strength to sell a lot more corn to South Korea...500- 700,000 M/T's. And this after the bulls were convinced they ran out, or they needed to import; or they had some grand scheme. No matter how much they have, they don't normally sell low and replace it higher. Remember when they said they stopped selling corn (export licenses) when December was roughly $2.50 because the price was too low? Not because they ran out as the market wanted to believe. That said, we're entering our target area on the downside at the $2.75 level in the December and covering shorts from over $2.90. From here we'll wait to see if we uncover better demand on the break. Keep in mind, to get to that estimated low stocks/use level being tossed around, we got to do the business first. No rationing needed yet.
John W. Kleist
Commodity Consultant
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