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THE WINDY CITY TRADER
P.O. Box 1673, Chicago, Illinois
(October 28, 1997) SOYBEANS: Grains seem to have calmed down after a strong rally. Beans and corn seem to be settling into a temporary trading range. A recent weather forecast studying El Nino effects on worldwide weather indicates a strong possibility of serious drought conditions for Africa and Asia. Drought in Africa would most likely affect cocoa and coffee. Drought in Asia would most affect soybeans, soymeal, bean oil, corn, and wheat. China was rumored to be in the market for 20,000 tons of U.S. soybean oil as well as 700,000 tons of wheat. The soy oil purchase was at the expense of Brazil which indicates supplies could be tightening there. Heavy snows through the plains and Midwest could hurt corn yields. Cold temps and 60 mph gusts did some damage. Many traders have been wondering what the grains will do short term. While we feel very comfortable suggesting corn reaching $3.40 and soybeans over $9.00 by March, the short term is hard to gauge. Corn stocks to usage ratio is at its lowest levels since 1975. Soybean and bean products demand continues at record levels. These are extremely positive signals. Weak Asian currencies however could slow all of this down short term. It stands to reason that these countries will be careful about long-term commitments when they are unsure as to their currencies worth.
Stephen Connell and William Frejlich
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