wmeubank@ocp.kcmo.com
BARNES BROKERAGE CO., INC.
30 S. Wacker, Chicago, Illinois
(October 29, 1997) SOYBEANS: In a week that will long be remembered for its cataclysmic stock market moves worldwide, new-crop November beans quietly traded in a 15-cent range, hugging the $7.00 mark, but unable to close above it. After its scintillating ascent of $1.10 (620-730) the first half of October, November beans have become mired in a 20-cent trading range (688-708). Booming export numbers and nasty harvest weather have tested the upside; stock market debacles and export cancellations have in turn tested the downside–but with no follow through in either case.
The bone rattling stock market gyrations we've witnessed in the past few days have been unnerving to everyone, but especially unsetting to the grain trade. Even though the markets have all snapped back from catastrophic losses incurred on Tuesday 10-28-97, the instability they revealed about the Asian markets cannot be ignored. Even the “main man,” Allan Greenspan mentioned in his testimony today that export growth could be tempered if Asian markets go soft. The good news is with all the turmoil in the Far East markets, November beans have held 3-week lows (688). Stay tuned!
OBSERVATION AND FUNDAMENTALS: 1) Harvest Wrap-Up–By this weekend, most of the beans and corn harvest in Iowa and Illinois should be completed. As of 10/26, 66% of the corn was in and 85% of the beans.
2) Worst October Storm–Ever recorded in Colorado swept through the plains last weekend damaging still standing corn and beans–fortunately most corn and beans are in already.
3) Stock Market–The greatest bull market of all time faltered this week, tripped up initially by a nosediving Hong Kong market. The “trade” implications were not lost on the grain markets although they held up very well considering.
4) South America Planting–Recent rains have been both friend and foe, replenishing subsoil moisture but delaying planting.
5) November Delivery–Begins this Friday–we wouldn't expect many but this market event certainly bears watching.
6) Allan Greenspan–Talked today, said the right things and soothed the markets–but seeing as though we're dealing with global markets, (being very inter-related as we've seen this week), his comments bear close scrutiny.
The engine driving the grain market bull for '97-98 is quite obviously foreign and domestic demand, and anything undermining this powerful entity would certainly impact the markets adversely. However, we feel the untoward market events that transpired this week are a welcome “red flag” to the international community to get its act together. Being a global economy, we can't smugly stand by touting our won strong economic fundamentals while letting one of our trading partners go in the tank. We feel measures will now be taken to prevent this scenario and that “export worries” will be short lived!
The bull has stalled but will resume. We consider the current break, being exacerbated by the stock market crash, as an “entry opportunity.” Use our option strategies to establish a position with staying power!
William D. Moore
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