Prepared by Commodity Insight

I cannot emphasize enough how important it is to probe the long side of a market with bullish fundamentals during an especially bearish October. More often than not, a commodity with bullish long-term fundamentals can for whatever reason drop and drop hard during the trick or treat month. But once a low is set, the upmove following the hard October sell-off is substantial and long lasting.

We know that the long-term fundamentals for grains and cattle for instance, are solid. With corn stocks at their third lowest level in 15 years, one must operate on the assumption that as harvest winds down, prices will bottom and head higher. Any buy signal for corn during October should be given serious consideration.

The same can be said of the cattle market. Cattle production is going to decline at some point in time in 1998. Add to that fact the potential for a harsh winter and a case can be made that any buy signal for cattle during October could turn out to be one heck of a winner. Use the bearishness of October as an opportunity to probe the long side of those commodities with long-term bullish fundamentals.

October 5, 1997 Jerry F. Welch, Publisher

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