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COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans,
Massachusetts
(October 16, 1997) CORN: SHORT
TERM–Fund buying and El Nino fever are sending the corn
higher. It may be difficult for this move to maintain itself as
harvest is barely underway. There is talk that China is exporting
corn, one of the last things this market wants to hear. However,
while they may be exporting now, I would view that as strictly a
short-term proposition. What was important in the report was not so
much production as ending stocks, which are very tight. Much higher
corn prices appear possible. Hedge selling is beginning to pick up
on the rally. Exports have been strong for the most part, and may
provide support. I remain very bullish corn, but suspect that this
leg of the move may have run its
course.
RESISTANCE–Resistance basis December is near 289-290
and 295.
SUPPORT–Support remains near 286, 278-280, 272-274,
266-268, 262, 264, 258, 252-255,
248.
RECOMMENDATION–Aggressive short-term traders might sell
December corn near 290 with stops of 5-10 cents, looking for a dip
to the low 280's. Long-term traders with deep pockets might buy
dips of 5 or so cents for the long haul. More conservative traders
should wait out the report or trade via options. Option traders
might sell December 280, 290, or 300 calls on rallies. Risk 5
cents. Experienced option traders might buy March or May calls and
sell December calls for the time premium. Most option traders
should wait for the action to subside, as option values have gotten
very pricey in the last week. However, if this does not pull back,
or you are very bullish, consider putting on vertical call spreads,
buying March or May 300 calls, selling 330 or 340
calls.
M. Steven Morgan
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