The Rural Voice, 1986-06, Page 51Miller's Painting
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50 THE RURAL VOICE
COMMODITY WATCH
David Clarke is an Account
Executive with the investment
firm of Bache Securities Inc., 376
Richmond Street, Suite 200,
London, Ontario, N6A 3C7,
1-800-265-1570.
Prices as of the market close
May 16,1986
CORN — Grain trading became
active as speculation regarding the
Soviet nuclear accident forced
short speculators to jump to the
sidelines. The long term effects of
the accident are still to be known
but speculation seems to have wan-
ed, suggesting that the trade feels
that the implications may be of a
short term nature only. July corn
futures closed Friday, May 16 at
2.36'/4, a gain of 173/4 cents from
levels of a month ago, while
December corn closed at 1993/4,
gaining 2 cents from levels of a
month ago. Negative fundamen-
tals abound in the corn market;
• weekly exports continue to be
anaemic
• U.S. corn planting progress is
excellent, moisture is adequate
• U.S. corn acreage is estimated
at 78.5 million acres (by
American Soybean Association)
• Supply/Demand estimates con-
tinue negative
Positive fundamentals in the
market would include continued
speculation on the Soviet nuclear
accident, low borrowing costs and
improved buying power of most
major currencies against the U.S.
dollar. **HEDGERS** may con-
sider the following:
1) selling cash corn and purchasing
low risk CALL OPTIONS
2) purchasing limited risk PUT
OPTIONS to cover new crop
prices
3) purchasing CALL OPTIONS
on Canadian dollars to hedge
basis
SOYBEANS — July beans closed
Friday, May 16 at 5.301/2, a gain of
83/4 cents over levels of a month
ago, while November beans finish-
ed at 5.18'/4 , better by 93/ cents on
the month. There are no signifi-
cant soybean cropping areas near
Chernobyl. Negative fundamentals
in the bean market would be as
follows:
• U.S. planting progress is good
with adequate moisture reported
• USDA raised Brazilian produc-
tion estimate to 13.0 million
tonnes from 12.5
• USDA carryover projections re-
main at high levels.
Friendly fundamentals include a
low bean acreage estimate of
60.8 -million acres released by the
American Soybean Association,
lower borrowing costs, and im-
proved purchasing power of world
currencies. **HEDGERS** pro-
bably did not get much of a chance
to act on the last rally in the grains
due to its intensity and timing. In a
market trading at such low levels
short futures hedges and forward
contracting are tough to swallow.
REMEMBER YOUR MARKET-
ING ALTERNATIVES!! What
about forward contracting and
buying a CALL OPTION? What
about buying PUT OPTIONS?
Don't let today's low prices and
bearish psychology make you com-
placent about marketing. You
won't produce your way out of this
cycle, but you can MARKET your
way out of it.
LIVE CATTLE — Meat markets
have had a variety of fundamentals
to influence prices over the month,
with the Soviet nuclear accident
pushing prices sharply higher, and
more recently, a Cattle -on -Feed
report forcing prices lower. June
futures finished at 56.55 on May
16, a decline of .38 cents since last
month. The Cattle -on -Feed report
released May 15th showed:
Cattle on Feed .... down 6 per cent
Placements up 10 per cent
Marketings up 1 per cent
Reaction was particularly