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To: Lalit Jain who wrote (27222)	1/28/1999 9:18:00 PM
From: Alex	Read Replies (1) \| Respond to of 116762

01/27/99: Analysis Of Commodities Activities PAUL KANGAS: Now, to discuss the protracted decline in most commodity prices over the past year, the reasons behind the weakness, and the outlook for this year is Bob Hafer, managing director of the Bridge Commodities Research Bureau in New York. And welcome back, Bob. BOB HAFER, MANAGING DIR., BRIDGE COMMODITY RESEARCH BUR.: Good evening, Paul. KANGAS: Several months ago, on this program, you told me that if the Commodity Research Bureau Index breaks below the 200 level, it could be a signal of serious deflation and possible recession. Well yesterday, it closed at the 187 level, a 21-year low. Where's the recession? HAFER: Well, we're still waiting for the recession, Paul. Certainly, this weakness in commodity prices will eventually impact the economy. We just haven't even it yet. KANGAS: Let's have a look at a graphic here that shows just how badly some of the major commodities declined last year. Sugar down over 36 percent, down 14.4 just in the month of January. The only gainer here was crude oil in the month of January, right? HAFER: Right, and certainly if you're a producer of those commodities, of course, you're feeling an impact. Your pocketbook is not burgeoning, as like the rest of the people in the economy is, so it's, it's selective. KANGAS: So why don't they stop producing? Maybe that'll get prices up. HAFER: Well, eventually, Paul, they will. I mean the one cure for low commodity prices is low commodity prices, because eventually the production will get cut back. That in turn will cause a supply to be reduced and prices will start to move up. KANGAS: Is that going to happen in 1999? HAFER: Well, it probably will. We're looking right now at an expectation that U.S. farmers are intending to plant 3 percent more than they did last year. When that realization starts to set in, perhaps they'll change their minds and pull back a little. KANGAS: What's your prediction on the CRB Index, down to 180 or are we seeing a bottom here? HAFER: The feeling Paul is that because last year was weak, the Index down 16.5 percent on the year, our feeling is the Index could drop a little bit, but nowhere near that, to that level. We're thinking somewhere here in the 180's, the Index should dig in.. KANGAS: I'm sorry, the 180... HAFER: Somewhere in the 180's, Paul, between 180 and 187. It would be surprising to see it continue down at the same pace it fell last year. KANGAS: So you feel we're getting near a bottom here. HAFER: Yes, I do. I felt that for the last several months. KANGAS: OK. Thanks very much, Bob. HAFER: My pleasure Paul. KANGAS: My guest Bob Hafer, managing director of the Bridge Commodity Research Bureau in Chicago.