A.G. EDWARDS & SONS, INC.
One North Jefferson, St. Louis, Missouri
314-955-3068
(November 18, 1999) CATTLE: Cattle and beef markets have rallied sharply after declining through late October and early November. Cash cattle prices have rebounded from the $68-$69 range to $70, and may reach $71 this week. We suspect anticipation of stronger beef values helped turn prices upward. The chart suggests those bullish ideas were accurate, since the latest wholesale quotes are almost 300 points above last week's low.
Wholesale Beef Prices
The fundamental situation certainly seems supportive. Beef demand remains generally robust, while producers continue selling fed cattle ahead of schedule. In addition, historical charts suggest the breakout seen this week could lead to significantly higher levels. Our research shows February live cattle have broken out to new contract highs during November in eight of the last 31 years. Strong gains of 5% or more followed in six of those eight years, with a very small gain being posted in the seventh. Only in 1995-96 did February futures fail to top the November high on February 1. We suggest buying February cattle at 70.55 or better, risking to 68.95. Our objective is 74.00.
Dan Vaught