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ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
800-551-4626(November 19, 1999) CATTLE: Cattle on feed released at 106, placements showing 109, and marketings at 101. This report is bearish compared with ALDL 105, 105, 103 and average guesses of 104, 102, 103. What is interesting is that all categories carry bearish implications. This report shows the highest cattle on feed in feedlots ever, for any month. The cattle are apparently there, even in the face of rumors of hard to find supplies. Placements follow their typical pattern of peaking in October. The 2.609 million head reportedly place in October is the highest since October 1992. Looking at prices, there are some similarities to that time. Prices were trading in the high $70's at the time and peaked in February of 1993 at around $84.50 the nearby futures. Those were the highest prices ever for cattle at that time. By April of 1993 however, nearby futures were down to the $75 range. As one customer from Nebraska pointed out, exactly the same time as when those October placements were coming due. We expect a 50-cent lower opening on the board Monday morning. The key point will be whether trade remains in that area or not. Cash markets finished up for the week, $1 live based trade and $2 higher for dressed quotes. Wholesale markets continued their gains with a strong finish on the final report. Here is what is amazing, traders have bought the last 4 Cattle on Feed reports regardless of bullish or bearish implications. With a strong wholesale market, traders feel confident in buying these dips. Chart support which we would look contain next weeks losses comes in around $69 the December.
Rich Nelson