This article is brought to you by:
CONSENSUS
COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
800-233-4445(December 16, 1999) CATTLE: OUTLOOK--There is a lot going for the bullish cattle argument in the coming weeks. For one, the futures remains at a one to two dollar discount to cash. Either cash has to come down dramatically or futures rally in the coming weeks, and based on bullish demand fundamentals my vote is for the latter. Plus, we are entering the winter weather surprise period, where any tough Midwestern or Plains states weather can result in gain problems and near-term supply shortages. I never like to be short February in January. A conservative bullish play is to sell just out of the money puts. With the discount to cash the out of the monies look fairly safe with a good risk to reward ratio
STRATEGY--FEEDERS: No hedge protection is recommended at this time in either futures or options since the trend is your friend.
COW/CALF OPERATORS: Cattle feeders remain buy-hedged. If you took our previous recommendations you are long the January feeder futures at 78 and 79 with effective prices actually $5.50 to $7.50 lower than this (due to rollovers). Hold until you buy your replacement feeders.
TRADERS: If you took our previous recommendation you accepted 600-point profits on our December futures first purchased in the in the 6450 to 6500 range. I now like purchases of February under 6850, looking for low to mid-seventies prior to expiration.
George Kleinman