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A.G. EDWARDS & SONS, INC.
One North Jefferson, St. Louis, Missouri
314-955-3068(November 18, 1999) FEEDER CATTLE: The recent surge in fed cattle prices, along with the rebound in wholesale beef values, quickly spilled over into the feeder cattle market. As a result, January feeder futures topped $85 on Wednesday. While bullishness concerning the feeder cattle outlook is justified, we suspect this late rise leaves the early 2000 contracts vulnerable to short-term weakness. In particular, the latest quote for the CME feeder index, which futures cash-settle against, is $81.23. November feeders expired Thursday, thereby making January the nearby contract. We would not be surprised if cash values pull it downward in late November and/or early December. We would view such weakness as an opportunity to build long positions.
Dan Vaught