ALLENDALE, INC
4506 Prime Parkway, McHenry, Illinois
800-262-7538(March 10, 2000) CATTLE: For the week, cash cattle gained $2, boxed beef up over $6.50, and April cattle down 37 cents. We could go on about how great demand is but it has not shown up on the board. In terms of supplies, it may be important to note that dressed weights typically take a 10 to 20 lb drop from here to late April. The slaughter typically drops in the next three weeks as well. That is supportive, but the market is keeping one eye on the wall of supplies everyone expects to hit late spring to summer. Technically, the gap at $72.22 remains waiting to be filled. The market has spent 6 days within a narrow range. We feel a breakout is due sometime soon, and will want to be on it. Our bias is to see trade break the gap under our feet. Given the tremendous finishes on the boxed beef however, we would not be surprised by an upside breakout. Just as we looked to some typical occurrences in the pork, lets do the same for the beef. Typically, prices for spring peak in early March, trade range bound for a month, and take a significant decline around the second week of April. Interestingly enough it was exactly one year ago today that the April fat contract peaked out at $68.95. It declined into expiration around $66.50. Of note, cash finished the week with tops of $66 and boxed beef at $103. This week, cash finished at $72 for the most part and boxed beef over $119. Typically, May to June remains mixed but by late June, a rally starts building into fall. Looking at the above stats, our bias should be a little negative. We are short one unit of April cattle for a correction to overbought futures. We are short one unit of March feeders also for a correction lower.
Rich Nelson
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