AG SERVICES
201 Innsdale Terrace, Clovis, New Mexico
505-769-3300(March 30, 2000) CATTLE: Cash trade this week is expected to be $1-2 lower between $71-72. The April live cattle traded down the 150 limit today as rumors of hoof and mouth disease in Japan created a panic sell-off. Cash beef prices are also expected to trade about $2 lower this week as well. For the most part, the market has had the opportunity to trade higher over the last few weeks on some of the most bullish news we've seen in a long time. Cash beef prices made a major move to levels not seen in years and packers were reportedly booking beef weeks ahead. With this news coming into the market, prices should have easily been able to make new contract highs. There were probably a couple of things which prevented this from happening. First, the tight basis between cash and the April live cattle has helped to keep cattle moving and second, many buyers holding long in the market were tired of non-activity, little profits and the fact the market just didn't want to move higher. The truth is, the market could have just as easily moved higher than lower today. The market has been waiting on something to happen and it just so happened that the news was negative today and gave sellers something to do. Technically, prices broke major support levels today and prices are still expected to move lower. We have contended for several months that prices would need to trade lower before getting into position to trade back up. Projections still are for June live cattle to re-test the $65-66 level before making a "normal" seasonal low sometime during the late May/early June time frame. Long term, it still looks like prices could be much higher later in the year. The bottom line seems to be that the numbers of cattle behind cattle coming out of the feed yard at this time just are not there. Cash prices are beginning to prove this out. The rest of the story will be known by year end. For now, look for some price weakness into May.
SHORT-TERM TRENDS--Down.
LONG-TERM TRENDS--Sideways to lower.
Bryon Fillpot
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