wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6,
Orleans, Massachusetts
(June 11, 1997) FEEDER CATTLE: Profit-taking and spec buying supported the feeders, as did weaker corn prices. Cash feeders are expected to remain weak but tight supplies of feeders are underpinning the market. Long term I remain very bullish feeders, but at this time it is difficult to see how they can sustain these price levels without a corresponding move in live cattle. Watch for signs of reversals signaling a bottom.
RECOMMENDATION--August feeders may garner strength as the 7500 level is approached. 7660 was taken out, so the potential is there for about 7550 or so, and traders should contemplate taking profits on tests of that area or tightening stops. At this time, a rally to the mid-low 7700's appears possible, so aggressive sellers could sell in that area with 50-100 point stops, looking for a decline to 7550-7500 or so. The cattle on feed may encourage short-covering.
Long-term traders should wait out the decline for a buying opportunity. This could be an excellent option trade, as it appears that there may eventually be a move to the upside of substance.
M. Steven Morgan
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Last updated on 06-13-97
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