wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W Madison, Ste 2607,
Chicago, Illinois
(June 12, 1997) LIVE CATTLE: Cattle futures were mixed, but turned firm during the past five trading as early weakness gave way to ideas that the cash market may be nearing a bottom. The cash market ended the week at $63.00 in heavy activity as the lower prices prompted producers to let their showlists go again. With such strong movements for the past few weeks there are signs that cattle have been pulled forward possibly easing heavy supply concerns for the next few weeks. The boxed beef sector was also weak with most categories dropping $2.00 to $3.00, but movement remained very strong. Retailers continue to be strong buyers which should be a sign that demand will stay at the current levels for at least a few weeks if not longer. Overall, market internals are mixed, but as long as demand remains constant through the larger supplies of market ready cattle these price levels are probably cheap enough to keep the market happy. Technically, August live cattle remain in a downtrend; the trend would turn up on a close above $64.50; momentum indices have moved into a positive configuration and do indicate a possible bottom could be in place.
FUTURES STRATEGY--Long LCQ at $63.70. Maintain a protective sell stop close only at $61.97.
OPTION STRATEGY--Long LCQ $66.00 call/short LCQ $62.00 put at even. Risk $1.00 on the short LCQ $62.00 put.
Tony Montini
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