wmeubank@ocp.kcmo.com
COMMODITY INSIGHT
152 Ennis Lake Road,
Ennis, Montana
(June 8, 1997) LIVESTOCK: Cattle and pork belly prices fell to seven-week lows this week as increased slaughter levels coupled with a decrease in cut-out prices weighed heavily upon both markets. Cattle prices are now 2.50 off the highs set on May 12, while pork belly prices are almost off 10 cents from where they were two weeks ago. And hog prices are off anywhere from 5 to 6 cents since late April.
From the late April to the mid-May period, the entire livestock complex has been on the decline. That should not come as much of a surprise to those following the commodity markets as a whole. Generally speaking, most commodity markets have been on the decline and the critters have been going along for the ride.
All my work continues to suggests that summer-month hog and belly futures are poised for a dramatic price rally. That may seem to be odd talk considering August bellies for instance, closed almost limit down on Friday with prices at their lowest levels since April 18. Nevertheless, my work suggests that light slaughter levels combined with renewed interest in U.S. pork by Japan will bring about a very hard rally in both hogs and bellies in the very near future.
For now, buy (1) August belly at 84.25 or lower. Also buy (1) more at 80.00. I wish to remain long the summer hogs.
Continue to view all breaks in summer hogs and bellies as a buying opportunity. Higher prices are coming and the rally should be underway by the close of trading on Tuesday of this week.
Jerry F. Welch
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