wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 6, 1997) CATTLE: SHORT TERM–The “Goldman roll” is adding to pressure to the December cattle. Packers are said to be in need of cattle, but are attempting to use contracted supplies rather than coming to the open market. Near-term supplies are tight, in part due to the winter storm of a couple weeks ago. The discount of December to cash is supportive, as are lower corn prices. There may be increased competition from pork and chicken in the next few weeks, and cattle supplies are also expected to increase in the next few weeks. The prospect of increased weather problems may encourage the market to begin to price in some sort of winter weather premium. Seasonals suggest higher prices.
RESISTANCE–Resistance basis December lies near 6700, 6780, 6825, 6850-6875, 6890, 6930 or so.
SUPPORT–Support basis December lies near 6647, 6600, 6550-6525.
RECOMMENDATION–Support in the upper 6600's appears to be substantial, and may encourage buying. However, we need to see December cattle take out 6795 in a convincing manner to suggest a near term low is in and a rally is under way. Traders might continue to buy Dec. cattle in the low 6700's, upper 6600's with stops of 100 points or under 6647. Look for a test of at least the mid-6800's, but there is the potential for a move to near 7000. Option traders might buy December calls for a move to near 7000. Long-term players could consider buying the April cattle at current levels with stops of 100-150 points. Objective is open.
M. Steven Morgan
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com