wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(November 6, 1997) CATTLE: Cattle futures were mixed to lower as the market found light pressure on ideas the cash market will trend weaker in the upcoming weeks along with ideas that the boxed- beef market will feature the same kind of action. Cash cattle trade, as of this writing, has not been established, but indication are such that $69.00 would be the worst with many sources indicating $70.00 will again be the price for the second consecutive week. Boxed beef markets were mixed to weak as the retailers seemed a bit hesitant to make large purchases due to the fact that they are expecting a break in prices. Overall, markets are mixed, but there are still signs that the market could move higher in the near term. The cash cattle market should continue to show strong price activity with the supplies moving into a tight state for the next few weeks and with the harsh winter storm that hit the majority of the cattle feeding belt that killed several head, it could make near-term supply very tight. Taking the latter into consideration, it could set up for a very strong market, especially if beef demand picks up. Technically, December live cattle are in a downtrend; the trend would turn back up on a close above $68.12.
FUTURES STRATEGY–Long LCZ from $66.50. Maintain a protective sell stop close only to $65.05. Add a second unit at $68.12 stop.
OPTION STRATEGY–Short LCZ $66.00 puts at $1.10. Maintain a protective buy stop at $2.25.
Tony Montini
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