wmeubank@ocp.kcmo.com
COMMODITY INSIGHT
152 Ennis Lake Road, Ennis, Montana
(November 9, 1997) CATTLE: Cattle prices rose into the end of the week with January feeder cattle ending at their highest level since early October. While the feeders closed the week out at a one- month high, February live cattle attempted to do the same, with the market rising 65 points off its Friday low, to actually end up higher for the day. All in all, it was a pretty good week for the cattle market.
Cattle prices are responding to the adverse weather forecasts for the coming two weeks. Several weather forecasters are calling for two storms, one of which seems very potent for the Plains as well as the Midwest. Keep in mind that the National Weather Service is on record calling for a “harsh winter.” If that forecast comes to be, it is going to be difficult to keep cattle prices depressed.
Hog prices, on the other hand, slumped this week when cut-out values declined along with another jump in slaughter levels. The feeling is that if slaughter levels continue at such a high pace, new contract lows could be set rather quickly for both hogs and bellies. The pork complex is once again on the verge of another leg down.
My work suggests that both cattle and hogs are in nothing more than a 300-to 400-point trading range. And until prices break out of those ranges in one direction or another, there is not a lot to do in either market.
I would like to buy cattle on a hard break. My work strongly suggests that cattle prices should bottom sometime between now and January and rise steadily into the year 2000. However, cattle prices may already have bottomed, for all I know. That's especially true if this winter is as harsh as the Weather Service fears.
Jerry F. Welch
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