wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(November 21, 1997) HOGS: SHORT TERM–Friday's cold storage was a bearish surprise for the bellies, with selling carrying over to the hogs. Funds were aggressive sellers. Cash was also lower. The Asian problems are creeping into the hog pits also, as traders are concerned that our exports may suffer. Retail featuring of pork is expected in the near future, so an improvement in cash pork prices, and good packer demand could provide support to the hogs for the near term. While increased hog numbers suggest that Feb. hogs may become a sale on this rally, demand has also grown. A number of traders are looking for hogs to begin to attract buyers on any further declines. Further, reports from the floor suggest that stops above 6330 in Feb. hogs are vulnerable, and funds are very short. Aggressive short-covering could become a factor.
RESISTANCE–Resistance basis Feb. lies near 6050-6070, 6140, 6200-6210, 6290-6300, 6330, 6380, 6440-6460, 6510.
SUPPORT–Basis Feb. lies near 6000.
RECOMMENDATION–Conservative traders should stay on the sidelines. Option traders could consider buying Feb. 6400 calls on dips from current levels for an eventual rally to the 6400-6500 area. Aggressive traders should consider buying this dip with 100 point stops. Look for a move to 6400-6500, although a move to the 6700's can't be counted out.
M. Steven Morgan
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