wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(December 4, 1997) CATTLE: Cattle futures spent the past few trading session in a choppy state as early pressure stemmed from packers threatening to cut the slaughter rate if the beef market did not firm, but chances for a strong winter storm in the cattle feeding bet and heavy beef movement late in the week sparked a decent rally. The cash market was steady at $67.00 again this week as everyone seemed happy with that price, but the packers were starting to become uneasy due, to the slide in beef prices which could prompt them to attempt buying cattle cheaper next week. The boxed beef markets were mostly lower for most of the week as retailers balked at last week's price rise and held out for lower money which did come. The price break sparked aggressive buying from the retailers which could signal the pipeline is now clean which should setup a rally in the beef market. Overall, market internals remain in a mixed state as the weaker beef market seems to have capped the price advance in the futures for now. The one wildcard for the market could be decent demand this month which could possibly help case an expected rise in production. The latest Cattle-On-Feed report bared no surprises as all of the figures were basically in-line with early estimates. It showed that on-feed numbers remain large, but with strong marketing's expected to continue the move through large supplies should not pressure the market all that much. Technically, December live cattle are in a downtrend; the trend would turn back up on a close above $68.00.
FUTURES STRATEGY–Long LCZ from $66.50. Long second unit at $68.12. Roll position into LCG. Place protective sell stop close only in LCG at $66.50.
OPTION STRATEGY–Sell LCG $67.00 puts at $.90. If filled enter a protective buy stop at $2.1O.
Tony Montini
Hogs
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Cattle
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