wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(December 4, 1997) HOGS: SHORT TERM–More fund selling in hogs. Pork product prices are expected to improve as retailers begin their purchases for the Christmas season. Asian problems are creeping into the hog pits also, as traders are concerned that our exports may suffer. These are not unwarranted fears, as our participation in foreign markets, especially Asian, has grown over the last few years. While increased hog numbers suggest that February hogs may become a sale on rallies, demand has also grown, and a number of traders are looking for hogs to begin to attract buyers on this weakness. The winter cold and its attendant storms may also provide support to the hog market. Reports from the floor suggest that stops above 6330 in February hogs are vulnerable, and funds are very short. Aggressive short-covering could become a factor.
RESISTANCE–Resistance basis February lies near 6050-6070, 6140, 6200-6210, 6290-6300, 6330, 6380, 6440-6460, 6510.
SSUPPORT–Basis February lies near 6000.
RECOMMENDATION–Conservative traders should stay on the sidelines. Option traders could consider buying February 6400 calls near 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. Selling may emerge in the mid 6100's, and if very aggressive, look to sell in that area with 100-point stops. Seasonals suggest a low in this time frame.
M. Steven Morgan
Hogs
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Cattle
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