wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(December 18, 1997) CATTLE: Cattle futures spent the past few trading session trying to gain some ground back after the huge drop that was seen the week before due to a weak cash market and unstable boxed beef prices. The cash market was steady to $1.00 lower at $65.00 in light volume as the recent reduction in the slaughter rate by the packers cast a weak tone on the market. The beef market was also steady to weak as a lack of end-user buying has made the market fairly soft. The retailers do not seem to be in a hurry to purchase beef in a large way which has sparked a weak tone and with the packers margins being in the red it has caused weak price activity. Overall, market internals are currently mixed to weak, but with a new series of winter storms heading for the cattle-feeding belt it could firm price activity. The market still seems to have worries that winter supplies might be a little burdensome if the packers do not see some kind of relief from all of the red ink they are now experiencing. The next USDA Cattle on Feed release should not bear any surprises so look for the market to stay focused on the weather. If the weather continues to stay fixed in its current pattern it could spell hard times for livestock during a good part of the winter which should help price action, especially if there are long periods of cold and moisture. Technically, February live cattle are in a downtrend, the trend would turn back up on a close above $67.50.
FUTURES STRATEGY–Buy LCJ/sell LCQ at even or better. If filled enter a protective sell stop at —2.60.
OPTION STRATEGY–Sell LCG $65.00 puts at $.90. If filled enter a protective buy stop at $2.10.
Tony Montini
Hogs
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Cattle
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