wmeubank@ocp.kcmo.com
THE WINDY CITY TRADER
P.O. Box 1673, Chicago, Illinois
(December 16, 1997) CATTLE: The live cattle market is in trouble. Packers cut slaughters back by 10% to try and bolster prices. No one fell for this ploy. Most users realize that the extra cattle are still on the feed lots continuing to get heavier. The market has finally broken and we expect much lower prices. The next Cattle on Feed report is expected to show 10% more on the feed lots and marketing at 92%. That means less is being taken to market and more are backing up on the feed lots. This is a bearish scenario. Also the weather in the plains remains mild. Each winter, severe storms kill a considerable amount of cattle. This has not been the case to date. February could see 60- 61 before it bottoms. Try to sell off of any 150-200 point profit taking rally. Pork received a minor shot in the arm late last week on news that Asia will look to import 20 million pounds. The downside is that we currently have 7% more hogs than last year at this time and demand is down nearly 15%. Not a pretty picture. The Asian currency situation makes pork very expensive for them to import from the U.S. so they may look elsewhere. This market could tank if February breaks below 5950.
Stephen Connell and William Frejlich
Hogs
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Cattle
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