wmeubank@ocp.kcmo.com
COMMODITY RESOURCE CORPORATION
P.O. Box 8700, Incline Village, Nevada
(August 14, 1997) CATTLE: OUTLOOK–Marketings out of feedlots for the month of July of this year were record large. The market stayed within our projected range, approximately the mid-sixties, and was very well supported on breaks. In other words, despite record high supplies, this market held up very, very well. This is a bullish sign for the cattle market longer term. Supplies will remain adequate over the coming month or so due to very high April through June feedlot placements, but then they will begin to decline. If demand remains good, I look for cattle prices to be much higher late this year and into next. Look for live cattle futures to possibly trade in the low eighties late this year, and perhaps record highs early next.
STRATEGY–FEEDERS: At the present time, we do not recommend any hedges for cattle feeders. If the trend looks as if it may turn down, we may rethink this strategy, but while the trend is up, the best hedge is no hedge at all.
COW/CALF OPERATORS: The feeder cattle market remains caught between record tight supplies [bullish] and a rising corn market [bearish]. For many months now, I have not recommended hedges in the feeder futures. However, should December corn futures be able to move above 280, consider short futures or long put options. Feedlot operators should continue to hold long hedges placed in deferred feeder futures at lower levels.
TRADERS: We took profits on our long October feeder cattle futures purchased at 74 or less on last week's close under 7995. A profit of over $5/contract or $2500 before commissions. Now look to purchase February live cattle at 7350 or less. Be prepared to risk at least $2/cwt. for a longer-term trade with an eventual objective above 80.
George Kleinman
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