GLOBAL ASSET MANAGEMENT

575 W Madison, Ste 2607, Chicago, Illinois

(August 14, 1997) HOGS: The pork complex spent the past week in a mixed-to-firm state as ideas that the cash and product markets should firm up kept the willing buyers alive at lower prices. The cash hog market will end the week about steady with a week ago with cash tops at $54.00 to $56.00. The cash market found late support from decent packer bidding as they seem ready to crank up the slaughter which from a seasonal standpoint is no big surprise. The dressed pork cut-out was again weak due to the fact that the pipeline remains stuffed with product without a home. It still appears that the packers have gotten enough of a set back in the cash market to ease margin concerns which more than likely will convince them to keep kills at full bore. All of this will be fine and dandy as long as the hog supply is plentiful enough to support this trend, but if this is not the case it will probably force the cash market back up. Overall, market internals remain in a mixed- to-weak state, but if the supply does indeed increase the packers could take control and force the market lower into the fall. Technically, October lean hogs are in an uptrend; the trend would turn back down on a close below $72.00.

FUTURES STRATEGY–Buy LHV at $72.50; if filled enter a protective reversing sell stop at $70.55.

OPTIONS STRATEGY–Sell LHV $70.00 puts at $1.00; if filled enter a protective buy stop at $2.15.

Tony Montini

Added to the WWW 08-15-97
Last updated on 08-15-97

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