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(September 25, 1997) CATTLE: Weak activity prevailed during the past week in the cattle complex as a weak boxed beef market and a lack of direction from the cash market sparked most of the pressure. The cash market was steady, at $66.00 as producers seemed happy to have the bid after a negative Cattle on Feed report a week earlier. The boxed beef markets were lower as the packers discounted the meat to spark stronger retail demand that seemed to work as movement was fairly strong. Overall, market internals remain mixed as the cash market seems to fixed in the $65.00 to $67.00 and beef seems to be moving at a good pace when packers discount prices. If the pipeline cleans out as it appears it is and market ready cattle numbers decline as expected it should setup for better things appear to be coming on the horizon. Weekly showlists have declined the past few weeks which is a good sip that a marketing hole for the next few months is nearing. If you couple the latter with the fact that demand is expected to remain at the current pace and it should point to higher price for most of the fall. The only thing that might upset the apple cart would be some sort of downturn in demand which does not seem likely at this time. Technically, October live cattle are in a downtrend; the trend would turn back up on a close over $68.42.
FUTURES STRATEGY–Long LCV at $67.50. Maintain a protective sell stop close only at $66.02.
OPTION STRATEGY–Short LCZ $67.00 puts at $1.10. Maintain a protective buy stop at $2.25 if filled.
Tony Montini
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