wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste. 2607, Chicago, Illinois
(March 26,1997)
LIVE HOGS:
The pork complex turned on a dime during the past week as news of a hoof and mouth disease outbreak in the Taiwanese pork industry sparked very strong buying. Speculation was rampant that Japan will now come to the U.S. for pork they usually buy from Taiwan as the latter has halted all exports until the situation is back under control. Despite all of the fanfare and optimism the cash market really did not perform as well as the futures which could pose a problems as basis levels seem to be out of whack. Cash prices advanced about $4.00 from week ago levels with prices ranging from $60.00 to $51.00 at the end of the week. The pork product market also rallied off of the Taiwan news, but after the initial rally it was still evident that the market could not hold the gains. Overall, the complex still appears as though it may be hesitant to price very much more in to the possible uptick in demand due to the situation in Taiwan. There have been a few signs that the hog runs in the near future may increase which would be a very negative factor. especially if the upcoming Hog and Pig report helps confirm that hog supply will increase. Technically, April live hogs are in a uptrend; the trend would turn down on a close below $71.95.
FUTURES STRATEGY:
Long LHJ at $70.10. Cancel protective sell stop and reverse position at market; when filled enter a protective buy stop at $74.30.
OPTIONS STRATEGY:
Short LHJ $77.00 call at $.90. Maintain a protective buy stop at $2.10.
Tony Montini
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Last updated on 04-14-97
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