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THE WINDY CITY TRADER
P.O. Box 1673, Chicago, Illinois
(September 30, 1997) CATTLE: We continue to be bearish long term on live cattle. There are a few short-term bullish factors to get through. Technically, the market is very oversold. Also the seasonal tendencies are for the market to rally short term. Long-term negative factors are big supplies on the feed lots and a recent finding of E-coli in frozen beef exported to South Korea. This could affect future exports. Anyone short might want to move stops to 6965 basis December or purchase a call option for protection, if you haven't already. Last Friday's (September 26, 1997) USDA Pig Inventory report was neutral. The numbers showed approximately 4% more hogs available than last year plus expansion of hears holding at 5% over last year. While these numbers may be a slight bit bearish, they actually were not. First of all, demand is expected to be up 7% this year. Also, the market has fallen over 15% during the past four months so the slightly negative news was already in the market. With this report out of the way, we are now starting to like the long side of this market.
Stephen Connell and William Frejlich
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