wmeubank@ocp.kcmo.com
GLOBAL ASSET MANAGEMENT
575 W. Madison, Ste 2607, Chicago, Illinois
(October 9,1997) HOGS: The pork complex spent the past week in poor state as pressure continued to emanate from a weak product market along with worries that hog supplies will increase into the first quarter of next year. The cash market was basically steady to firm as most activity took place between $47.00 to $50.00 which was inline with the previous week. The problem for the entire industry continues to be the product sector which seem to have plentiful supplies and limited buyers, but the recent break should spark some kind of interest from either domestic retailers or foreign buyers. Overall, the market seems to be nearing an area of value, especially when one considers that the futures are now well below the CME cash index. The hog run this week has not been very uniform and there is even some indications that runs will be light near term. If this does become a trend it might setup a very powerful recovery after terrible recent action. Technically, December lean hogs are in a downtrend; the trend would turn back up on a close above $65.75
FUTURES STRATEGY–Buy LHZ at $62.75 or better. Enter a protective sell stop close only at $60.00 if filled.
OPTIONS STRATEGY–Short LHZ $62.00 puts at $1.00 or better. Maintain a protective buy stop at $2.15.
Tony Montini
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