wmeubank@ocp.kcmo.com
COMMODITY REVIEW AND OUTLOOK
195 Route 6A, Suite 6, Orleans, Massachusetts
(August 20, 1997) FEEDER CATTLE: Higher corn prices and fund selling more than offset commercial buying in the feeders. Good demand and tight feeder supplies have supported the market, and longer term I like the long side of feeders quite a bit. However, the prospect of higher feed prices at a time when live cattle are in trouble suggest to me that feeders might have more downside. Especially when it appears that higher feed costs are likely. I remain a bear unless deferred cattle can sustain a good move higher.
RECOMMENDATION–Support basis October is near 7965, 7920, 7880-7865, 7800 and the low 7700's. The market has signaled a move to at least the low 7700's, possibly the low 7600's. Resistance is near the 8290's, 8250, and the low 8200's, as well as near 8150, 8170 and as the 8100 level is approached. Aggressive traders might sell October feeders in the mid-upper 8000's with 50-100 point stops or over 8150. Objective is open. Option traders should be on the sidelines right now. Feeders are thinly traded, so they may not be for everyone.
M. Steven Morgan
Added to the WWW 08-22-97
Last updated on 08-23-97
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