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Cattle.

Position Monitor

GAME PLAN:

Futures suggest a short-term top is in place for fed cattle. But bullish long-term fundamentals argue against hedging weakness. Continue to carry risk in cash as price should quickly recover.
 Feds Feeders

III'07 0% 0%
IV'07 0% 0%
I'08 0% 0%
II'08 0% 0%


Fundamental analysis

Cattle futures failed to sustain trade above $100.00 and turned lower in technical-based trade to signal a short-term top. The top in cattle futures is expected to weigh on cash cattle prices near-term, although heavy pressure will be avoided unless the boxed beef market collapses. There are concerns beef will struggle to compete against cheaper-priced pork near-term, but tightening feedlot supplies make it unlikely there will be a sharp collapse in beef prices. As a result, the downturn in both live cattle futures and cash cattle prices should be short-lived. Bullish long-term fundamentals mean there's no urgency to hedge weakness, but a recovery back to the $100.00 level in futures would be a solid hedging opportunity.

Daily December Live Cattle

Trend is choppy to higher.

Bulls' target on the next bounce will be the contract high of $101.45. Buyer interest above $100.00 has been limited.

Violation of the uptrend leaves support at the August low of $96.50. A drop through that level would open near-term downside risk to the June low of $94.00.
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Publication:Pro Farmer
Date:Oct 6, 2007
Words:229
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