Cattle Call

  • August 25, 2000
  • Marc Dupee

Disappointing cash prices from cattle marketers sent
traders holding longs scurrying to cover at the end of the year’s biggest meat consuming season. The weak cash prices demonstrate
weaker-than-expected, or satiated, demand one week prior to the last major barbecue of the grilling season, Labor Day. October live cattle
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at a new contract low, down 1.050. Feeder cattle
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but left more of a hint it could make a larger-than-expected move by posting a 6/100 Low Volatility
signal and a break gap below the neckline of a head-and-shoulders top pattern.
FCV0 closed down 1.275 at 85.500.

From the Implosion-5 List,
January pork bellies
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Stock index futures got off to a strong start powered by
surging biotechs but were halted in their tracks after a false story about a
tech firm’s earnings hit newswires and cut the stock’s value by more than
one-half. 

Major newswires carried a story that Emulex (EMLX)
misstated earnings and that the CEO resigned, resulting in a plunge in
prices from 105 3/8 to 46 5/16 in 30 minutes before trading was halted for the
maker of broadband hardware and software. Shares of QLogic (QLGC), an Emulex
spin-off six years ago, also tanked as much as 31% to a low of 74 before
recovering almost all of the decline.

Index futures never fully recovered, despite all major
index futures contracts registering on the Momentum-5
List.
NASDAQ 100 futures
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edged 1.20 lower to 1514.00 and
Dow futures
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Revised gross domestic product (GDP) figures showed the economy grew at a
slightly faster pace than previously estimated, up 5.3%. In a separate report,
sales of existing homes dropped to their lowest level in five months, lending
additional credence to the view that the Fed’s 14-month long interest rate
hiking campaign has successfully slowed the economy. GDP had expanded by as much
as 8.3% in the final quarter of 1999. 

Interest rate futures held at contract highs with September T-bonds
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closing down two ticks at 100 14/32 and 10-year notes
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unchanged at 100 4/32.

British pounds (BPU0), the leading contract on the Implosion-5 List,
fell for a ninth session in 10, finishing the week at a contract low, down .0110
at 1.4716. The pound was hurt by speculation that a bid by British firm Billiton
to purchase a Canadian mining interest, Rio Algom, was excessive and added to
downside momentum in the British unit.

The leading contract on the Momentum-5
List, October heating oil
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to gather steam on worries about super-low stockpile levels and rallied .0195
to .9640. Natural gas
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4.640 on a delay to reopen a New Mexico pipeline that exploded last week and
killed 11. 

Prospects for another bumper harvest continued to shake Implosion-5 List
member cocoa
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Africa, are forecast to bring in record harvests of cocoa beans in October, while
upcoming elections in the Ivory Coast next month were the principal negative
factor. The December contract struck a new contract low of 778 before closing
down 8 at 785.

October sugar
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demand from Asia and ahead of Friday’s Commitment Of Traders report.

More dry weather in the south and strong technicals took cotton to a contract
closing high. The December cotton
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been registering on the Momentum-5 List and made good on a move above a 1-2-3-4 Pullback From Highs
setup.