No Economy bottom can be called yet. Whether it takes two weeks or nine months it is anyone's guess as to when the economy will bottom. We also noted last Friday the bullish commodities based on inflation argument could be valid at some point towards the end of 2009, but for now it is not an issue. Our basis for calling a bottom in live cattle futures is not based on a bottom in the economy, but on the idea 2009 live cattle futures have discounted themselves enough to factor in anymore-economic weakness.
Futures are implying cash cattle will fall to $83, and then make a slow rally to $89 by the end of the year. While we have light supplies in place to make a bull market, the clear issue remains domestic demand. This is still the time to only place small bets that deferred contracts are under priced.
Allendale's Annual Outlook Conference on Jan 23 and 24th: What Is Our Call for 2009...Tight Supplies or Falling Demand? Get the answers, call 800 262
7538 or go to www.allendale-inc.com
Cattle Technical Commentary: Cattle are in danger of violating the right shoulder of the head & shoulder bottom formation at 82.40. A break of this level would void the formation and could send the market lower in the coming sessions. For more technical information, including charts and trade recommendations please visit the Advance Charts section of the Allendale Research Center.
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