MORNING LIVESTOCK REPORT Tuesday October 6, 2009
LEAN HOGS
Lean hog futures closed lower across the board on Monday with the Dec and Feb contracts the loss leaders. Dec hogs closed under their 40-day moving average for the first time since Sep 8th. Oct hogs likely will do the same today, moving these markets back into a down trend mode. Huge production will likely to weigh on the pork carcass again this week (last week the cutout lost .95) resulting in declining bids for cash hogs. As traders realize the upward correction is finally complete and the down trend is back in force, I'm expecting a sharp move down to test the contract lows. The move downward should be led by the Dec contract. My opening call is down 25 to 30 by the time the pit opening bell rings.
LIVE CATTLE
Live cattle futures closed slightly lower on Monday with the early electronic trade weak early today. The market continues to struggle big time, sustaining the current down trend. Despite tight supplies of fed cattle the fact that too many cattle are overweight has reduced dramatically the impact of tight supplies. The heavy weight cattle are located in the north (Nebraska) and large deliveries against the Oct contract late yesterday were all going to northern delivery points. There were 110 deliveries posted on FND partly through 8/24. There are two items to support the market today; first it appears the show list numbers are smaller this week compared to last week and, second, the outside markets are very supportive today. With the market very oversold perhaps the market will bounce from a lower early trade but I'm not very confident today in the magnitude of a bounce. Look for a lower early trade.
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