MORNING LIVESTOCK REPORT                   Wednesday October 14, 2009

LEAN HOGS

Lean hogs closed mixed to mostly lower on Tuesday nearly opposite of the close on Monday. Oct hogs finished higher as the cash market performed strong with light selling interest containing the deferred hog contract including the most active Dec. However, prices in the deferred hogs managed to climb well off their session lows into the closing bell. Early indications are calling for a fully steady cash hog market for today and futures are higher in the early electronic trade. Oct hogs go off the board today along with options against the Oct. The remainder of the board is holding a substantial premium to cash, solely based upon expectations for surging demand for pork. Look for selling interest in the 5400-5500 range in the Dec hogs. The pork cutout was quoted up 1.65 at 54.89 on the back of rising ham prices. Hams are now at their highest price of the fall late summer/fall season.

LIVE CATTLE

Live cattle closed unchanged in the Oct and lower in the deferred contracts on Tuesday. Selling interest was fairly good on the heels of Monday's unexplained rally. While there's still no cash steer trade to report, in the face of smaller show list numbers it appears a steady bid will surface today (81 cents). It appears we're currently working through the tightest supplies of the season. Deliveries against the Oct contract continued but also appear to be slowing. There were 48 new deliveries posted with no retenders noted. The 48 new deliveries have gone to a strong stopper. The beef was higher but on light box movement. There does not appear to be anything special happening in the wholesale beef market. It's my opinion that beef business is suffering in the face of a stressed household budget in the wake of the recession and that much cheaper priced pork is proving to be very tough competition for the meat retail dollar. Bottom line, I'm expecting the downtrend to remain intact in live cattle futures for another couple of months. I'm currently hedging production for the remainder of this year. Look for a higher early trade.

If you're not satisfied with your current brokerage relationship give me a call or send me an email to dennis.smith@archerfinancals.com  or 1.877.377.7905.

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