MORNING LIVESTOCK REPORT Friday October 23, 2009
LEAN HOGS
A brief comment today as I'm running way late. Cash hogs are looking flat to lower today. Overall the performance of the cash market this week has been impressive. Having said that, however, it appears that consistently large production is going to fully challenge the ability of demand to absorb that production without forcing prices lower. Pork is cheap and moving well in both the domestic and export channels but it likely needs to stay cheap. Expect stiff resistance in Dec hogs in the 5420 to 5460 range. Major support comes in just below 5300. My fundamental information and my bias has me looking for another break on the board.
LIVE CATTLE
Packers evidently paid higher money for cattle in KS late yesterday, paying 85 to 85.5. This positive cash news has driven futures higher again today in the early electronic trading action. The 8750 resistance has been breached and now look for a test of 8800 to 8820. Beef packer margins are slipping into the red as it appears the strength in the wholesale beef is a rather labored affair. Currently fed supplies are tight, likely the tightest of the year. It should remain this way for another two to three weeks, but no longer. I'm strongly recommending to my producers to establish hedges in some fashion as prices work upward. Bottom line, I'm not expecting the uptrend to last.
If you need help in developing and executing a hedging strategy in either cattle or hogs give me a call or send me an email to dennis.smith@archerfinancials.com or 1.877.377.7905.
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