MORNING LIVESTOCK REPORT                   Thursday March 18, 2010

LEAN HOGS

Cash hogs are called fully steady for today...we'll see. The pork carcass gained 1.60 last night, quoted at 74.68. The USDA, while quoting hams lower used a sharply higher ham value in their cutout calculation. They also quoted loins mostly steady but used a higher loin value and a sharply higher pork butt value in the cutout math. I'm very suspect of this calculation and would not be surprised to see weakness in tonight's pork carcass. Futures have taken the cue from the higher cutout value with the early electronic hogs trading as much as 70 to 80 higher. Support in the April hogs at 7150, on a closing basis has been holding well this week. June hogs are testing resistance levels today, which I define as 8190. If you want, or need any hedge protection this is a good opportunity to establish the 76/86 option window at even money. I have resistance in the April hog contract at 7360. The latest CME lean hog index stands at 7313 and this index is working downward. Average hog weights are now running above last year. I'm thinking this rally, today, will not hold....we'll see.

LIVE CATTLE

The uptrend in live cattle futures continued on Wednesday and remains in force again today. Futures in the early electronic trade are as much as 70 higher. Fresh contract highs have been scored in every cattle contract early today including the feeders. There's not been any widespread cash steer trade with some higher money paid by a regional packer in Nebraska. What is, perhaps, most surprising is the fact that wholesale beef continues to move higher. The choice beef cutout was quoted up 1.08 yesterday at 153.60. The beef has gained nearly $4.00 this week and has sliced through the $150 level like a hot knife through butter. The beef packer has been saying for three weeks now that they can't get any higher money for the beef. Talk about not telling the truth. At this moment there's no sign of a top.

If you would like to discuss hedging opportunities and strategies in lean hog futures give me a call or send me an email to dennis.smith@archerfinancials.com or 1.877.377.7905.

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