MORNING LIVESTOCK REPORT                    Friday October 10, 2008

LEAN HOGS

The meat fundamentals will take a back seat again today with the outside markets continuing to melt down. Stocks are sharply lower with concerns regarding global recession dominating the trade. Impressively, pork appears to be withstanding the recession concerns much better than is the live cattle. Pork is a cheap source of protein and will be extremely price competitive both in the U.S. and in the world market. Having said that; I have no trade recommendations or positions in the hogs at this time. The back end continues to lose to the front end with the Oct, Dec and Feb discount to cash while the back end remains premium to the cash. The trade is clearly worried about a demand shift next year. The USDA will issue new meat supply/demand tables today. My opening call is down 50 to 100.

LIVE CATTLE

I'll keep today's comment brief as there's a USDA grain supply/demand report coming out at 7:30AM Chicago time. Live cattle closed slightly lower yesterday in back and fill fashion following Wed's dramatic recovery off the spike lows. However, prices are expected to open sharply lower today (down 100 to 200) in direct response to the sharply lower stock market today. The live cattle and feeders appear more vulnerable to a real demand shift in the event of major recession than either pork or poultry. I'm holding a few Dec bull call spreads. Otherwise, I have no positions.

Questions or comments on this article, please contact Dennis at 1.888.377.7905 or dennis.smith@archerfinancials.com.

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