MORNING LIVESTOCK REPORT               Wednesday December 24, 2008

LEAN HOGS

Good morning & Happy Holidays! The meats close one hour early today with all exchanges closed Thursday.  I'm out of the office on Friday. Lean hog futures opened lower on Tuesday but closed higher. There did not appear to be enough volume to take the Feb into fresh contract lows. It will happen, eventually, in my opinion. The interior IA/S. Minn cash market traded lower yesterday and actually penetrated the November lows. This is not good news for the premium structured futures board. The cash hog index continues to work lower and the Feb will soon be "running out of time". The weekly out-of-town was supportive, showing an IN movement of 4 million lbs, below the IN movement from last year of 5.5 million. Out-of-town belly stocks are running below year ago levels for the first time in months. Yesterday's kill was large at 437,000. Several plants will be dark today, all plants closed on Thursday with limited processing on Friday and Saturday. The pork packer would go after the hogs if the demand was there, but evidently it's not. My opening call is lower.

LIVE CATTLE

With the exception of the expiring December contract, live cattle futures closed higher across the board on Tuesday. Technically, both fats and feeders are looking strong in my book. The beef packer reached to buy cattle late Wednesday afternoon in NE, paying $135 on the hot beef, up $3.00 from last week. Large volume trade occurred and I'd expect this to spill over into the S. Plains direct steer trade for today. Perhaps, in a light volume affair today, it's possible for fats and feeders to break out to the upside, we'll see. The stock market has been lower for five consecutive days and crude oil continues to erode in price, moving to new lows yet the live cattle futures market appears ready to stage another leg upward. It appears the market has decided that "supply does matter". Last week's cattle-on-feed report continued to demonstrate tight supplies of cattle in U.S. feedlots. I'm expecting a test of major resistance in the Feb live cattle futures. My opening call is higher across the board.

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

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