MORNING LIVESTOCK REPORT                 Monday November 16, 2009

LEAN HOGS

Cash hog prices are called lower for today. Packers are likely well booked for the week and next week is a short kill week. I'm expecting a soft to lower cash market tone early this week and I'm expecting a break in the ham market. The outside market forces are supportive early today. The investment appetite for commodities seems insatiable. Will it last? I find it most difficult to recommend buying in the meats and grains simply because "everyone not connected to the fundamental side is buying". Maybe they make money as a rising tide lifts all boats. In the meantime, the board is offering, perhaps, a profitable hedge for producers in the spring and summer months. Looking at a lower cash market in the face of positive outside market influences, I'll call the market mixed to higher in the early trade.

LIVE CATTLE

The positive influence from the outside markets did not support the live cattle market last week and I don't think it will this week. Perhaps after absorbing some buying early today, I'm expecting the down trend in live cattle futures to resume. The cash steer market was "roughed up" last week with most prices paid down 3 to 3.5 cents from the previous week. The beef was quoted slightly higher on Friday but the choice cutout was down 1.36 for the week. Next week is a short kill week and it's hard to imagine that packers will be paying steady to higher money for inventory. The USDA is scheduled to release their cattle-on-feed report Friday afternoon and I'm expecting higher placements on this report compared to Oct of last year. A NY firm issued a long term bullish meat report last week discussing the long term fundamental ideas of improving demand for red meat in tandem with lower production down the road. The report seems to have attracted some large speculative money to the cattle pit with 4,000 Aug 90 calls purchased Friday for 190 to 200 points. That represents over $3 million in premium paid out. Last week live cattle futures broke down technically on very large volume of trade. The cash market was also lower and finally, feeder cattle futures also broke into fresh contract lows. This tells me that live cattle are moving out of a trading range and likely will continue lower.

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