MORNING LIVESTOCK REPORT           Thursday November 19, 2009

LEAN HOGS

December lean hog futures closed near unchanged on Wed after showing limited upside follow through on the heels of Tuesday's surge of index fund buying. The market appears ready to "give up" most of the gains today as the real pork fundamentals begin to erode. Cash hog prices were lower yesterday and they're expected to remain soft to lower for the rest of this week and possibly most of next week. Look for the CME lean hog index to begin working downward under the weight of the heavy cash market. The pork cutout, as we've been expecting, finally cracked yesterday, quoted down 1.54. I'm expecting additional weakness in the pork carcass over the next week. I'd expect support at 5400 basis the Dec hog contract to be tested in the near term. Commodities "in general" have been on a good run and now it appears like a downward correction "in general" is likely to develop into next week's holiday market.

LIVE CATTLE

Live cattle futures resumed their downtrend on Wed after staging a three-day correction against the trend. The Dec board is now within striking distance of the contract lows. The move downward was confirmed by a lower cash steer market. The direct steer trade was generally 1 to 2 cents lower than prices paid for cattle last week. The beef managed to trade higher yesterday allowing packer processing margins to improve. The volume of boxed trade was very active and likely highlights some last minute holiday business. I would not expect much follow through in the beef at this point in time. My first downside target to cover shorts in the Dec is the range from 8200 to 8150. In today's action look for resistance in the 8340 to 8360 range. By the time the opening bell rings I'd expect a steady to lower trade.

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