MORNING LIVESTOCK REPORT                Wednesday August 27, 2008

LEAN HOGS

Good morning! Lean hog futures closed lower across the board on Tuesday with settlements near their session lows. Yesterday's close also represented new low settlements for the recent slide in prices. The supply fundamentals are proving to be a burden as they begin to challenge and overwhelm the outstanding demand which has been able to absorb record large production thus far in 2008. Look for lower to sharply lower cash bids today with a soft to lower cash tone evident well into next week. The CME lean hog index should begin dropping hard. The latest index stands at 85.76. The expanding fall slaughter pace has finally forced too much product into the pipeline, forcing the pork primal cuts lower and driving the pork cutout value lower. The closing pork report showed the cutout down $3.93 at 83.79. The technical picture in the hogs is melting down. Look for a gap lower open today and likely a sharply lower close.

LIVE CATTLE

Live cattle opened lower on Tuesday but seemed to uncover decent buying shortly after the lower early trade. Yesterday, early, seemed to be a "sell commodities" day but most markets seem to focus on their individual fundamentals by the end of the session, including live cattle. There's not been any cash activity yet this week but the expiring Aug contract is clearly anticipating a higher round of cash trade for this week's show list offerings. In the face of on-feed numbers which are down 4% from last year, the kill at 128,000, even with last year's kill seems aggressive and indicative of good demand for beef. The Tuesday box movement was active at 264 boxes and 77 trim. The choice beef cutout was up .42 at 162.04. I'm bullish the live cattle futures and expecting a rally over the next thirty to forty days.

If you're interested in opening an account to trade the livestock and grain markets give me call or send an email at 1.877.377.7905 or dennis.smith@archerfinancials.com .

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