MORNING LIVESTOCK REPORT                     Friday March 5, 2010

LEAN HOGS

Hogs closed mixed yesterday with the April contract higher while the rest of the board traded lower under the weight of commercial type selling interest. The sellers continue to be greeted with willing buyers. Total open interest in hogs was up nearly 3,000 cars with open interest higher in every contract. The fundamentals appear rock solid heading into next week. Look for the April to take out the January highs today. I have no trade recommendations at this time.

LIVE CATTLE

Live cattle edged higher in what appears to be a labored effort to display significant upside follow through. Still, technically, there's no sign of a top. Feeders surged into new highs with the exception of the March. The fats all closed into new highs with the exception of the April. The beef has been lower for two consecutive days but not sharply lower. Bids for cattle remain rather stubborn at 89 to 90 cents. It's more likely the real bid for cattle is at 91 cents. Cattle traded in light volume last week at 92 cents in the S. Plains. From a seasonal standpoint, I'm expecting a top. My producers are hedged, mostly using April options. We're pursued long puts and put spreads designed to provide adequate downside protection while leaving the upside to market prices open. My spec traders are doing the same. The funds continue to pour money into length in live cattle. Total open interest from yesterday's slight gains was up 3,476 cars. Open interest was higher in all contracts except the April. The action will depend on the cash and cutout with the outside markets supportive. Beef packer margins are profitable but they keep saying they can't continue to ask and receive higher money for wholesale beef. Are they telling the truth???

If you would like a free 30-day trial to my evening livestock wire which includes a discussion of the grain market give me a call or send me an email to dennis.smith@archerfinacials.com or 1.877.377.7905.

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