MORNING LIVESTOCK REPORT             Thursday September 9, 2010

LEAN HOGS

Good morning.  Look for the Oct hog contract to test resistance at 7700 today but likely fail to display significant upside follow through from this level. The Dec may test resistance at 7500-7520 but likely fail to follow through. From a spec standpoint I have no position in the hogs at this time with one exception. We're holding a few Apr/Dec bear spreads and I'm looking to add to this position on a correction in the spread. Cash hogs are looking fully steady to firm for today. The kill was very aggressive yesterday at 422,000, pushing capacity. Look for a large Sat kill and look for a struggling pork carcass value as a result of the expanding pork production. The exception here is the fresh belly market which sits at record highs. We're out of frozen bellies. Thus, the fresh market must meet the daily demands of the bacon slicer. A higher fresh belly market could be a short term supportive feature for the pork carcass.

LIVE CATTLE

Technical damage has been sustained in the live cattle market this week. Last Friday a wave of fund selling forced the Oct from 20 higher to 120 lower. During that session, the market made a full recovery and actually traded 100 higher for the day before closing unchanged. On Tuesday, the market traded 20 higher in the early trade but finished 210 lower. Then, on Wed, in the face of a rising cash steer market, the board managed to gain 90 points on the close. Look for stiff overhead resistance approaching 9800 in the Oct live cattle contract. I'll be using a test of resistance to add to hedge positions mostly through the use of put spreads and risk reversals. I have no spec positions at this time in live cattle futures. Call me with questions regarding hedging live cattle.

If you would like more information about this article, please contact Dennis at 1.877.377.7905 or send an email to dennis.smith@archerfinancials.com.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.