Volume 4, Number 163

E-Livestock Volume: LE (E-Live Cattle): GF (E-Feeder Cattle): HE (E-Lean Hogs): 8/25 190 11 244

August 25, 2006

8/24 207 0 741 8/18 138 0 721

Livestock market information provided by Steve Meyer and Len Steiner. Distributed courtesy of the Chicago Mercantile Exchange, Inc.

DLR PRODUCTION & PRICE SUMMARY

Week Ending
Pct. Change 2.66% 0.63% -0.13% 2.68% 5.20% 6.50% NA 10.80% 4.80% 1.28% 0.00% 1.03% 5.50% 3.20% 3.10% 1.90% -4.25% 0.76% -3.52% 0.38% -0.91% 0.00% -5.00% 2.48% 0.67% 3.16% 0.60% 17.30% 24.70% -18.70% -10.60%

8/26/2006
YTD 21667.0 1267.9 775.2 16779.7 Pct. Change 3.9% 1.7% 1.7% 6.1%

Current Pct. Week Last Week Change Last Year Item Units C FI Slaughter Thou. Head 683 692 -1.30% 665 A Avg. Live Weight Lbs. 1279 1273 0.47% 1271 T Avg. Dressed Weight Lbs. 783 781 0.26% 784 T Beef Production Million Lbs. 532.7 538.6 -1.10% 518.8 L Live Fed Steer $/cwt live wt. 85.96 85.59 0.40% 81.70 Dressed Steer $/cwt carcass 136.64 135.88 0.60% 128.28 E Georgia Feeder Steer 600-700 Lbs. 105.02 103.9 1.10% 106.25 Beef Cutout 600-750 Choice 147.32 150.87 -2.30% 133.01 Hide/Offal $/cwt live wt. 8.47 8.50 -3.80% 8.08 H FI Slaughter Thou. Head 2003 1965 1.93% 1978 O Avg. Dressed Weight Lbs. 196 195 0.51% 196 G Pork Production Million Lbs. 391.2 385.1 1.58% 387.2 S Iowa-S. Minn. Direct Avg. 74.83 71.79 4.20% 70.91 Natl. Base Carcass Price Weighted Avg. 70.79 68.15 3.90% 68.56 Natl. Net Carcass Price Weighted Avg. 73.14 70.58 3.60% 70.98 Pork Cutout 185 Lbs. 76.74 74.92 2.40% 75.30 C Young Chicken Slaughter* Million Head 160.68 162.06 -0.85% 167.81 H Avg. Weight Lbs. 5.27 5.24 0.57% 5.23 I Chicken Production Million Lbs. 846.79 849.20 -0.28% 877.65 C Eggs Set Million 213.05 213.02 0.01% 212.24 K Chicks Placed Million Head 174.46 174.35 0.06% 176.06 E 12-City Broiler Composite 71.38 69.04 3.40% 71.38 N Georgia Dock Broiler 2.5-3 Lbs. 69.86 69.69 0.20% 73.53 T Young Turkey Slaughter* Million Head 4.76 4.74 0.42% 4.64 U Avg. Weight Lbs. 27.23 27.42 -0.69% 27.05 R Turkey Production Million Lbs. 129.5 129.8 -0.27% 125.5 K Eastern Region Hen 8-16 Lbs. 78.00 77.00 1.30% 77.55 F Corn, Omaha $ per Bushel 2.01 1.95 2.80% 1.71 E Wheat, Kansas City $ per Bushel 4.44 4.39 1.10% 3.56 E Soybeans, S. Iowa $ per Bushel 5.08 5.12 -0.80% 6.25 D SB Meal, 48% Central Illinois $ per Ton 163.80 158.50 3.30% 183.20 * Chicken & turkey slaughter & production are 1 week earlier than the date at the top of this table.

Federally-inspected (FI) hog slaughter jumped above 2 million head last week for the first time since early April. Thats one week earlier than last year and it also marks just the third time in history that a weekly slaughter total in August exceeded 2 million head. This will not likely be the last time it happens, though, due to a generally growing industry and continued improvements in performance. The spring pig crop is still larger than that of any other quarter and March-farrowed pigs that once took 7-8 months to reach slaughter weight in October and November now grow fast enough to get there by September and the really good ones do so by late August. Theres more of that to come, pending feed price increases, of course. The 2-million plus week did no damage to either pork or hog market as the cutout value gained $1.82/cwt and the major cash market measures all gained roughly 4% for the week. Steady to rising prices in August is becoming a new trend it seems. A likely reason is the absence of the Japanese safeguard tariff in 2005 and now 2006. That tariff had gone into effect in July of each of the previous 5 years and had been, we believe, a major contributor to August and September cutout and cash price weakness. We cant underestimate the importance of what is going on tin the chicken sector as well. Slaughter for the week ending August 19 was over 4% lower than last year and only a fraction of that decline was compensated for in higher weights so chicken production was 3.5% lower. Lower output since early June has finally pushed chicken prices back to year-ago levels. Both the 12-city composite and boneless/skinless breast meat series reached that threshold the week of 8/19. While dark meat products such as legs, thighs and leg quarters havent recovered to 2005 levels, they have improved DRAMATICALLY and are all well above the 5-year averages. Dressed beef prices fell 2% last week while cash cattle prices held firm, thus putting packer margins on the defensive once again. Page 2 contains information regarding some historicallyprofitable seasonal trades in CME livestock futures that all require positions to be placed over the next few days. We include the list due to the rather high number that occurs in this short time period and the breadth of products involved. It is also interesting to note that most of these trades are accomplished over a rather short time period. Readers are urged to read and understand the statement shown as Figure 2 since trading futures contracts does involve risk and past performance in no way guarantees future performance. For all the details on these trades, including historical seasonal charts and year-by-year performance, go to http://www.cme.com/trading/prd/ag/res/moore3356. html and download your copy of the Moore Research Reports.

65610.0 201.2 13210.1

0.4% 0.3% 4.3%

5310.9 5.35 28434.1 7041.1 5755.9

-0.1% 1.6% 1.5% -0.1% -1.0%

148.22 28.85 4276.28

4.0% -0.8% 3.2%

Please feel free to forward the Daily livestock Report to others who you think will benefit from having this information. The DLR is published daily by Steve Meyer and Len Steiner, and distributed courtesy of the Chicago Mercantile Exchange. You can subscribe by going to http://www.dailylivestockreport.com/subscribe.asp. To submit a comment or suggestion, please send an e-mail to: feedback@ dailylivestockreport.com. To unsubscribe from the DLR newsletter, go to http://www.dailylivestockreport.com/unsubscribe.asp. Disclaimer: The Daily Livestock Report is intended solely for informative purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Security futures are not suitable for all customers. Futures and options trading involve risk. Past results are no indication of future performance. Copyright (c) 2006 by Chicago Mercantile Exchange Inc. 30 S. Wacker Drive, Chicago, IL 60606. All rights reserved.

Daily Livestock Report Figure 1

Volume 4, Number 163

August 25, 2006

HISTORICALLY PROFITABLE SEASONAL TRADES

Placed 8/25-8/31 Source: Moore Research Reports Date Placed 8/25 Position Buy Oct LC - Sell April LC Buy Dec LC Buy Oct LC Buy Dec LC - Sell June LC 8/27 8/28 8/29 8/30 8/31 Buy Oct LH Buy Oct LC Buy Dec LC - Sell June LC Buy Oct LH Buy Oct FC Buy April LH Buy Dec LC Buy Oct LH Buy Feb LC - Sell Aug LC Date Lifted 9/14 10/19 10/19 11/24 9/23 9/14 9/14 10/2 9/11 9/14 9/11 9/13 11/11

Figure 2
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PREFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMACNE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK AND NO HYPOTHETICAL TRADING REORD CAN COMPLETETLY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO W ITHSTAND LOSSES OR ADHERE TO A PARTICUALAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMBEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPOLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. RESULTS NOT ADJUSTED FOR COMMISSIONS AND SLIPPAGE.