Live cattle may be indicating the top is in. The large decline of boxed beef of about $4.00 during the first half of the week will keep pressure on futures. It has been a nice run higher, but we know that cannot last forever. The December contract holds some premium to cash, but trading will continue until Dec. 31 when the contract expires. Later contracts look as if price may be tipping over as traders prepare for the Cattle on Feed report Friday. There were a few bids surfacing Thursday in the North at $190, but miles apart from the $195 asking prices. Packers will need to procure some cattle, but the disruption of regular movement due to the holidays may keep them on the defensive as they do not need as much product. Trade may be confined to a narrow range.
Lean hogs are having a difficult time getting some strong buyer interest. There is some disappointment over the first phase of the trade agreement with China. China has been silent on the matter, giving no indication as to how much they will purchase and when. Traders hope new pork orders will come from China as they need pork and the U.S. has it. Futures look like the trend is up despite the minor setback Thursday, but the demand needs to be realized. Cutouts fell Wednesday, which may keep a lid on prices.
| BULL SIDE | BEAR SIDE | ||
| 1) | The holidays add some challenges to cattle trade, but packers may need more cattle to keep plants operating and may be willing to bid up for them. Feedlots might be tight fisted over the holidays. | 1) | Cattle futures look to be running out of steam and could be turning lower especially in light of the nearly $4.00 decline of boxed beef during the first half of the week. |
| 2) |
February futures held support at the 20-day moving average. Some technical indicators show a neutral market, which may keep funds long in futures.
| 2) | Packers may not be very aggressive this week or next week as they purchase cattle for slaughter around the holidays. Higher bids than last week are unlikely. |
| 3) | Lean hog futures show a nice uptrend of prices. The inside trading day Wednesday may indicate a consolidation before resuming the uptrend. | 3) | Traders are looking ahead to the Hog and Pig report to be released on Monday. Lower volume trade and positioning ahead of the report may keep future sideways at best. |
| 4) | China could purchase significant volumes of pork now that phase one of a deal has been signed. They need pork and we have it. | 4) | Pork values fell Wednesday, which may keep a lid on further upside. Hogs continue to come to the market, leaving packers confident of supply. |
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| #completeherdhealth |
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