Friday Morning Livestock Market Update - Limited Trading Expected

GENERAL COMMENTS:

Most of the cash cattle business is likely done for the week, even though Friday is a full futures trading day. Strong prices unfolded in the North this week with cash $3.00 to $5.00 higher. However, there have been limited sales in the South; those sales were somewhat disappointing with feedlots meeting packer bids of $138. That has not been widespread and not likely to open the floodgates Friday. Feedlots have indicated they want $140 and are willing to hold cattle to next week rather than sell for anything lower. Whether packers will give in to their demands, following the lead of Northern trade, will be seen Friday. Weekly export sales of beef were low at only 6,300 metric tons (mt). Boxed beef prices were mixed with choice down $0.45 and select up $1.14. It may be a slow trading day as traders look ahead to celebrating the New Year.

Hog futures had a setback Thursday, but not before setting a new contract high in June again. Traders did not have a cash report to provide direction due to packer submission problems. There will be no data released Friday due to USDA being closed for the holiday. This may leave prices to drift a bit as traders scalp the market and try to make a little profit to end the year. Otherwise, trading activity might be low due to no information being available. Cutouts made a huge jump Thursday with a gain of $7.06 providing some excitement. This was not enough to influence a positive close for futures. Weekly export sales for pork were the overriding factor with movement bearish at only 3,200 mt, down 90% from the four-week average.

	BULL SIDE		BEAR SIDE
1)	Cash cattle traded higher in the North this week and there is a good potential prices will be higher in the South as packers will need to step up to gain ownership of cattle.	1)	The standoff of packers and feedlots in the South continues. Both are resolved to hold the line through the end of the year. The few that traded Thursday at $138 may have set the stage for further business Friday.
2)	The overall trend remains up, which should keep traders confident with holding long positions into the new year.	2)	December live cattle futures go off the board Friday with February taking over as lead month. This may limit price movement.
3)	The large increase of pork cutouts Thursday indicates strong demand seems to be developing. There have been some wild swings of cutout prices, but the overall trend is higher.	3)	Disappointing weekly export sales raised the concern of ongoing international demand at a time when Prop 12 could also back up supplies.
4)	The weakness of hog futures Thursday did not change the strong uptrend that has developed over the past two weeks.	4)	The uncertainty surrounding no data being reported Friday may leave traders unwilling to participate in the market today, leaving futures floundering.