Monday Morning Livestock Market Update - Trading Activity in Complex May Be Slow to Develop

GENERAL COMMENTS:

USDA was closed on Friday, leaving traders guessing as to what slaughter numbers were and what boxed beef prices did. This left just some positioning to close out the books for the year and to wait for information before guessing price direction. Trading activity did not increase in the South on Friday, leaving the potential for more cash activity this week. Neither packers nor feedlots were willing to give in on Friday. Northern cattle traded higher last week with feedlots likely setting their sights higher again this week. With the holidays behind, packers will return slaughter schedules back to normal and may need more cattle to fill demand.

Hog futures were under pressure due to the uncertainly of cash and whether the large increase of cutouts of Thursday would hold. USDA was closed with no information to provide direction. Some traders may have been just plain tired of the question of what was going to take place in the new year due to the effects of Prop 12 and decided to close out their books at the end of the year and take a wait-n-see attitude.

	BULL SIDE		BEAR SIDE
1)	The uptrend is still intact with the consolidation on Friday due to lighter trading activity.	1)	Cattle futures are overbought and in need of a price correction. The stability on Friday may trigger some liquidation.
2)	Higher cash is projected this week as limited activity last week may require packers to be more aggressive this week. Feedlots will hold for more.	2)	Traders may wait for cash to trade before making any decision on price direction.
3)	Even with lower futures on Friday, futures have consolidated at the top of the trading range showing limited concern over Prop 12.	3)	Hog futures are in jeopardy of moving down to test chart support unless cash will establish a solid bottom.
4)	Traders remain bullish long term as tighter supplies are expected in the future.	4)	Prop 12 kicks in. Now what? Traders will be uncertain over product movement into California and around the country.