Friday Morning Livestock Market Update - Reports and an Extended Weekend Will Influence Trading

GENERAL COMMENTS:

Live cattle futures traded in a narrow range Thursday with contracts holding much of Tuesday's gains. Feedlots continued to hold for no worse than steady cash, which traded at that level in the South while a light volume of cattle traded as much as $1.00 higher in the North. Further business will need to be done Friday and likely at similar prices. Boxed beef closed higher with choice up $0.35 and select up $5.52. Weekly export sales were rather dismal with only 4,500 metric tons (mt) recorded in the books. Trading is expected to be choppy as traders look ahead to the Cattle on Feed report as well as a three-day weekend. Cattle on feed on Dec. 1 are estimated to be 97.1% of a year ago. Placements are estimated at 95.8% and marketings at 101.0%. This would be a friendly report and, if so, much of it may be already factored in.

Hogs found further support both from the weather and good export sales. The winter storm is hindering the movement of hogs to the market, which may have been a part of the reason cutouts jumped $6.31 Thursday. Much of the strength stemmed from weekly export sales of 58,700 mt with Mexico purchasing a large share of the total. Cash was down $0.44 on the National Direct Afternoon Hog report with further weakness expected Friday as packers may be less aggressive. The Quarterly Hogs & Pigs report estimates show all hogs and pigs on Dec. 1 at 98.5% of a year ago; kept for breeding at 99.7%; and kept for marketing at 98.4%. Much of the trading activity Friday might be mixed as traders prepare for the report and the extended weekend.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are holding new highs with optimism the Cattle on Feed report will be supportive.	1)	Beef in cold storage increased 11.6 million pounds in November with inventory 6% above a year ago.
2)	Packers will need to pay no less than steady money to obtain the cattle yet needed for the week. Feedlots are willing to hold out.	2)	Traders may be more interested in managing their exposure of positions prior to the report and extended weekend, which could result in price weakness.
3)	Strong pork export sales provided support under the market, indicating international demand remains strong and will hopefully continue after the holidays.	3)	Weaker cash may put pressure on the market as February hogs now carry quite a bit of premium.
4)	The USDA Cold Storage report showed a large decrease of 55.5 million pounds of frozen pork during November, an 11% decline from October.	4)	Some profit-taking may take place Friday as the market has had a strong increase over the past two days and traders look ahead to the Hog & Pigs report and an extended weekend.