Friday Morning Livestock Market Update - Mixed Activity Due to End of Year Positioning

GENERAL COMMENTS:

Cash business was light with much of the business pushed off until Friday. Packers and feedlots are holding with feedlots wanting more while packers want to hold the line. Some cattle in the South traded higher at an average of $158.31 for over 80% choice. Northern dressed averaged $248.67 delivered. The rest of the business will be done Friday with packers likely not purchasing very many for future delivery. Boxed beef was mixed with choice down $0.55 and select up $3.42. This is the final day to trade the December live cattle contract, which has made an impressing run higher over the past three weeks. February will take over as front month on Tuesday nearly at the same price where December will end. Markets will be closed Monday.

Hog futures have seen a lot of spread trading this week with nearby months and later months flipping back and forth nearly every day. The pressure was in February again Thursday as traders seem to realize it is carrying a significant premium to cash. The lean hog index did show a nice increase of $2.09, bringing it to $80.69. However, cash was lower on the National Direct Afternoon report with a decline of $0.70 with cutouts down $0.79. There could be more unwinding of spreads Friday before trading may settle down to mixed activity ahead of the three-day weekend. Saturday slaughter is estimated at 255,000 head.

	BULL SIDE		BEAR SIDE
1)	New contract highs across live cattle futures continue to build traders' confidence of higher prices.	1)	Ongoing strong beef demand is questionable moving into the new year. Consumers are grappling with high food prices.
2)	Feedlots have been able to achieve higher prices for their cattle over the past few weeks as packers have been running strong slaughter speeds and have had to pay up to get what they need..	2)	Traders may liquidate some of their long positions before the end of the year to settle out the books. This could pressure the market.
3)	Hog futures have been able to maintain an uptrend as the supply of hogs is expected to tighten into the summer months.	3)	February hogs still have a large premium to cash, which could limit upside potential and further unwinding of spreads Friday.
4)	Slaughter has remained strong even though cutouts have floundered. Lighter hog weights require more animals to achieve the same tonnage.	4)	Lower cash and lower cutouts do not provide support for continued strength in hog futures. This could pressure the market further Friday.