Friday Morning Livestock Market Update - Hog Futures May See Further Short-Covering Ahead of Weekend

GENERAL COMMENTS:

There was some cash cattle trade Thursday, which showed a bit more support. Northern dressed cattle showed some strength with prices steady to $1.00 higher. The $1.00 higher may not be repeated Friday as packers may have most of their needs met for the week. Southern cattle traded steady to $1.00 lower. Significant technical damage has been done to feeder cattle futures, which may keep traders cautious over buying back into the market aggressively. Boxed beef prices were mixed with choice up $1.00 and select down $0.10. Exports sales were nothing to write home about with 143,300 metric tons (mt) sold falling 25% below the previous week.

Hog futures had an impressive rally with triple-digit gains in many contracts and December closed over $3.00 higher. Cutouts were higher, posting a gain of $0.34. Much of the gain Thursday was due to strong weekly export sales of 43,000 mt, up 57% from last week. Cash did not provide any support as it was $1.48 lower, according to the National Direct Afternoon Hog report. It is likely packers will not be aggressive buyers Friday. Saturday slaughter is estimated at 145,000 head.

	BULL SIDE		BEAR SIDE
1)	Technical selling may have run its course in feeder cattle with price near support. This could increase buying interest into the weekend.	1)	Beef demand has yet to rebound from the sluggishness of September. Uncertain financial markets and world events may have a negative influence on the market.
2)	Northern dressed cattle showed slightly higher prices Thursday than what had initially developed. This could be an early indication of prices bottoming.	2)	Cattle numbers may be tight and remain that way, but consumer demand may remain lackluster in the near term.
3)	Short-covering may continue in hogs ahead of the weekend. Traders may view this as a buying opportunity.	3)	The bounce of hog futures may be technical, triggering some short-covering. This strength may be short-lived without further support coming from cash and cutouts.
4)	Strong weekly exports indicate lower pork prices have increased the interest of international buyers.	4)	December hog futures closed the chart gap, putting futures in a technical neutral position. Further upside price potential might be limited.