Thursday Morning Livestock Market Update - Traders Wait for Cash

GENERAL COMMENTS:

Traders are optimistic cash cattle trade might be no worse than steady this week. There was some light trade in Kansas and Texas at $185 Wednesday, but activity was limited and not necessarily representative of what will take place for the week. The bids and offers posted are $4 to $5 apart but will come together with more business happening Thursday. Front-month December live cattle did not do much as it took over as the lead month on Wednesday, only posting a gain of $0.07 cents with traders focusing more on later contracts. December poked slightly more into the chart gap during Wednesday but was unable to close the gap. Boxed beef took a hit with choice down $3.00 and select down $0.95. Feeder cattle mirrored live cattle somewhat with little direction from fundamentals.

Hogs fared well most of the day but succumbed to selling pressure into the close. There was some unwinding of spreads, which put pressure on nearby months. The recent strength was not supported by cash and cutouts with traders finally liquidating to bank some profits. Further pressure may be seen as cash was lower again Wednesday. The National Direct Afternoon Hog report showed cash down $0.78. Cutouts posted minor strength with price up $0.02 at an average price of $86.50. Saturday slaughter is estimated at 248,000 head.

	BULL SIDE		BEAR SIDE
1)	Traders may try to take a run at closing the December chart gap, which is within easy grasp even if cash trade remains uneventful.	1)	Lower boxed beef prices may indicate slower demand, which may limit upside price potential.
2)	Feedlots are optimistic for higher prices and may hold strong with offers until packers raise bids.	2)	If lower cash trade develops, futures will see further pressure. Packers may not be very aggressive if demand looks weaker.
3)	Hog futures could stabilize after the selloff at the end of Wednesday as traders search for market direction.	3)	Hog weights increased 0.2 pounds to an average of 285.4 pounds this week. This is 1.4 pounds higher than a year ago.
4)	Packers may be more aggressive Thursday as they may want to finish up purchases for the week. This could provide support to nearby contracts.	4)	The selloff of hog futures at the end of Wednesday could have some follow-through, putting further pressure on the market as December fell back from the 50% retracement level as it failed to penetrate and hold above it.