Friday Morning Livestock Market Update - Limited Volatility Ahead of Reports

GENERAL COMMENTS:

Cattle just could not find sufficient buying interest to support the market Thursday. Steady cash is factored in and looks like it may be a reality. Some trade has developed in Nebraska at $170 live and $270 dressed, while Iowa has seen light trade at $268-$270. It is a bit surprising both sides have been holding without doing business up until the final day of the week and ahead of the holidays. Business may wait until the Cattle of Feed report is released which may not be more beneficial to either side if it comes in near expectations. Cattle on Feed numbers as of Dec. 1 are estimated at 102.2%. Placements in November are estimated at 95.9% with marketings at 93.3%. Traders will continue to position themselves ahead of the report and the three-day weekend, which may result in sideways trade. Boxed beef was mixed with choice up $2.00 and select down $0.33.

More of what we saw Thursday may dominate the trading Friday as traders position themselves ahead of the Quarterly Hogs and Pigs report and the three-day weekend. Some light spreading was done to reduce risk, resulting in February and April closing higher. The National Daily Direct Afternoon Hog report showed a surprising gain of cash. It was only up $0.14, but higher, nevertheless. Cutouts showed a loss of just $0.01 rounding out a noneventful day. The estimates for the report Friday are for all hogs and pigs on Dec. 1 at 99.6%, kept for breeding at 98.7%, and kept for marketing at 99.6%. Saturday slaughter is expected to be light at 53,000 head as some plants will be dark for the weekend.

	BULL SIDE		BEAR SIDE
1)	Cattle futures have a chart gap quite a bit higher than the current market that may be filled at some point.	1)	Cattle futures may be developing a sideways pattern as traders remain uncertain over demand moving into next year.
2)	Steady to higher cash trade should provide support to the market as it will give greater confidence to feedlots to set their sights higher next week.	2)	Cattle placements over the past three Cattle on Feed reports have been higher than expected. Another repeat of this would be negative for prices.
3)	Weekly export sales of 37,500 metric tons (mt) were 33% above the previous week, indicating international demand may be improving.	3)	Hogs may have a difficult time finding long-term support without solid strength from both cash and cutouts.
4)	The Hogs and Pigs report may show higher sow slaughter took place, which could be supportive to the market over time.	4)	Reduced slaughter over the next two weeks may leave packers less aggressive with supply readily available.