Thursday Morning Livestock Market Update - Cash Cattle Trade Starts to Develop

GENERAL COMMENTS:

Feedlots are holding with some light cash trade at $170 in Nebraska and some dressed at $270. Asking prices are generally $3 to $5 higher at the present time. This certainly will provide support in cattle futures if this continues through the rest of the week. December live cattle futures are reflecting this optimism with a close at $170.02 Wednesday. Be that as it may, traders will be turning some attention to the upcoming Cattle on Feed report Friday which may begin to limit volatility. More caution might develop as the report will be released after the close of trading and ahead of a three-day weekend. Boxed beef prices were mixed with choice up $0.30 with select down $1.56.

Hog futures Wednesday reflected the weakness of cash and cutouts we saw Tuesday with futures posting a lower high and a lower low. Higher cash on Wednesday with the National Daily Direct Afternoon report showing a gain of $0.85 moving the weighted average price to $47.82, might provide some support Thursday. However, cash is expected to be weaker the rest of the week. The better cash Wednesday is expected to be offset by cutouts posting a decline of $1.70. Traders will be cautious over underlying price strength as well as the upcoming Quarterly Hogs and Pigs report. All hogs and pigs on Dec. 1 are estimated at 99.6%, kept for breeding at 98.7%, and kept for marketing at 99.6%. Weekly export sales may have an influence on trade direction Thursday.

	BULL SIDE		BEAR SIDE
1)	Packers have raised bids to steady with last week and may need to increase those bids as feedlots are holding offers at $3 to $5 higher.	1)	If cash cattle trade steady this week, the futures already have that factored in, limiting further upside.
2)	There may be further short-covering heading into the Cattle on Feed report and the three-day weekend.	2)	Weekly export sales need to be better than last week or cattle futures could see some weakness with the ongoing concern of demand.
3)	Higher cash hogs Wednesday may provide some stability in futures Thursday balanced with the loss in cutouts.	3)	Pork demand continues to remain weak, which is reflected by struggling cash and cutouts. This will limit upside price potential.
4)	Positioning ahead of the Hogs and Pigs report may result in some short-covering and a rebound in futures.	4)	Weekly hog weights were 0.9 pounds below the previous week but remain 4.3 pounds above a year ago.