Thursday Morning Livestock Market Update - Traders Wait For Direction From Cash

GENERAL COMMENTS:

December live cattle futures may not change much as the contract goes off the board Friday. The rest of the contracts will be influenced by the development of cash activity. Outside of that, there is limited fundamental reason for the market to change much. Holiday trade may move the market erratically as traders want to make some money but also position themselves for the end of the year to settle their books. No cash activity took place Wednesday as only a few bids were placed and were met with no interest from feedlots. Some activity should surface Thursday, but it likely will be limited. Feeder cattle did much better with the January contract closing at the highest level since Nov. 22. Unfortunately, boxed beef closed lower with choice down $1.83 and select down $0.87.

Hog futures continued to struggle with April and later contracts making lower highs and lower lows. Overall, there is little reason for futures to move higher as cash continues to struggle. Some spread trading took place as traders position their accounts for the end of the year and may want to limit exposure. The National Daily Direct Afternoon Hog report showed cash down $0.29 with the weighted average down to $46.26. Packers have not had to be very aggressive due to a holiday-shortened week with slaughter disrupted. Cutouts may provide a little support Thursday with values up $0.40 on Wednesday. Weekly export sales are delayed until Friday.

	BULL SIDE		BEAR SIDE
1)	A few packers posted bids at steady money with last week but were passed by feedlots as they may hold out for higher cash.	1)	Boxed beef continues to remain lackluster due to reduced demand. It is not likely demand will rebound significantly into the new year.
2)	Strong feeder cattle may provide support to live cattle as traders look for anything to provide volatility and hopefully a profit.	2)	Live cattle futures seem to be in a sideways range where it may remain for a while as supply and demand seem to be somewhat balanced for now.
3)	With the recent weakness of hog futures, there may be short-covering into the end of the year and the extended weekend.	3)	Hog weights decreased slightly last week but remain 6.1 pounds above a year ago at 289.3 pounds.
4)	The weakness of the U.S. dollar could increase international interest for pork along with the low pork prices.	4)	The recent weakness of hog futures may indicate futures may head back down to test the lows again. Cash and cutouts provide limited support.