Wednesday Morning Livestock Market Update - Traders Look Ahead to Two Major Reports

GENERAL COMMENTS:

Traders are looking ahead to the rest of the week with caution. They await cash trade to see whether it may provide at least steady cash and they are looking ahead to the Cattle on Feed report Friday. Generally, we may see more positioning of traders beginning about a day or two ahead of the report, but due to Christmas and some thoughts already turned toward travel and the holidays, trader positioning may be more prominent Wednesday. 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%. Cash trade was quiet Tuesday with packers and feedlots waiting for each other to tip their hand. Boxed beef was lower with choice down $0.10 and select down $0.56.

Hog futures opened lower and tried to move back into positive territory but failed. As with cattle, traders may begin to position ahead of the Hogs and Pigs report to be released Friday. There is always more anxiousness when major reports are released ahead of the three-day weekend. Cash continues to perform poorly with the National Direct Afternoon Hog report down $1.42 with a weighted average of $46.97. Cutouts declined 0.91. This combination may put further pressure on futures Wednesday. In the Global Agritrends monthly Newsletter it is reported that China's swineherd is in one of the most prolonged financial downturns in history with farmers losing money 20 of the past 24 months. Losses last week were reported at US$50 per head. This may spur liquidation in the country.

	BULL SIDE		BEAR SIDE
1)	Packers may want to accomplish business earlier in the week rather than wait until the end of the week to purchase ahead of Christmas. They may be more aggressive in their buying.	1)	Packers may not be willing to step up this week as their needs for cattle may not be as great over the next two weeks due to the reduction of slaughter.
2)	Chart gaps were closed Tuesday with the recent uptrend still intact. This may provide technical support.	2)	Traders will be cautious ahead of the Cattle on Feed report, which may leave the market drifting.
3)	Smithfield has partially completed a planned sow herd liquidation that could top 90,000 head, according the Global Agritrends Newsletter.	3)	The weakness of cash and cutouts Tuesday may have a negative influence on the trading activity today, eliminating some of the recent gains.
4)	The Hogs and Pigs report could show further herd liquidation, which should eventually support the market.	4)	Packers may not be very aggressive the rest of the week as slaughter needs will be reduced during the holiday period.