GENERAL COMMENTS:
Cash cattle traded steady for Southern live cattle and $2.00 higher for Northern dressed cattle for the week. That provided the confidence for traders to buy futures more aggressively. They also had positioned themselves ahead of the Cattle on Feed report as the liquidation subsided. The Cattle on Feed report was about as neutral as a report could be. On feed on December 1 was 100% compared to the average guess of 99.9%. Placements in November were 96% compared to the estimate of 95.9%. Marketed in November was 99% compared to the estimate of 98.2%. This is the first time in quite a while that the placement number was very close to the estimate. That category has been difficult to guess for quite some time. This is a holiday-shortened week with fewer cattle needed for slaughter leaving the potential for steady trade. Boxed beef prices were mixed with choice down $4.84 and select up $1.80. The Commitment of Traders report showed funds adding 7,451 contracts in live cattle increasing their net long position to 136,213 futures contracts. They added 794 long futures to feeder cattle increasing their net long position to 19,116 contracts.
Hog futures were able to post strong gains with The Frebruarty contract heading the charge and moving to the highest close since December 9. Traders seemed to view the price decline over the past month as a buying opportunity despite the Quarterly Hogs & Pigs report to be released today. The trading activity is expected to be subdued today as traders position ahead of the report. The average estimate for all hogs and pigs on December 1 is 100.0%. Hogs kept for breeding at 100.0%. Hogs kept for marketing at 99.9%. The National Daily Direct Afternoon Hog report showed cash down $2.50 on Friday. There is little expectation for stronger cash today. Cutout values increased $1.13. The Commitment of Traders report showed fund traders reducing their long positions by 17,107 contracts with their current net long position at 118,899.
| BULL SIDE | BEAR SIDE | ||
| 1) | Steady to higher cash cattle last week and expectations for steady cash this week should support the market. | 1) | The packers may not be very aggressive this holiday week as they may have a significant amount of cattle purchased ahead. Prices could drift lower. |
| 2) | The Cattle on Feed report was neutral leaving the potential for traders to feel more comfortable adding to their long positions. | 2) | There is concern the demand for beef could slow resulting in lower slaughter. Feedlots may not receive higher prices by holding out for higher cash. |
| 3) | The Hogs & Pigs report may show some adjustments relative to the previous report which may show the supply of hogs may be less than reported. | 3) | The upcoming Hogs & Pigs report could result in traders positioning ahead of the report by liquidating some of their long positions. |
| 4) | Traders were confident buying more aggressively on Friday ahead of the report due to the confidence demand will remain strong. | 4) | Reduced hog slaughter during the holiday may leave the packers less aggressive. There is little strength expected in the cash market. |
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