Monday Morning Livestock Market Update - Traders May Adjust Portfolios For End of The Year

GENERAL COMMENTS:

It was a successful week for the cattle complex. Even though trading activity was lighter than usual due to the Christmas holiday, traders followed the fundamentals and reacted accordingly. Cash cattle traded higher with Southern live cattle up $1.00 and Northern dressed cattle up $2.00. Boxed beef prices were higher with choice up $1.99 and select up $2.36. Demand is strong with packers needing to remain aggressive. The June and later live cattle and all of the feeder cattle contracts pushed through and closed above technical resistance opening the way to retest the contract highs. The December live cattle contract will cease trading on Tuesday with February taking over as the lead contract. The January feeder cattle contract closed at the highest level since May 28. It is another holiday-shortened week and the close of another year.

Hog futures traded on both sides of unchanged with only the front-month February contract posting a slight loss. The market may be under pressure early Monday in reaction to both lower cash and cutouts on Friday. The National Daily Direct Afternoon Hog report showed cash down $1.81 with cutouts down $0.62. There is a potential packers may be aggressive early in the week as they may want to procure most of their needs early rather than wait until after the holiday. Futures have been holding in a sideways pattern and may remain choppy throughout the week.

	BULL SIDE		BEAR SIDE
1)	Live cattle and feeder cattle futures pushed through and closed above resistance. This should open the way for further upside potential.	1)	Weekly beef export sales were down 85% from the previous week. The high prices may continue to impact international demand. The low sales were not due to the holiday week as this was from the previous week.
2)	Beef demand remains strong and may continue that way for the foreseeable future. Packers need to remain aggressive to meet the demand.	2)	If there is any word of the resumption of the importation of cattle from Mexico, the market will react negatively for a short period.
3)	Hog futures have been holding sideways and seem to be building support. The demand fundamentals need to improve to turn the trend higher.	3)	Weekly export sales of pork were down 37% from the previous week. Sales will need to improve or prices could weaken.
4)	The hog slaughter pace remains above a year ago, which should keep supplies from backing up.	4)	Hog futures are expected to remain sideways during the holiday-shortened week providing little direction.