GENERAL COMMENTS:
Live cattle futures chopped around spending little time in positive territory in general. The Cattle of Feed report was digested and provided little direction for traders. Cash likely will not trade until later in the week and may be lighter than usual due to the holidays. It is uncertain how aggressive the packers will be due to having purchased cattle for deferred delivery last week. They could try to do the same this week to better position themselves. Boxed beef prices were higher with choice up $0.13 and select up $0.84. January feeder cattle showed significant strength on Monday as it was the contract that traders were able to push to take advantage of the movement to scalp a quick profit. It is a shorter trading day today with the markets closing at 12:05 Central time.
Traders seemed to position themselves ahead of the Hogs and Pigs report by spreading or liquidating to limit risk. The report did not show anything significant and is neutral to slightly bearish. All hogs and pigs on December 1 were 101%, kept for breeding was 100% and kept for marketing was 101%. All hogs and pigs kept for marketing categories were 1% higher than expectations. The Sep-Nov pig crop was 1.5% higher totaling 35.238 million head and a record number for this quarter. Pigs per litter were 1.4% higher than expected. The rest of the categories were close to expectations. The packers were aggressive in the cash market with the National Daily Direct Afternoon Hog report showing a gain of $2.61. Pork cutouts did not fare well declining $2.66. The packers may not be very aggressive today as it is a shorter trading day and Christmas Eve and most may not be willing to do business.
| BULL SIDE | BEAR SIDE | ||
| 1) | Live cattle futures are holding support and are trading in a sideways pattern. Traders may be willing buyers at technical support levels. | 1) | The packers had been able to purchase cattle for deferred delivery last week which may limit their need to be aggressive this week or they may be able to further increase ownership to position themselves better for the following week. |
| 2) | Cash cattle trade is not expected until later in the week but the expectation is for cash to be no less than steady with last week. | 2) | Light trading activity may result in cattle futures drifting lower as no usual government reports will be available. |
| 3) | The recent decline of hog futures and the weakness on Monday may have the bearish aspect of the Hogs and Pigs report factored in. The break might be viewed as a buying opportunity. | 3) | Trading activity in hog futures may be light allowing some of the bearish aspects fo the report to influence the market resulting in lower prices. |
| 4) | The packers will need hogs this week and are expected to be aggressive after Christmas. This should provide support to the market. | 4) | Without some of the usual government reports today, many traders may opt to stay out of the market if they do not see any significant reaction to the report. That generally results in price weakness. |
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