Friday Morning Livestock Market Update - Feedlots Hold For Higher Prices

GENERAL COMMENTS:

Cash cattle were expected to trade higher Thursday, but when they did traders became aggressive buyers. The February contract pushed through technical resistance while later contracts made new highs. Feeder cattle followed suit but led the way with greater gains. Southern lived cattle sales were $2.00 to $3.00 higher. There is potential for Northern dressed sales to see even greater gains. Futures are adjusting higher to remain in line with cash. This buying interest is likely to have managed money traders holding a record-long position. Boxed beef closed lower for the second day with choice down $0.74 and select down $0.29. Feeder calves and cattle at auctions continue to bring higher money as demand remains strong.

Hog futures showed some buying interest at the lows on Thursday as traders bought the break. The market was not supported by cash or cutouts. The National Daily Direct Afternoon Hog report showed a steady price compared to the previous day. The packers should have most of their business done and may not be aggressive Friday. Pork cutouts were unable to find support with values down $0.98. The weakness of cash and cutouts may be due to the two, back-to-back holiday weeks; better demand and the resumption of regular slaughter may support the market.

	BULL SIDE		BEAR SIDE
1)	New contract highs in cattle will keep technical traders active as they trade with the trend. The fundamentals also provide support for higher prices.	1)	The demand for beef may slow as the prices move to record highs. International demand may be affected as buyers turn away.
2)	Packers are short-bought and need to purchase cattle. Feedlots continue to hold for higher prices, requiring packers to pay up or go without cattle for slaughter.	2)	If there is any indication of the resumption of feeder cattle imports from Mexico, traders may liquidate as a knee-jerk reaction to the news.
3)	The lower opening and lower early trade were rejected as the day progressed. Traders increased their interest in buying the break.	3)	Weekly hog weights increased by 2.6 pounds from the previous week, averaging 292.3 pounds, just 0.2 pounds below a year ago.
4)	Demand is likely to improve with packers more aggressive next week as the slaughter returns to normal. Packers will need hogs to maintain full slaughter schedules.	4)	Packers should have most of their purchases done for the week and will lower their bids Friday for any hogs that will be offered for sale.