Friday Morning Livestock Market Update - USDA To Release WASDE, Grain Stocks Reports Today

GENERAL COMMENTS:

Northern dressed cattle traded about $5.00 higher with Southern live cattle trading $4.00 higher. The strength over the past few weeks has been incredible. Beef prices continue to increase with choice boxed beef up $2.17 and select up $1.46. Consumers prefer beef and are willing to pay for it. The heavy cattle weights have not hindered the market, but are a blessing, allowing for more meat per carcass. This has also allowed feedlots to remain in the driver's seat as holding cattle for higher prices has not been detrimental. New contract highs were again seen in most live and feeder cattle contracts. Feeder cattle continue to see strong demand at auctions with some seeing double-digit gains over the previous week.

Hog futures had a strong day Thursday, mostly from spillover trading from cattle. Cash and cutouts did not provide much support. The National Daily Direct Afternoon Hog report showed cash up $0.34. Pork cutout values slipped $0.05. It may be difficult for futures to see much upside if further underlying support does not unfold. The increase may have been from the interest in buying the break in anticipation of seasonal weakness nearing the end. Further short-covering could take place ahead of the weekend. USDA will release the WASDE and Quarterly Grain Stocks report today.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle prices will continue to support futures with new highs increasing technical buying interest.	1)	The Commitments of Traders report is expected to show a record-long future position of managed money traders. This increases the caution of traders holding long positions.
2)	The reports that cattle imports from Mexico will partially resume during the week of Jan. 20 have not had an impact on the market. An official announcement has not yet been made.	2)	High prices cure high prices and cash cattle at record highs may be near price resistance.
3)	The strength of hogs may trigger further short-covering ahead of the weekend.	3)	Hogs will need further support from cash and cutouts or futures will fall back.
4)	The seasonal weakness of pork cutouts may have been overdone to the downside. Demand may increase as consumers turn to more pork in the diet due to high beef prices.	4)	There are sufficient hogs available for packers at higher weights, leaving them confident of supply and less aggressive with cash.