Friday Morning Livestock Market Update - Cattle on Feed Report After the Close Today

GENERAL COMMENTS:

Feedlots continue to hold out for higher cash and seem prepared to hold cattle until next week if they do not get what they want. Earlier this week, cash trade took place at steady money with last week. This indicated it would set the tone for the week. However, that does not seem to be the case. The feedlots have drawn a line in the sand, and they intend to make the packers cross that line and pay higher prices. In the meantime, futures continue to make new contract highs. Trades may pull back a bit Friday as they position themselves ahead of the Cattle on Feed report this afternoon. The average estimate for on-feed as of Jan. 1 is 99.8% of a year ago. Placements in December at 101.8% and marketed in December at 101.3%. Placements are expected to be the wild card with the range of estimates from 98.8% to 107.1%. Lower boxed beef prices may provide some pressure along with some profit-taking. Choice cuts declined $1.06 with select down $0.78.

Hog futures just could not get anything going with a mixed close. It was surprising to see cash higher again Thursday with the National Daily Direct Afternoon report up $0.99. The packers should be done for the week with lower cash expected Friday. Cutouts posted a nice gain of $1.60. The combination of higher cash and cutouts may provide support. Slaughter has been running below a year ago for the past two days, likely due to some plants having mechanical issues. This may be made up on Saturday with a higher slaughter number.

	BULL SIDE		BEAR SIDE
1)	The trend remains up as traders continue to push cattle futures to new highs. Tight cattle supplies and good demand support the market.	1)	Cattle prices will not go up forever and will find a level at which liquidation will be triggered in the futures market.
2)	Feedlots are determined to get higher prices for cattle this week and are prepared to hold them over the next week if they do not receive it.	2)	Boxed beef has been choppy and mixed this week, indicating a threshold may have been reached.
3)	Cash hogs have increased each day this week with the packers aggressively looking for hogs. The numbers of market-ready hogs may be tightening.	3)	Packers may have finished buying hogs for the week, which may keep futures from moving higher ahead of the weekend.
4)	If hog futures build support at this level, traders might be more aggressive buyers for the long term.	4)	Hog futures may have limited upside as cutouts have remained choppy this week. Consistent support remains elusive.