Thursday Morning Livestock Market Update - Steady Cash Cattle Trade Expected

GENERAL COMMENTS:

Cattle futures exploded Wednesday as buyers piled into the market. The recent weakness was negated and then some with all contracts for live and feeder cattle setting new contract highs. The February live cattle contract closed above $200. Some early cash trades this week indicated cash could trade steady with last week. Traders took the discount futures held to cash out of the market. Traders may begin to look ahead to the Cattle on Feed report to be released on Friday, but this may leave futures mixed with limited liquidation ahead of the report. The Cattle on Feed report average estimate for on-feed as of Jan. 1 at 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%. Boxed beef prices were lower with choice down $0.03 and select down $1.56. Weekly export sales are delayed until Friday.

Hog futures managed to close higher Wednesday, supported by packers aggressively purchasing hogs and paying higher prices. The National Daily Direct Afternoon Hog report showed cash up $1.51 with a weighted average price of $81.26. Packers purchased most of their needs for the week with lower cash expected. The liquidation subsided with follow-through selling running its course with buyers becoming more aggressive. Pork cutouts continue to struggle with values down $0.65 on Wednesday. Hog weights declined by 0.5 pounds last week to an average of 291.7 pounds.

	BULL SIDE		BEAR SIDE
1)	New contract highs for live and feeder cattle futures keep the uptrend intact. Traders continue to trade with the trend.	1)	The cattle market may be near the top if boxed beef prices cannot find consistent support. Boxed beef prices have been mixed or lower for the past week.
2)	Cash cattle are expected to trade no worse than steady, which will support the market at the current level. Packers will need to purchase cattle to meet demand.	2)	The Cattle on Feed report could limit the upside price potential if placements were higher than expected.
3)	Hog futures seem to have corrected and may now be viewed as a buying opportunity by traders anticipating demand improving due to record-high beef prices.	3)	Pork cutouts continue to struggle with plentiful hogs keeping the market supplied. Packers can purchase hogs without difficulty.
4)	Hog weights declined last week by 0.5 pounds to an average of 291.7 pounds. This is 0.4 pounds below a year ago.	4)	Hog futures may move in a sideways pattern at best in the near term as the market sorts out the supply and demand balance. Futures may remain choppy.