Wednesday Morning Livestock Market Update - Feedlots Seem Anxious to Move Cattle

GENERAL COMMENTS:

It was likely too early for traders to position themselves ahead of the Cattle on Feed report, leaving Tuesday's trading activity the result of uncertainty. Boxed beef prices were mixed with choice down $1.11 and select up $0.11. 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%. A few cattle have already traded this week with prices for both live and dressed steady with last week. Feedlots seem to be anxious to move cattle with more likely to take place Wednesday. The holdouts for higher prices this week may need to hold cattle until next week.

Hog futures were higher in the February contract and then in October and later contracts. The in-between contracts showed strong losses in volatile trading with a range of $3.00 for the day in the June contract. Cutouts showed weakness in both the morning and afternoon reports, which put pressure on the market. The afternoon report showed cutouts down $1.49. Packers remained aggressive looking for hogs with the National Direct Afternoon Hog report up $0.58. Hog supplies are sufficient for increased packer demand, leaving them purchasing to procure the needed hogs but not having to chase the market higher. Liquidation may follow-through Wednesday but the selling should subside as the market has corrected. The recent sharp decline could result in traders buying the break to establish long-term positions.

	BULL SIDE		BEAR SIDE
1)	If cash cattle trade is steady this week, it should support the market as live cattle futures hold a discount to cash.	1)	Steady cash cattle trade this week could be viewed as the price has reached a level of resistance. The caution of traders may increase and trigger fund liquidation.
2)	The cattle complex is correcting from being overbought, but supportive boxed beef prices and strong consumer demand should keep the market supported.	2)	Boxed beef prices have turned mixed, which may indicate that high prices have begun to slow consumer demand.
3)	Hog futures have completed two days of liquidation. It generally runs its course in two to three days. This break might be viewed as a buying opportunity.	3)	Hog futures may have made a significant price correction but may not rebound very quickly due to the weakness of cutouts.
4)	Hog slaughter remains on a strong pace with the packers trying to keep up with demand. This is keeping market-ready hogs current.	4)	Traders have become disillusioned that demand has not been better than it has been due to the high beef prices. The strong slaughter pace has kept sufficient pork available to the market.