Friday Morning Livestock Market Update - Traders Will Position Ahead of the Cattle on Feed Report

GENERAL COMMENTS:

Traders pushed cattle futures lower, closing the chart gaps below after having been unable to find sufficient buying interest to close the upper gaps. Traders began positioning themselves ahead of the Cattle on Feed report, which is scheduled for release this afternoon. The trade estimates are for On Feed as of Dec. 1 to be at 98.3%, with a range of 97.3% to 99.0%. Placements in November are estimated at 92.4% with a range of 84.4% to 96.0%. November marketings are estimated at 88.4% as of a year ago, with a range of 87.5% to 89.0%. When breaking down the day's that cattle are on feed, the estimates show that cattle on feed of 120- and 150-plus days will be significantly higher than a year ago. Heavier weights indicated cattle are being held longer. Boxed beef prices were mixed on Thursday, with choice up $1.19 and select down $2.46. Some light cash trade took place in Nebraska at $4.00 higher, possibly indicating packers will remain aggressive and pay more for the cattle they need.

Hog futures rejected the weakness of Wednesday to close higher, maintaining the sideways trading range. The weakness of cash and cutouts on Thursday could put some pressure on the market today, eliminating further strength ahead of the weekend. The National Daily Direct Afternoon Hog report showed cash down $1.06, with packers likely done purchasing for the week. Pork cutouts were down $1.11. Bellies were down $7.01, with hams $3.79 lower. Next week will be a holiday-shortened week, containing the Quarterly Hogs & Pigs report on Tuesday. This should have no bearing on trading activity today.

	BULL SIDE		BEAR SIDE
1)	Light cash trade in Nebraska on Thursday at $4.00 higher may have set the stage for higher cash trade for the complex.	1)	Cattle futures have been unable to penetrate price resistance to close the chart gaps above the market. This may limit upside price potential in the near term.
2)	Even if the Cattle on Feed report is negative, traders may look past the report and focus on the bullish fundamentals.	2)	The Cattle on Feed report may show a significant number of cattle on feed at 120-plus days, as cattle are being held, resulting in heavier weights.
3)	The rebound of hog futures on Thursday keeps the market in a sideways trading range and possibly builds support.	3)	Packers may not be aggressive in purchasing hogs today or next week as their slaughter needs will be limited. This could result in lower cash.
4)	Some early indications are that the upcoming Quarterly Hogs & Pigs report might be supportive to the market.	4)	The upcoming Quarterly Hogs & Pigs report may limit the upside price potential as traders' position ahead of the report.