Monday Morning Livestock Market Update - Mixed Trading Expected to Begin the Week

GENERAL COMMENTS:

It took until Friday for cash cattle to trade again, and it was well worth the wait. Southern live cattle traded steady to $2.00 higher, while Northern dressed traded $5.00 higher. Packers keep holding out, hoping for something that would reduce cash prices for cattle, but the wait has no impact. Feedlots know that supplies are tight, and they have little need to move the cattle they hold. Boxed beef prices were higher with choice up $1.47 and select up $0.66. The Cattle on Feed report may not be much of a market mover. It was considered neutral overall, with placements a bit bearish because it was higher than expected. One feed as of Dec. 1 was 96.9%, placements in November were 94.6%, and marketings were 102%. The Commitment of Traders report showed the fund traders increasing their long positions in live cattle by 1,122 contracts to a net long of 101,471. The net-long position in feeder cattle increased by 357 futures contracts to 17,405.

Hogs were mixed moving into the weekend. The substantial moves higher during the week prompted some profit-taking into the weekend in the nearby months. There was no fundamental reason for the slight decline in some contracts, as the trend remains higher, and demand seems to be improving. New contract highs were made on Friday. The National Daily Direct Afternoon Hog report showed an increase of $0.47. It is usual to see cash strength on Fridays. Pork cutouts were higher, posting a gain of $1.13. The Commitment of Traders report showed the fund traders adding 13,558 futures contracts, bringing their net-long position to 92,216.

	BULL SIDE		BEAR SIDE
1)	The continued tight cattle supplies keep the market supported, and packers have to bid up to obtain the cattle they need.	1)	Cattle futures have not been able to break through technical resistance. A neutral Cattle on Feed report may keep the upside limited for now.
2)	The Cattle on Feed report was neutral and may not influence the market much today. The placement number being a little higher than estimated should not harm the market.	2)	The cattle market seems to be tired, and higher prices may be more difficult to unfold. This may be the level it remains at for a while.
3)	The trend in hog futures remains up, providing confidence for traders to buy and hold.	3)	Hog futures have had a substantial run higher, and it may be near the level at which a price retracement may take place.
4)	Pork cutouts are finding good support with the price trending higher. This indicates good demand.	4)	There may be limited upside strength for hog prices as there are sufficient hogs available and ready for the market.