DTN Early Word Livestock Comments

Cattle: Steady Futures: Mixed Live Equiv $155.85 -0.89

Hogs: Steady Futures: Mixed Lean Equiv $ 85.91 +1.61**

* based on formula estimating live cattle equivalent of gross packer revenue

** based on formula estimating lean hog equivalent of gross packer revenue

General Comments:

Cash cattle markets remain quiet early Monday morning with both sides assessing overall holiday week movement. The underlying support in cash markets seen ahead of the Thanksgiving break may spark some additional movement through the first week of December. Cash cattle prices last week were reported at mostly $111 per cwt live and mostly $174 per cwt dressed. This is $1 (live)and $2 (dressed) per cwt higher than the previous week with most of the business developing on Wednesday. Packers are expected to be focused on post-holiday inventory taking, while showlist distribution will be seen through feedlots, although bids and asking prices are not expected until later in the week. There will be significant attention given to the release of average cash prices Monday morning, which will help create a baseline for the upcoming week, and likely the month of December. Futures trade is expected to remain mixed as increased volume is likely to move back into the complex. The overall support across the complex in late November continues to add expectations of moderate price momentum through the end of the year, although trade will remain very dependent on the ability to sustain and continue gains in beef values. The pullback in boxed beef values Friday is not expected to shake the market significantly due to "holiday trade", but at the same time, traders are starting to become very cautious in the event that recent upward market movement starts to wane in the coming days.

Strong underlying market support remains firmly planted in lean hog futures trade following the rally over the last couple of weeks. Even though prices eroded during the holiday-shortened Friday session, prices remain near resistance levels, with the opportunity to end the month of November at month-long highs. It is still uncertain just how active traders will become during the opening minutes of trade, but the focus on firming pork values late last week could help to regain moderate-to-active buying interest, which has hovered on the sidelines over the last few trading sessions surrounding the Thanksgiving holiday break. Traders will continue to focus on underlying pork movement through the end of the year. This will take export and domestic market activity into account but will likely lead to additional underlying support in lean hog futures. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady 50 cents higher. Slaughter Monday is expected at 488,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle market gains last week will create expectations of firm underlying support during the first week of December. Cattle feeders are expected to elevate early week asking prices in order to take advantage of packers need to gain access to additional market-ready cattle over the next couple of weeks.	1)	Choice beef cutout values posted the most aggressive loss in over a month Friday afternoon. This is creating underlying concern that the aggressive market run higher may be coming to an end after cutout values have rallied nearly $40 per cwt during the month of November.
2)	Nearby feeder cattle futures have rallied $5 per cwt in the last week, and $14 per cwt in the last month. This upward movement is sparking renewed underlying support through the entire complex. At current levels, the potential to set short-term highs during the upcoming week is creating further market momentum.	2)	Firm market pressure in live cattle futures at the end of the week is creating market uncertainty as trader volume returns to a normal schedule, and end of month positioning may lead to further price pressure Monday morning.
3)	Strong gains in pork cutout values developed Friday, creating the potential for further underlying market support as trade volume returns to normal following the holiday week.	3)	Cash hog values have continued to show limited but noticeable weakness during the last full week of November. The concern that current market-ready hog supplies and the reduced holiday processing schedules will put even more pressure on cash hog prices is creating uncertainty in the entire complex.
4)	A move above $67.67 per cwt in spot February futures would break through resistance levels, likely sparking additional technical buyer support through the end of the year.	4)	Limited pork exports to China over the past two report cycles is adding to the concern that the recent growth and rebuilding of domestic pork production in China could be limiting long-term movement of pork to the country and entire Asian region. This would impact long-term market direction, given the current size of the U.S. hog herd.

Rick Kment can be reached at rick.kment@dtn.com

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