DTN Early Word Opening Livestock

 
Cattle: Steady w/Wed Futures: Mixed Live Equiv $132.15 - 1.07* 
Hogs: Steady Futures: Mixed Lean Equiv $ 81.79 + .24**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Given the appearance of moderate trade volume in most corners of feedlot country Wednesday, there's a good chance that the lion's share of pre-Christmas trade is already completed. We'll be eager to check out Mandatory summaries later Thursday. At the very least, we could see some clean-up trade. Unsold cattle are still priced around $122 in the South and $193 in the North. Live and feeder futures should open on a mixed basis, tied to residual selling on one hand and short-covering on the other.

Look for the cash hog trade to open with basically steady bids. Saturday's kill plans are turning out to be smaller than we expected, possibly no larger than 135,000 head. While hogs are certainly out there to kill, it's tough to find enough workers in the middle of the long Christmas weekend. Lean futures seem also set to begin with uneven prices action thanks to a combination of follow-through buying and pre-report long liquidation of the other.

	BULL SIDE		BEAR SIDE
1)	Fed cattle traded higher on Wednesday, ignoring both deepening board discounts and sluggish wholesale beef demand. Once again, such stubborn cash strength speaks well of feedlot currentness and leverage.	1)	On the other hand, imploding cattle futures at midweek seemed more worried about the likely size of the November placement and the possible burden of 2018 beef production.
2)	Wednesday's extreme sell-off in cattle futures should at least invite some short-covering as traders position before the release of the uncertain Dec. 1 Cattle on Feed report Friday at 11 a.m. CT.	2)	The beef carcass value was hammered again Wednesday with choice cutout quoted sharply lower and box supplies described as "moderate to heavy."
3)	Lean hog futures looked uncertainty in the eye (i.e., the pending Dec. 1 Hogs & Pigs report due out Friday) and laughed. Significant buying interest surfaced on Thursday near 100-day moving averages basis spot February and April. Summer 2018 issues all jumped back over 40-day moving averages.	3)	For the week ending Dec. 16, U.S. hatcheries set 228 million broiler eggs in incubators, up 3% from a year ago. At the same time, chicks placed totaled 182 million chicks, up 1% from 2016.
4)	For the week ending Dec. 15, Iowa barrows and gilts averaged 285 pounds, 1.1 lbs. lighter than the previous week (though the scale ticket remains 5.2 lbs. heavier than 2016).	4)	Further buying of lean hog futures seems unlikely with a new quarterly hog inventory close to the doorstep. Furthermore, the seasonal index for February hogs points lower into contract expiration.

OTHER MARKET SENSITIVE NEWS
CATTLE:

(NCBA) -- After much debating, Congress has released a final tax-reform bill, wherein some personal exemptions will be eliminated while also increasing standard deductions.

Craig Uden, president of the National Cattlemen's Beef Association (NCBA), issued a statement saying: "The Tax Cuts and Jobs Act makes a number of changes to the current tax code that will benefit family ranchers and farmers, including the expansion of key provisions livestock producers rely on like cash accounting, bonus depreciation and Section 179.

"While it is disappointing that Congress ultimately passed up this once-in-a-generation chance to fully and permanently repeal the unfair and onerous death tax, the final bill does take a sizeable bite out of the death tax by doubling the exemption rates, and we are grateful for the lawmakers who fought so tirelessly on agriculture's behalf.

"Unfortunately, in order to keep the cost of the bill within Senate budget rules, all of the positive changes affecting individuals, including the higher death tax exemption rates, are set to expire after 2025.

Of course, fourth-, fifth-, and sixth-generation cattle producers tend to think about things in the long-term, and in that tradition, we will continue to fight to reduce the tax burden on family ranchers in the months and years to come."

HOGS: (North Iowa Broadcasting) -- The massive pork processing plant that's under construction in north-central Iowa is approaching an important milestone, as winter arrives Thursday. Ron Prestage, the C-E-O of North Carolina-based Prestage Farms, says the roof is nearly complete on the sprawling structure near Eagle Grove in southern Wright County.

The roof should be finished in a matter of days on the 240-million dollar facility. Almost a year of work remains before the plant is ready to open, but that should be able to continue uninterrupted once the roof is complete. One vital component to the facility's success is water.

Prestage chose to locate the pork plant near Eagle Grove after Mason City officials rejected plans for the plant in their city. The facility will be one of the larger employers in the area and about a thousand people will work at the plant itself, not counting the host of supporting roles, like truck drivers.

The completion of the Prestage Farms pork processing facility is set for late next fall, Prestage estimates about 11 months from now.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

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