DTN Early Word Livestock Comments

Cattle: Lower Futures: Mixed Live Equiv: $261.04 -$1.94*

Hogs: Lower Futures: Mixed Lean Equiv: $104.36 -$0.02**

*Based on the formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. The index has been updated to depict recent changes in live cattle weights and grading percentages.)

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

GENERAL COMMENTS:

Cattle futures have been unable to penetrate price resistance and close the chart gaps. This triggered selling as closing the gaps below the market may be easier to accomplish. The optimism of steady to higher cash has waned as boxed beef prices are not finding solid support. Boxed beef was lower in all categories, with choice down $2.79 and select down $2.67. Cash cattle may not trade today as business may wait until later on Friday due to the Cattle on Feed report being released then. The trade estimates for On Feed as of Dec. 1 are 98.3%. Placements in November are estimated at 92.4%. Marketings in November are estimated at 88.4% of a year ago. Placements will be lower, but lower marketings will more than offset the decline. Estimates for placements range from 84.4% to 96.0%.

Hog futures retraced after some profit-taking was triggered. The lower opening indicated that traders anticipated fundamentals may not support prices at this level. However, cash increased on the National Daily Direct Afternoon Hog report, gaining $0.26 on a moderate volume of hogs purchased. It is estimated that much of the buying for the holiday period has been completed. Pork cutout values were $0.02. This could provide some support today. Hog slaughter remains strong and higher than last week and a year ago. Hog weights finally declined with a weekly average of 294.1, down a pound from the previous week.

	BULL SIDE		BEAR SIDE
1)	Cattle futures have a chart gap above the market that will likely be filled before the close of the year.	1)	Cattle futures have not been able to penetrate resistance and close the chart gaps on the upside. The lower gaps may be the next target.
2)	The Cattle on Feed report might be supportive to the market as placements remain substantially below a year ago.	2)	Boxed beef prices continue to show weakness. Demand has not been as strong recently, with consumers reducing purchases due to high prices.
3)	Weekly hog weights declined by 1.0 pounds, totaling 294.1 pounds. This has been the first decline since the week of Aug. 27.	3)	Hog futures may be ripe for a further price retracement moving toward the holidays.
4)	The hog slaughter pace remains strong, with packers processing more hogs to keep up with demand.	4)	Even though weekly hog weights declined last week, hogs remain 4.6 pounds heavier than a year ago.

For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.

Robin Schmahl can be reached at rschmahl@agdairy.com

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