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DTN Early Word Opening Livestock       12/05 06:31
   Cattle Futures Searching for Short-Term Support

   Active pressure in cattle futures Wednesday left the market looking for
late-week stability. Although losses have done little long-term technical
damage at this point, the concern of a changing trend is adding increased
anxiety through the complex.

By Rick Kment
DTN Analyst


Cattle: Steady             Futures: Lower   Live Equiv $147.87 -1.71*
Hogs:   Steady to higher   Futures: Mixed   Lean Equiv $ 85.97 +0.39**

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

GENERAL COMMENTS:

   The direction of cash cattle markets has not yet been established for the
week with just a few cattle sold midweek in parts of the South. Although the
sold cattle were priced at $119 to $119.50 per cwt, the lack of volume makes
overall test too light to establish an accurate trend. It is expected that
packers will become more aggressive through the day Thursday, although active
trade may still not develop until late Thursday or early Friday. The focus
throughout the complex continues to be based on increased packer needs with
Tyson's Kansas plant ramping up production. Although this week's numbers will
not show significant gains on a day-to-day basis, the focus on keeping plants
full given current margins is strong incentive for packers buy cattle at
steady-to-higher price levels. Futures trade shifted lower Wednesday, with
triple-digit losses in all nearby live cattle and feeder cattle trade. Although
the losses brought about increased anxiety, the fact that live cattle futures
have held firm gains through the last couple of weeks is currently keeping
prices contained in a sideways price shift. With February futures at $124.17
per cwt, prices are still holding above initial support levels of $123.85 per
cwt. If markets can maintain these support levels through the end of the week,
limited short-term downside pressure is expected. Given the wide price swings
in feeder cattle futures during November, even the strong losses this week have
kept the complex within a wide, but sideways trading range. Thursday slaughter
runs are expected at 120,000 head.
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