Price action: Lean hog futures faced profit-taking pressure to close out the week as traders evened positions ahead of this afternoon's Hogs & Pigs (H&P) Report. Futures ended slightly to moderately lower relative to last week's close.
5-day outlook: This afternoon's H&P Report is getting a negative read by the market, as it showed all major categories even with year-ago levels and points to at least steady pork production in 2013 compared to 2012. Year-to-date hog slaughter is 1.7% higher than last year and total pork production is up 1.8% from 2011. Traders will also be focused on closing their books for year-end when they return on Monday.
30-day outlook: Also key as the calendar flips to January will be how the pork market performs. A lot is riding on fiscal cliff talks, as another breakdown in negotiations would result in further erosion of consumer confidence. But pork remains a "value" in comparison to beef and pork exports remain a bright spot for the market.
90-day outlook: Farrowing intentions of steady to down slightly from year-ago suggest high grain prices have not yet trimmed producers' production plans significantly. But if drought conditions linger into 2013, this could change as high feed costs would stick around for another year.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Carry all corn-for-feed and soybean meal risk in the cash market for now.
Price action: Live cattle futures were supported by news of $1 higher cash cattle trade getting started across the Plains. Futures ended near weekly highs and near week-ago levels.
5-day outlook: December live cattle futures ended the week at more than a $2 premium to the cash market and the contract expires on Monday. February live cattle have further cash improvement priced in as traders expect tightening supplies will keep the cash market pointed higher over the near-term. Key to near-term demand for cash supplies will be if fiscal cliff negotiators strike a deal this weekend, which would help shore up consumer confidence, which is vital for the beef market.
30-day outlook: Cattle slaughter in 2012 is projected down 3.6% from year-ago and beef production is projected 1.3% lower based on this afternoon's red meat production report. In 2013, further production declines will be seen, which is supportive for deferred-month live cattle futures.
90-day outlook: The cattle market will be as much of a weather market in 2013 as corn was in 2012. That's because it will take improved pasture conditions in order to encourage producers to move heifers out of the feedlots and into the breeding herd.