Cattle traded on a dressed basis in Nebraska Thursday at $170-$172, down $1-$2 from last week. There also was light additional trade in Kansas at $106.00 live, steady with Wednesday's trade. Texas remains at a standoff. Bids were no better than $106.00 last night, with feedlots continuing to hold for at least $107.00 based on the futures market. Trade is expected today, with the direction of futures trade very important to prices. Some in the market expect trade to take place ahead of this afternoon's Cattle on Feed Report. That report is expected to show a sharp increase in placements over last year's anemic pace.

The choice cutout was up $0.90 at $172.81 last night, with the select up $69 at $170.86. Spot volume was improved after a somewhat slow Wednesday. Ribs continued to receive a good call and choice values rebounded a bit. Loins were able to work a little higher as well. Chucks and rounds continued firm on strong export demand.

Today's Cattle on Feed Report is expected to show a sharp increase in the level of placements during December. The average of analysts' estimates is 113.7%, with the highest estimate at 120.6%. Marketings also are expected to have been robust, with the average estimate at 105.2, Numbers of Cattle on Feed as of January 1st are expected to be up about 4% from last year.

HOGS

Cash hog calls are mostly steady/firm this morning. Most packers are out of the market for the week, so the trend is left up to our packer in the West who sets the topside. Bitterly cold temperatures have settled in over the Midwest, but they are expected to moderate into next week.

The pork cutout lost $0.06 last night. Loins were quoted as mostly steady/weak. Butts were 2-3 cents lower. Ribs remained strong and were quoted higher again. Light and middle weight hams were quoted steady, while heavy hams were unquoted. Bellies also were unquoted again though we hear there was some trade at steady to higher prices.

The Cold Storage Report this afternoon is expected to show end of December pork belly stocks at around 59.5 mill lbs compared to 56.8 mill lbs last year and 37.7 mill lbs at the end of November. This would be the largest in-movement for December since 1998. Total pork stocks are expected to be slightly over year ago levels at the end of December after running well under for most of the year.

- Note: two people are in hospital in Hong Kong with swine flu. At this point, it doesn't look as though it will affect the market, but it is something to keep an eye on.