Thursday Morning Livestock Market Summary - Mixed Trade Expected

 General Comments:

Cattle were up, up and away. The increase of futures does not show any real significance on the charts, but the fact that traders are interested in buying after a bearish Cattle on Feed report, provides the feeling that they believe the bottom is in. Increasing futures provides feedlots with the hope of no worse than steady cash prices this week. Bids and offers should surface Thursday with some business expected to be done. The increase of coronavirus cases in the U.S. and European Union is cause for concern over this impact it may have for beef demand from the food service industry. Boxed beef cutout prices continue to struggle.

Hog futures diverged from the cattle Thursday moving lower almost to the same extent as the gains seen in feeder cattle. December and February contracts did not break below the low set on Monday. However, later contracts did move lower, filling the price gaps left on Sept. 10. Technically, this is a good sign. The large decline of futures over the past two weeks has not reached a level to trigger bottom picking. Cutouts took a big hit, adding to the bearishness of the market. Futures are oversold, but not enough to trigger short-covering. Cash is expected lower.

	BULL SIDE		BEAR SIDE
1)	Traders seem to think lower cattle futures were a buying opportunity. This provides more confidence the market had been overdone to the downside and a further price retracement is necessary.	1)	Cattle futures have shown resiliency so far this week but continued higher prices may be a tall order without the support of boxed beef.
2)	Higher futures may bring packers to the table at steady-to-higher bids as they seek to procure sufficient cattle for the week.	2)	Demand may suffer to some extend due to the surge of the coronavirus again as further restrictions on restaurants and catering may have a bearish impact as this may not be offset by an increase in retail demand.
3)	Hog futures are ripe for some short-covering and Thursday and Friday before the weekend. Price support holding in the December and February contracts could increase trader buying interest.	3)	Hog futures are on the very edge of breaking chart support and fill the price gaps remaining in December and February contracts about $1.50 below Wednesday's close.
4)	Lower cutouts should improve demand interest, keeping pork moving. This should establish a bottom as consumers will turn to a less expensive meat with more meals eaten at home.	4)	Pork cutouts are struggling, falling to the lowest levels since mid-September. This provides little incentive for packers to bid higher.

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