Heavy weights, a sluggish economy and continued fears that consumers are resisting higher beef prices has helped to pressure the market this week, and it may take more back and fill action before the market will be ready to work higher. December cattle closed moderately lower on the session yesterday with an outside-day down, and this turned the technical pattern a bit negative.

June cattle bounced to trade to the highest level since September 25th due to the grain market surge but the market gave back all of the gains late in the day to close just slightly higher on the day. December traded as much as 77 higher into the mid-session but quickly fell back to near unchanged. The rally pushed the market up to the highest level since September 25th but a lack of new buying interest and weaker hogs helped to pressure.

The slow trend higher in the beef market has traders concerned with the ability of the cash market to rally this week and the ability of consumers to absorb higher beef prices and the ability of December futures to hold onto the premium to the cash.

Boxed beef cutout values were up 48 cents at mid-session yesterday and closed 33 cents higher at $191.31. This was down from $191.35 the prior week. Feeder cattle fell sharply on the session with some months limit-down due to a 5% surge in corn. A lack of deliveries supported October cattle early. There were 10 deliveries posted overnight. Cash cattle in Kansas saw light trade at $125.00, up $1.00 from last week.

Slaughter came in at 120,000 head, which was below trade expectations and a slight negative. This brings the total for the week so far to 502,000 head, up from 492,000 last week at this time but down from 512,000 a year ago. The actual production report for the week ending September 27th showed cattle slaughter down 1.9% from last year. However, with the hefty weights, beef production for the same week came in at 517.0 million pounds, up 1.4% over year ago.

Average dressed steer weights came in at 873 pounds, down from 874 the previous week but still up 2.1% from a year ago. The previous week was a record high. The 5-year average weekly weight is 858.0.
 

View All Market Commentary

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

Copyright CME Group All rights reserved.