Tightening supply in the weeks ahead and a strong tone for the cash market plus this week's surge in beef prices are factors which could support a further uptrend over the near-term.

Boxed beef cutout values were up $1.01 at mid-session yesterday and closed $1.14 higher at $195.10. This was up from $191.20 the prior week and is the highest beef market since June 28th.

December cattle pushed sharply higher into the mid-session yesterday trading as much as 107 higher on the day but drifted lower to close just moderately higher on the day. The market pushed to near last week's highs as the surge up in beef prices this week, a strong gain in the stock market and expectations that the cash market trend could remain up into early December helped to support.

The deliveries from Friday were absorbed by commercial traders and there were no new deliveries yesterday and no new deliveries overnight, and this may continue to support the October cattle which pushed to the highest level since September 24th.

Cattle slaughter came in a bit higher than expected at 127,000 head, which sometimes can mean better demand from the packer. This brings the total for the week so far to 253,000 head, down from 255,000 last week at this time and unchanged from a year ago. For the Cattle-on-Feed report on Friday, traders see September placements of cattle onto feedlots down about 15% from last year. Tightening supply of available feeder cattle, drought in the US and surging feedgrain and hay prices are factors which likely contributed to the lower placements, which could come out at the lowest level for September since the new series began in 1996.

Marketings are expected to be down about 10% in September and this is mainly due to the fact that there were two less days for marketings this year as compared with last year. On-Feed supply is expected to come in near 2.0-2.5% below last year for October 1st.
 

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