The market has consolidated in the past few sessions as the technical set-back from last week failed to find either a peak in beef prices or a sluggish demand tone to help confirm the top. In fact, beef prices continue to advance and reached a 7-week high. Traders also see a higher cash market this week. The premium of futures to cash plus a continued concern over the possible increase in non-fed and cow slaughter into the fall are factors which could limit the advance.
October cattle closed 20 higher on the session yesterday as a jump in grain markets, strength in other commodity markets and a weaker US dollar all helped to support. The range for the session was only 50 points as traders absorbed higher beef prices and a more positive tilt from the USDA report from Friday. It was an inside trading session of Friday's relatively small range.
The premium to last week's cash trade was seen as a negative force but was offset by a firm tone for the cash market this week plus ideas that Friday's Cattle-on-Feed report was supportive. Placements were down 10% from last year, and this was a bigger drop than expected and provided some early support as well.
Boxed beef cutout values were up 36 cents at mid-session yesterday and closed 82 cents higher at $193.85. This was up from $186.89 the prior week and is the highest beef market since July 2nd. Traders believe beef prices are near a short-term peak once retailers fully book Labor Day features.
Slaughter came in well above trade expectations at 129,000 head, which could mean strong demand from the packer. This was up from 122,000 last week and up from 126,000 a year ago as this time.
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