April cattle closed sharply lower on the session yesterday, and fell to the lowest price levels since February 14th. The market traded slightly lower early in the session, then selling intensified along with large-scale weakness from the grains and equity markets during the middle of the session. Ideas that the beef market may have a more difficult time in moving higher if there is a slowdown in economic growth was thought to have pressured the market. Commodity and equity markets yesterday showed were thought to have shown significant concern for the possibility that energy and food inflation could trigger a slowdown in the global economy and have an negative impact on consumer spending.
Many traders saw the USDA Cattle-On-Feed report from Friday as slightly negative, but the large premium of futures to the cash market along with weakness in equity markets were seen as driving the market sharply lower. On-feed supply as of February 1st was up 5.7% from last year, and some traders view the global surge in energy prices along with a stronger US dollar as strong reasons to expect a slowdown in exports. The monthly cold storage report released after the close showed frozen beef stocks as of January 31st at a higher than expected 460.3 million pounds, up 3% for the month and up 8% from last year. Stocks seasonally remain unchanged for the month, so a 3% jump was seen as a sign of slower than expected demand during January. In addition, chicken stocks were up 23.5% from last year to 778.3 million pounds. The estimated cattle slaughter came in at 130,000 head yesterday. This brings the total for the week so far to 243,000 head, down from 255,000 head last week at this time and down from 250,000 head a year ago. Boxed beef cutout values were up 54 cents at mid-session yesterday and closed 46 cents higher at $169.56. This was up from $168.13 the prior week and is the highest trade since February 9th.