The cattle market could not hold together on the rally yesterday, as October futures closed lower and December futures slightly higher but well off of the highs. Supply factors have helped to support this recent rally and when the stock market and grain markets saw a negative turnaround, many traders viewed this as a signal of weaker demand. Beef volume was slow this week, which some traders feel contributed to ideas that packers may not pay-up in the cash market over the near future. As a result, the premium structure in cattle and a collapse in most other agricultural markets were seen as negative factors going into the close. Weakness in energy and metal markets also was seen as pressuring the market early. The supply outlook remains supportive after the cattle report from Friday but the upside may be limited until there is a stronger reaction from the cash market. Some traders see cash cattle trading near $119.00 this week, up $3.00 from last week while others see a weaker tone for the beef market and negative profit margins from packers as reasons to suspect trading will occur near $117.00 at best. Cash traded at $116.00 last week with $116.00 bids and $120.00 offers this week. The estimated cattle slaughter came in at 130,000 head yesterday. This brings the total for the week so far to 389,000 head, down from 392,000 head last week at this time but up from 383,000 head a year ago. Boxed beef cutout values were down 41 cents at mid-session yesterday and closed 5 cents lower at $183.00. This was down from $184.25 the prior week and is the lowest beef market since September 12th.
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