December cattle closed 35 higher on the session Friday, and managed to gain 135 for the week. The market traded slightly lower at midday after trading as much as 145 points higher earlier in the session. With December futures having more than a $4.00 premium to the cash market, the beef market may need to have continued strong gains this week in order to support cash prices. Strength in the stock market and improving optimism for the global economy was thought to have supported cattle along with other agricultural markets. Cash cattle traded at $2.00-$3.00 lower last week at $119.00, with some traders feeling that December futures have taken an excessively large premium to cash prices. Weakness in the beef market added to the negative tone. Boxed beef cutout values were down 73 cents at mid-session Friday and closed $1.00 lower at $185.00. This was up from $184.41 the prior week. Weekly U.S. beef export sales for the week ending October 6 came in at 13,900 metric tonnes, compared with the prior 4-week average of 14,750 metric tonnes. Cumulative sales for 2011 have reached 716,500 metric tonnes, up 35.2% from last year's pace. For the month of August, US beef exports totaled 261.9 million pounds from 272.1 million pounds in July and compared with 201.1 million pounds last year. Beef imports were 189.2 million pounds, down from 193.8 million pounds in July and 208.8 million pounds last year. The estimated cattle slaughter came in at 116,000 head Friday and 22,000 head for Saturday. This brought the total for last week to 650,000 head, down from 666,000 head the previous week and down from 662,000 head a year ago. Beef production for the week was 501.5 million pounds, down 3.7% from last year. The USDA supply/demand update last week showed 2012 beef production revised down by 30 million pounds, exports were revised higher by 180 million pounds and imports were adjusted down by 320 million. This pushed 2012 per capita beef supply to 54.3 pounds compared to 57.7 pounds for 2011 and 59.6 pounds for 2010 and is the lowest since at least 1971. As a result, total supply in the US will be down 5% in 2012 from 2011.
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