December cattle remained in a choppy to higher trading pattern early in Tuesday's session, and then moved sharply higher for the day. The cattle market closed with strong gains yesterday as a lack of evidence that the beef market will begin to fall quickly helped to support prices. Ideas that cash cattle will soon begin to slide due to poor packer margins are thought to have driven the market lower during recent days. However, strength in the beef market and a continued outlook for declining supply ahead were seen as positive factors for the market. Fears that Friday's Cattle-on-Feed report might show a higher near-term supply continues to be a possibly negative short-term condition. The futures market appears for many traders to be less concerned with a potential jump in supply as a significant drop in cash cattle prices will create normal profit margins for packers. Cash cattle hit a record high last week, and the outlook for declining supply in 2012 remains a supportive force for futures. The beef market rose to the highest levels since October 21st, 2003 which is in sharp contrast to a 7-day slide in February cattle futures. The estimated cattle slaughter came in at 129,000 head yesterday. This brings the total for the week so far to 252,000 head, down from 261,000 head last week at this time and down from 261,000 head a year ago. Boxed beef cutout values were up $1.21 at mid-session yesterday and closed $1.85 higher at $194.25. This was up from $189.68 the prior week. Select beef was up $1.06 to $176.14.
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