April cattle pushed moderately higher during yesterday's session, rising to the highest price level since November 8th and posting the highest close since November 3rd. The strong jump in beef prices late Monday and ideas that the beef supply will tighten into the spring was thought to have supported the market early in the session. Weak packer profit margins have raised ideas that production might slow down in order to support the beef market and recoup margins. Many traders will be watching producer marketings closely to see if any cattle back-up on feedlots. With sluggish beef prices during the past several weeks, negative packer margins and good weather, the rally in cattle futures during the past week caught many traders by surprise although the beef market is beginning to play catch up with a firmer tone yesterday. The USDA believes that 2nd quarter beef production will be up just 135 million pounds from the first quarter. This will be the smallest increase in 12 years, and could enhance the normal seasonal upswing for prices into the spring. Poultry production is expected to pick up as the year progresses but may be down 5% from last year during the first quarter. Retail prices are already at record highs and some traders remain nervous over possible consumer resistance if prices climb even higher into the spring. The estimated cattle slaughter came in at 125,000 head yesterday. This brings the total for the week so far to 248,000 head, down from 262,000 head last week at this time and down from 254,000 head a year ago. Boxed beef cutout values were up 80 cents at mid-session yesterday, and closed 68 cents higher at $184.20. This was up from $182.90 the prior week, and is the highest beef market since January 12th. Cash offers have emerged at $128.00 this week as compared with trades at $125.00 to $127.00 last week.
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