February cattle closed slightly higher for the session yesterday and posted the highest close since November 4th. Ideas that packers will be forced to pay-up in the cash market this week due to tightening supply of available feedlot cattle helped to support the market. However, some concerns of increased consumer resistance if the beef market pushes much higher was thought to be a negative factor for the market. Many traders feel that the accommodative monetary policies in the US and China during the months ahead will be beneficial to commodity markets around the world, and that investors will be especially attracted to markets which have tightening supply during an expanding demand environment. The USDA Cattle Inventory report for Friday is expected to confirm a shrinking cattle supply. The southern plains drought last year contributed to the continued decline in the herd to the smallest cattle inventory in over 50 years. Traders look for a 1.5% decline in the total supply to near 91.2 million head. The estimated cattle slaughter came in at 121,000 head yesterday. This brings the total for the week so far to 369,000 head, down from 387,000 head last week at this time and down from 382,000 head a year ago. Boxed beef cutout values were up 97 cents at mid-session yesterday and closed 65 cents higher at $184.85. This was up from $182.53 the prior week and is the highest beef market since January 12th.
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