Canada and China signed trade agreements overnight which included a deal to resume beef and tallow exports after Canadian beef was banned for nine years due to mad cow. This appears symbolic and should not have too much immediate impact on the cattle futures market. April cattle posted the lows of the day session near the opening yesterday and closed sharply higher on the session. The market traded moderately lower early in the session, led by weakness in outside market forces. Continued debt concerns in Europe plus weakness in metal and energy markets and a bounce in the US dollar helped to pressure. However, higher beef prices and talk that cattle slaughter Monday was a bit higher than expected lent support. In addition, a turn to trade moderately lower on the day for the US dollar and a bounce in the stock market also were supportive. The estimated cattle slaughter came in at 127,000 head yesterday, which was higher than expected for the second day in a row and suggests stronger than expected demand from the packer. This brings the total for the week so far to 251,000 head, up from 239,000 last week at this time and up from 249,000 a year ago. Packer margins are still deep in the red but have improved significantly since last week, and this has added to the positive tone. Boxed beef cutout values were up 99 cents at mid-session yesterday and closed $1.02 higher at $185.68. This was up from $183.23 the prior week and was the highest beef market has been since January 12th. Cash cattle in Texas and Kansas traded $1.00 lower on the week last week to $123.00. The COT reports as of January 31st were positive showing non-commercial traders were net long 85,643 contracts, an increase of 7,221 for the week and the buying trend is a short-term plus.
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