Morning Cattle Market Report

 
on May 04 2012 9:55 AM

The cattle market traded sharply higher during yesterday's session, as many traders feel the market was strengthened by news that Wal-Mart may expand their use of choice beef going into the summer. Wal-Mart expanded to include choice beef last year and as they expand, some traders feel that the total short-term pipeline for beef will increase and lead to stronger beef demand. Ideas that consumer demand will improve during the next few weeks going into the most active weekend demand period of the year for beef, as well as the current discount of June futures to the cash market is widely seen to be providing support to the market as well. The short-term supply situation, reflected by cattle coming off feedlots, is still somewhat plentiful but with cash corn values up and recent weakness in cash cattle, feeding margins have been hit hard and many traders will begin to anticipate a sharp decline in feedlot placements during April, May and June. In addition, pasture and range conditions are much better than last year, which may help to keep cattle away from feedlots. In addition, non-fed cattle slaughter could be slower than normal into the summer as more heifers could be held back from pasture. Average dressed steer weights for the week ending April 21st came in at 835 pounds, down from 837 pounds the previous week but still up from 818 pounds last year. Beef production for the same week came in at 464.9 million pounds, down 4.81% over year ago. June cattle took out the range of the previous three trading sessions and closed up the 3 cent limit. Weekly U.S. beef export sales for the week ending April 26th came in at 16,800 metric tonnes, compared with the prior 4-week average of 19,900 metric tonnes. Cumulative sales for 2012 have reached 359,800 metric tonnes, up 4.5% from last year's pace. While not outstanding, some traders feel that this report does not show a negative reaction from the case of mad cow. Boxed beef cutout values were down 20 cents at mid-session yesterday and closed 22 cents lower at $190.96. This was up from $190.74 the prior week. The estimated cattle slaughter came in at 126,000 head yesterday. This brings the total for the week so far to 490,000 head, up from 488,000 head last week at this time but down from 518,000 head a year ago.

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