August cattle closed 112 higher during yesterday's session, as some traders were hoping for a steady trading in the cash market this week at the $121.00 and other traders were concerned that cash prices could decline due to a higher showlist. Reports of cash cattle trading at $122.00 in Texas helped to support the market. The market seems to have the supply fundamentals to chop higher into the late summer but we remain concerned with the hefty weights and the short-term demand factors. Weather looks favorable for demand but consumer sentiment is an important factor and could turn worse unless the European issues are resolved. Weekly U.S. beef export sales came in at 18,000 metric tonnes, compared with the prior 4-week average of 16,400. Cumulative sales for 2012 have reached 447,800 metric tonnes, up 6.0% from last year's pace. Cattle slaughter came in at 130,000 head, which was higher than expected and suggests strong demand from the packer. This brings the total for the week so far to 507,000 head, up from 393,000 head last week at this time but down from 509,000 head a year ago. Boxed beef cutout values were up 66 cents at mid-session yesterday and closed 29 cents higher at $197.42. This was up from $197.31 the prior week. However, select beef prices were down 46 cents to $184.31 from $187.05 last week. Average dressed steer weights for the week ending May 26th came in at 839 pounds, down from 841 pounds the previous week but up from 819 pounds last year and up from the 5-year average of 814 pounds. Beef production for the same week came in at 498.8 million pounds, down 0.30% over year ago. The higher than normal weight is keeping production at higher than expected levels. While beef production was down 0.30%, slaughter for the same week was down 3.25%. There are still no deliveries against the June contract.
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