The market appears to be probing for a near-term low and may be close to absorbing the short-term excess supply which is coming from much higher than normal steer weights. Perhaps the shift to a hotter pattern for feedlot regions will slow weight gains and help clear-up any backlog in supply. The heat in the forecast may not be ideal for consumer demand but commodity markets in general seem to be seeing at least some stability out of Europe, which might help support. August cattle pushed sharply higher early in the session yesterday, but gave back most of the gains into the mid-session and then saw a late run to close back up on the highs and sharply higher on the day. Strength in hogs helped to support. Outside market forces were mixed for much of the day but late strength in the stock market helped. However, sluggish beef demand had traders actively selling the rally early. In addition, weak consumer sentiment readings are not a good sign for beef demand. Heat is expected to slow demand and traders also see wholesalers about done booking 4th of July specials, and this could help pressure beef. Slaughter came in a little higher than expected at 130,000 head. This was unchanged from last week but up from 128,000 a year ago at this time. Boxed beef cutout values were down 81 cents at mid-session yesterday and closed 51 cents lower at $197.49. This was down from $197.69 the prior week. The market seems to have the supply fundamentals to see another strong leg up in 2012 as beef production in the fourth quarter is expected to be down 9.2% from last year.
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