The market has seen an impressive three-day surge higher with a much more positive tilt to outside market forces and ideas that the severe heat in the central plains (all-time record highs posted for Dodge City Kansas this weekend) will dent supply. However, while lighter weights could help, traders now see very hot weather on the east Coast beginning this past weekend as a negative force for consumer demand. At 95-100 degrees, consumers tend to stay indoors and consume less beef. Through Tuesday, fund traders were in a long liquidation selling mode but this may have shifted the other way with a more positive tone for the economy. However, high grain prices may help keep short-term supply ample and the surge higher last week leaves August futures at a significant premium to the cash market. Boxed beef cutout values were down $1.43 at mid-session Friday and closed $1.46 lower at $194.66. This was down from $196.63 the prior week and is the lowest beef market since May 25th. August cattle closed sharply higher on the session Friday as outside market forces seemed to be the driving force. Fund traders were active buyers of most commodity markets as macro-economic fears subsided. The rally pushed the market up to the highest level since June 13th. Cash cattle trade was seen as a positive influence as Kansas cattle traded at $116.00, which helped give the market a boost. Packer margins are in the black and if beef prices do not fall too much this week, traders are hopeful that cash can stay steady or push a bit higher. A much more positive tilt to commodity markets helped to support with a surge higher in the stock market and a sharp break in the US dollar. The estimated cattle slaughter came in at 123,000 head Friday and 24,000 head for Saturday. This brought the total for last week to 653,000 head, up from 649,000 the previous week but down from 670,000 a year ago. The Commitments of Traders reports as of June 26th showed non-commercial traders were net long 49,205 contracts, a decrease of 7,409 for the week and the long liquidation selling trend is seen as negative. Non-commercial and nonreportable traders combined held a net long of 24,628 contracts, down 4,332. Commodity Index traders held a net long of 115,896 contracts, down 804.
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