The market saw a recovery bounce back into yesterday's range overnight as outside market forces are firm and traders see mixed fundamental news in the short-term. Consumer beef demand is the main concern with the heat into the east coast into one of the stronger demand periods of the year. These demand fears are being offset by concerns for tightening supply from now into the end of the year. Keep in mind; 4th quarter beef production is expected to come in 9.2% below last year according to the recent supply/demand update from the USDA. August cattle closed sharply lower on the session yesterday and gave back all of the gains from Friday. The market traded slightly lower early in the session and pushed moderately lower on the day late to close on the lows. Outside markets shifted a bit negative on the day with a strong dollar and weakness in the stock market. Heat in the plains is seen as a positive supply force but heat and humidity on the East Coast is seen as a negative demand indicator. The premium of futures to the cash market and a turn down in beef prices on Friday helped to pressure. Slaughter came in at 129,000 head, which was higher than expected and could mean better demand from the packer. This was up from 128,000 last week and up from 2,000 a year ago as this time. Boxed beef cutout values were up 63 cents at mid-session yesterday and closed 3 cents lower at $194.63. This was down from $196.43 the prior week and is the lowest beef market since May 22nd. Severe heat in the central plains (all-time record highs posted for Dodge City Kansas this weekend) should keep weight gains slow, but while lighter weights could help, traders see slow consumer demand on the East Coast. With so many areas out of electricity for several days due to storms, re-stocking could become a positive force for the beef market by next week.
Join the Discussion