With the surge in grain prices and more hot weather next week, both supply and demand factors look bearish for cattle in the short run. Sluggish consumer demand has already left the pipeline slow and average weights high coming into this month, and short-term beef production could come in a bit higher than expected. Average dressed steer weights for the week ending June 30th came in at 856 pounds, up from 853 the previous week and up 2.7% from a year ago. August cattle traded sharply lower on the session yesterday with the market pushing down to the lowest level since June 27th and closing lower for the 4th session in a row. The hot and dry forecast for parts of the Midwest plus talk that recent poor demand weather has already caused a slowdown in the beef pipeline helped to pressure prices. With more heat in the forecast, consumer demand looks weak. In addition, feedlot operators have more incentive to move cattle off of yards quickly as expensive corn and poor weight gain weather has producers wanting to sell now, not later. Beef prices have already pushed down to their lowest level since early April, and this has traders looking for sluggish cash cattle trade. Cash cattle trade emerged at $115.00, down $2.00 from last week and well under trade expectations from earlier in the week. Traders were expecting higher trade in the cash market. Boxed beef cutout values were down $1.07 at mid-session yesterday and closed $1.78 lower at $186.03. This was down from $193.57 the prior week and is the lowest since April 18th. Weekly U.S. beef export sales for the week ending July 5th came in at 17,400 metric tonnes, compared with the prior 4-week average of 16,550. Cumulative sales for 2012 have reached 531,400 metric tonnes, up 4.6% from last year's pace. Beef exports for the month of May totaled 207.6 million pounds, which is down slightly from April and down from 234.8 million pounds last year. The estimated cattle slaughter came in at 125,000 head yesterday. This brings the total for the week so far to 506,000 head, up from 385,000 last week at this time but down from 517,000 a year ago.
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