The turn up yesterday is impressive but the upside appears limited for the nearby contracts. The surging corn market should help to keep near-term supply high and spark even tighter supply down the road. April cattle saw the highest close since mid-March. Boxed beef cutout values were down 1 cent at mid-session yesterday and closed $2.29 lower at $182.16. This was down from $187.81 the prior week and is the lowest beef market since April 16th. Reports from Japanese newspapers that Japan is likely to ease import restrictions for US beef as early as November helped to cause early buying yesterday and short-covering emerged to drive the market sharply higher. The market closed sharply higher on the session yesterday with October up 285 on the day. A jump in beef prices late Tuesday, a limit-up advance in feeder cattle and talk of the oversold condition of the market helped to spark very strong gains in August cattle with the market at a 5-session peak into the mid-day. Temperatures in Western Kansas and Oklahoma look to hold near 105 for the next nine days in a row, and this is expected to spark very poor weight gains. The estimated cattle slaughter came in at 126,000 head yesterday. This brings the total for the week so far to 379,000 head, down from 381,000 last week at this time and down from 384,000 a year ago. If the western Corn Belt crop conditions continue to deteriorate, poultry, pork and beef producers will all be under the gun to cut costs and move un-needed animals to the market. Consumer demand is sluggish and lower beef prices may be necessary to entice consumers to eat more beef during a heat wave.
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