The cattle market could eventually find support off of the herd reductions and forecasted declines in beef production in the third quarter, but in the meantime it has to deal with lower demand and short term supply boost off of increased slaughter cow and heifer slaughter rates. Trader estimates of the size of the herd reduction resulting are around 2%, similar to last year when drought hit the southern plains. Last year's drought brought some movement of cattle into areas not affected by the drought, and similar action appears to be happening this year. The hot weather has curtailed demand, and the boxed beef cutout has plunged from a peak of 197.93 on June 27th. The cattle market sold off yesterday as traders became apprehensive that the sluggish cash live cattle market will weigh on the futures. Cash traded at $114/cwt last week, and with the moves in the futures markets since, October had moved to almost a $12 premium to that level and the nearby August to almost a $6 premium. Packer bids yesterday were reported at $113. Boxed beef cutout values were up 61 cents at mid-session yesterday and closed 20 cents higher at $177.82. This was still down from $178.24 last week, but at least it marked two straight days of increases. There is hope that demand will pick up as football season approaches, but that may be some time off given the hot weather still in the forecast across the nation's midsection.The estimated cattle slaughter came in at 126,000 head yesterday. This brings the total for the week so far to 248,000 head, down from 254,000 last week at this time and down from 252,000 a year ago. Feeder cattle found some support yesterday when corn prices sold off after reaching new contract highs. A positive read on central bank actions today and tomorrow could lend some outside market support.
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