The market came back strong yesterday after cash live cattle in the plains traded as high as $118, up $4 from the cash trade a week ago. The futures had been under pressure earlier in the week on concerns that they were carrying too big a premium to the cash market, so when the news of the higher cash trade hit, the futures saw aggressive buying. With the move, August futures recovered all of their losses since the market peaked on Tuesday. October futures also staged an impressive reversal on the news. The longer term prospects for the cattle market are bullish with the USDA forecasting a 525 million-pound reduction in beef production for the 3rd quarter. There is a seasonal tendency for beef production to decline during that time, but this year's estimate is in a tie with 2008 for the 2nd largest on record back to at least 1992. (The worst year was 2003, with a 1.1 billion-pound decline.) Add to that the possible 2% reduction in the size of the US herd due to the drought, and the situation could be even more supportive. The estimated cattle slaughter came in at 126,000 head yesterday. This brings the total for the week so far to 502,000 head, down from 507,000 last week at this time and down from 509,000 a year ago. Boxed beef cutout values were up 32 cents at mid-session yesterday and closed 46 cents higher at $178.15. This was down from $178.25 the prior week. Average dressed steer weights for the week ending July 21 came in at 859 pounds, down from 860 the previous week but up 1.54% from a year ago. The 5-year average weekly weight for that week is 840.2. Beef production for the same week came in at 514.2 million pounds, down 0.92% from a year ago. Weekly U.S. beef export sales for the week ending July 26, came in at 15,800 metric tonnes, down from the prior 4-week average of 16,125. Cumulative sales for 2012 have reached 577,300 metric tonnes, up 1.8% from last year's pace.