Packer margins are still weak and the push down to the lowest level since September 14th for the beef market suggests sluggish short-term consumer demand. Weak exports and fears of a weakening global economy have added to the bearish tone. Boxed beef cutout values were up 85 cents at mid-session yesterday and closed 41 cents lower at $192.04. This was down from $194.99 the prior week.
Average dressed steer weights for the week ending September 15th came in at 869 pounds, down from 870 the previous week but still up from 855 pounds last year. The previous week at 870 pounds matched the record high. December cattle managed to close moderately higher on the session yesterday after first falling to the lowest level since July 17th. Talk of the oversold condition of the market and a bounce in the beef market along with a strong gain for the stock market helped to support the recovery bounce. The market saw choppy and two-sided trade early as traders tried to determine if the recent break was enough to entice some improved demand.
Packer profit margins are weak, the cash market is lower this week and beef prices remain sluggish. Weekly export sales came in at just 9,800 tonnes as compared with the prior 4-week average of 15,400 tonnes. This is the lowest weekly sales since March 22nd and traders remain nervous with weak economic news out of the US, China, Europe and especially Japan, a major beef importer. Cumulative sales for 2012 have reached 702,600 metric tonnes, up 2.0% from last year's pace. News of a massive injection of cash into the China banking system helped to support the global stock markets and some commodity markets as traders attempt to determine if this might help the global economic situation. Ideas that the market is a bit oversold after the 2-day collapse helped to provide some support.
Cash cattle in Kansas already traded this week at $123.00, down $3.00 from last week. The weak Durable Goods news added to the negative demand tone. However, a lack of new selling interest on the move under Wednesday's lows helped to support the bounce. The estimated cattle slaughter came in at 129,000 head yesterday which was much higher than expected. This brings the total for the week so far to 505,000 head, up from 502,000 last week at this time but down from 522,000 a year ago. The higher slaughter can sometimes mean improving demand from the packer. However, with near record high weights, the packer is not in a position to cut-back on slaughter for very long.
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