The reversal-type action yesterday is impressive but the upside may be limited by the premium of futures to the cash market, the possibility of increased non-fed and cow slaughter ahead and by continued much heavier than normal weights. 

Average dressed steer weights for the week ending August 11th came in at 862 pounds, which was unchanged from the previous week but still up from 846 pounds a year ago and up from the 5-year average of 846.4. With corn at $850-$900 in the southern plains, this is surprisingly high. With October cattle trading near 125, cash cattle traded at $120-$121 this week, which is steady from last week. Nebraska cattle, however, traded at $119.00-$120.00 this week, which was down $1-$2 from last week. Packer margins are still in the black which has helped to provide some support but traders are nervous over a possible lull in beef demand once Labor Day bookings are complete. 

October cattle closed higher yesterday with an outside-day up after first moving down to the lowest level since August 2nd. The reversal may attract some technical buying. October feeders closed sharply higher to provide support as corn prices were weak. The soybean market pushed to a new all-time high, and this helped pressure the market early but a sharp break in corn and soybeans and a firm tone to outside market forces helped to support the market into the close. Sluggish beef prices and ideas that total meat supply could increase in the weeks just ahead helped to pressure. 

Weekly U.S. beef export sales for the week ending August 16th came in at 14,700 metric tonnes, compared with the prior 4-week average of 17,450. Cumulative sales for 2012 have reached 631,400 metric tonnes, up 3.5% from last year's pace. Slaughter came in higher than expected at 127,000 head. This brings the total for the week so far to 509,000 head, up from 505,000 last week at this time but down from 516,000 a year ago. 

Boxed beef cutout values were up 21 cents at mid-session yesterday and closed 10 cents higher at $193.83. This was up from $191.48 the prior week. There were 15 new deliveries and 10 retenders posted overnight. 

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