October cattle broke out to the upside yesterday and saw aggressive follow-through buying overnight to push to the highest level since March 28th. Ideas that supply will continue to tighten in the months ahead has helped support active buying from fund traders. The lower placements back in March and April has traders expecting tighter supply ahead.
The market closed moderately higher on the session yesterday with the highest close since March 28th as fund trader buyers were active. December cattle also closed higher and are up as much as 267 points from Tuesday's lows including the jump overnight.
The market traded lower on the day into the mid-session yesterday but strength in some commodity markets and a weaker US dollar helped to support. Continued talk that a smaller showlist could lead to higher cash cattle trade again this week has helped to support. However, the turn from black to red for packer profit margins this week has traders nervous that cash will only trade higher "if" beef prices can continue to trade higher this week and that beef will move at the higher price.
Boxed beef cutout values were up 16 cents at mid-session yesterday and closed 18 cents higher at $191.71. This was up from $191.14 the prior week and is the highest beef market since August 28th.
Cash bids emerged in Texas at $122.00 as compared with trade in the plains last week at $124.00-$125.00. Offers are at $128.00.
Slaughter came in well below trade expectations at 122,000 head, which can sometimes suggest weak demand from the packer. This brings the total for the week so far to 375,000 head, up from 259,000 last week at this time but down from 398,000 a year ago.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.