The market was under pressure yesterday as the slow slaughter pace was offset by a weaker cash market, sluggish exports and hefty slaughter weights. October cattle closed 60 lower on the session yesterday with December 95 lower and the outside-day down on the charts could attract some technical selling.
Economic sensitive commodity markets like cattle struggled yesterday and news that cash cattle in the plains traded $126.00, steady to $1.00 lower than last week helped to pressure. December cattle traded to a 3-session high early in the day before pushing lower. The beef rally this week helped to support the market early but a strong US dollar, weak export news and weak outside market forces helped to pressure.
Weekly U.S. beef export sales for the week ending September 13 came in at 10,900 metric tonnes, compared with the prior 4-week average of 16,300. Cumulative sales for 2012 have reached 692,800 metric tonnes, up 2.4% from last year's pace.
Positioning ahead of this afternoon's cattle on feed report also kept the trade choppy. Traders believe that feedlot placements for the month of August will come in near 6% down from last year due to high-priced feed. The lower placements would suggest less market-ready cattle late this year and early next year. Some rains in August helped to boost pasture and range conditions which may have slowed some of the "forced" placements seen earlier. With the lower placements, traders see feedlot supply on September 1st near unchanged from last year as compared with 100.7% on August 1st and 102.7% on July 1st. Traders also see marketings down about 1.5% from last year.
Slaughter came in above trade expectations at 123,000 head which could be a sign of firm demand from the packer. This brings the total for the week so far to 502,000 head, up from 500,000 last week at this time but down from 518,000 a year ago.
Boxed beef cutout values were up 29 cents at mid-session yesterday and closed 7 cents higher at $194.99. This was up from $191.40 the prior week and beef prices are at the highest level since June 28th. Average dressed steer weights for the week ending September 8th came in at 870 pounds, up from 865 the previous week and up from 849 pounds last year. This matches the record high steer weight posted on October 10th of 2009 and weights normally increase into mid-October.
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