October cattle closed slightly lower on the session yesterday with choppy trade as the market managed a bounce off of the mid-session lows to close back up near the middle of the range.
Average dressed steer weights for the week ending August 25th came in at 867 pounds, up from 865 the previous week and up 2.12% from a year ago. Beef production for the same week came in at 516.3 million pounds, down.23% over year ago. For the six weeks ending with the week of August 25th, weekly slaughter has come in a range of down 2.6% to down 3.3% from last year but weekly beef production has yet to come in down more than.9% from last year as average weights remain very high.
Futures traded slightly higher on the day early yesterday but selling emerged to drive the market down near 55 lower on the day into the mid-session. A surge higher in the stock market and strength in other commodity markets failed to support. Traders indicated a lack of follow-through buying support from Wednesday's run higher may have sparked some profit-taking selling.
Weak packer profit margins and talk of the overbought condition of the market were seen as short-term negative forces. There was also talk that part of the reason for the rally this week came from optimistic comments from US officials over ideas that Japan may ease import restrictions into next year. Talk that this is a longer-term positive force and will not have much short-term impact was also seen as a negative factor along with continued weakness in pork prices.
Texas cattle bids in the cash market improved by $2.00 to $122 as compared with trade last week at $123.00 with offers this week at $126.00. Cheap pork could slow beef demand.
Slaughter came in well below expectations at 124,000 head and sluggish slaughter can sometimes indicate weaker demand from the packer. This brings the total for the week so far to 383,000 head, down from 500,000 last week at this time and down from 387,000 a year ago. Boxed beef cutout values were up $1.11 at mid-session yesterday and closed 42 cents higher at $191.56. This was up from $190.92 the prior week.
*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.
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