So far, the heat does not seem to have impacted demand too much as beef prices are steady against last week. Heat is a double-edged sword for the cattle market as demand generally slides but feedlot performance also suffers. A turn up or recovery bounce in feeder cattle was enough to provide some strength in the live cattle market yesterday, and this was enough to spark some short-covering as well. August cattle closed 177 higher on the day and pushed up to the highest level since June 20th. The market pushed down to the lowest level since May 3rd early in the day but a more positive tilt to outside markets, a jump in hog prices and ideas that the market will eventually see tighter supply ahead helped the market. Talk of a potential sharp drop in average slaughter weights and a surge in hog futures added to the positive tone. The estimated cattle slaughter came in at 125,000 head yesterday which was a bit lower than expected. This brings the total for the week so far to 382,000 head, up from 378,000 last week at this time but down from 391,000 a year ago. Boxed beef cutout values were up 41 cents at mid-session yesterday and closed 19 cents higher at $197.93. This was down from $198.00 the prior week. Beef production in the 3rd quarter is expected to be down 65 million pounds from the second quarter. This is only the 2nd time in at least 22 years in which beef production is expected to decline. Last year, beef production was up 177 million pounds. Cash cattle bids emerged at $112.00 this week as compared with cash trade at $116.00 last week.
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