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Another jump in beef prices yesterday failed to spark much in the way of new buying as cattle fund traders are quite negative and the market sees the upside as very limited. Cash cattle bids emerged this week at $79.00 with offers at $84-$85 after cash traded at $82.00 last week. The jump in beef prices with packer profit margins already in the black could support demand for cash cattle but traders are nervous with news that the showlist this week is higher than last week. Cash dealers believe that cash may not trade until after the Cattle-on-Feed report on Friday. The lowest close for August cattle since December yesterday leaves the market technical picture negative but the June lows managed to hold. The market saw some early strength with talk of a slight improvement in beef demand and ideas that we could see a few more week’s of good retail clearance for beef but weakness in the stock market and talk that the showlist is a little higher this week helped to pressure the market. Traders also believe that outside market forces will stay negative into the end of the week. The estimated cattle slaughter came in at 129,000 head yesterday. This brings the total for the week so far to 259,000 head, up from 255,000 last week at this time and up from 249,000 a year ago. Boxed beef cutout values were up 79 cents at mid-session yesterday and closed $1.03 higher at $140.55. This was down from $140.69 a week ago. Beef prices are still down 11% from last year even though beef production last week was down 2.8% from last year. Heat moving up from Texas may slow weight gains and help ease beef production totals just ahead. Trend-following funds still hold a near record high net short position which leaves futures vulnerable to a bounce if resistance points are violated.
TODAY’S GUIDANCE: A bounce in the beef market should help provide some support to the market but demand fears persist and funds continue to aggressively sell the market. The technical action is weak and the market may not see much support at the June lows with 79.65 as next support for August Cattle. We would think the market has the short-term news to bounce from support.
