The market is a bit oversold after the steep 4-day break and a bounce in beef prices yesterday and extreme heat moving back into the southern plains could be factors which spark some short-covering support in the short-term. August cattle closed moderately lower on the session yesterday and closed lower for the 4th session in a row. Demand concerns persist and while there has been plenty of talk of a tight supply of market-ready cattle coming off of feedlots, beef prices are just bouncing off of the lowest level since early April. Ideas that cash cattle can trade higher this week helped support the strong recovery from the lows Tuesday but the weak close yesterday does not bode well for traders looking for packers to pay up for live inventory. Boxed beef cutout values were up 52 cents at mid-session yesterday and closed 45 cents higher at $138.45. This was down from $139.37 a week ago. Keep in mind; beef prices were at $173.60 last year at this time. The estimated cattle slaughter came in at 127,000 head yesterday. This brings the total for the week so far to 369,000 head, down from 387,000 last week at this time and down from 378,000 a year ago. Cattle prices are sensitive to the economy and a recovery bounce in many of the outside financial markets along with extreme heat in the southern plains should help support the market today. Cash markets are bid at $81.00 with offers at $85.00 as compared with trade at $83.00-$83.50 last week.
TODAY’S GUIDANCE: A 50% correction of the June 17th to July 1st rally leaves support for August cattle at 83.17 which is also the overnight low. The market seems to have the supply fundamentals to see a recovery bounce but demand uncertainties persist. Support for August cattle comes in at 83.17 and 82.52 with 83.85 resistance. Look for a bounce over the near-term but it will take signs of better demand to turn the trend up.