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Ideas that beef demand was a little better than expected for the Labor Day holiday weekend due to dry and warm conditions in many areas was partially confirmed with higher beef prices for early this week. Given the outlook for a generally tight supply of market-ready cattle coming off of feedlots in the next several weeks and the potential for lower cow slaughter due to excellent pasture and range conditions for this time of the year, we may be in a position to see higher trade just ahead. At the very least, we should be able to muster up enough buying to support a recovery bounce. October cattle pushed moderately higher on the session yesterday and moved to the highest level since August 28th as an improving beef market, ideas that the export market could perk up and expectations for tightening supply ahead helped to support. Export sales have been sluggish recently but a combination of a one year low in the US dollar and beef prices near $142.50 from near $159 last year at this time could spark some increased buying from importers. Follow-through technical buying from last week and a surge down in the US dollar added to the positive tone as a weaker US dollar could help support exports. Slaughter came in above trade expectations which is sometimes seen as a positive demand force. The estimated cattle slaughter came in at 129,000 head which was unchanged from last week and up from 128,000 head a year ago as this time. Boxed beef cutout values were up 87 cents at mid-session yesterday and closed $1.19 higher at $142.80. This was down from $144.04 a week ago. The COT reports from Friday showed an aggressive selling trend from trend-following funds for the week ending September 1st (bottom on Sept 2nd). This group reduced there net long position by 12,828 contracts to a net long of just 146 contracts.

TODAY’S GUIDANCE: The market has the supply fundamentals to push higher in the weeks just ahead and any sign of better beef demand (like the jump in beef prices after long holiday weekend) could help support renewed interest from speculators.

TODAY’S MARKET IDEAS: Buying support for December cattle is at 86.95 with 88.17 and 88.92 as resistance.

This content originated from – The Hightower Report.