Yesterday there was a strong recovery in outside markets that helped to support the market and I’ve been hearing that traders are looking at the heat in the central and southern plains as a factor which may push beef production lower. With this lower than expected production, the average dressed cattle weights for the week ending on June 25th came in at 811lbs which was actually up from 808lbs the previous week. Even though the USDA expectation for 3rd quarter beef production is supposed to increase about 2.1%, they see 4th quarter production dropping roughly 5.8%. Production is expected to drop 430 million pounds from the 3rd to 4th quarter of this year, comparing that to last year’s 127-million-pound increase, I expect this to help support the market in the deferred month contracts. The December contract traded fractionally lower today down .400 and settling at 145.075. The Dec contract, in my opinion, has seemed to find some support in this range from 144-146. Barring any outside market fears of a global recession/depression I still believe the Dec contract will maintain support at 142 if it somehow breaks through the first level of support at 144.
The USDA boxed beef cutout closed 2 cents higher at $268.07 which was up from last weeks $264 price. That was the highest the cutout has been since June 27th. Cash live cattle look to be a little softer this week as I heard there were about 7700 head traded in Kansas on Thursday with an average price of 137.44. Nebraska, with 10,300 head, traded at an average price of 147.26 while the Texas/Oklahoma area traded an average price of 137 with 7300 head traded.