August cattle traded at its lowest point since May 6th but eventually closed higher on the day. Though it failed to fill the gap that was made on May 7th, the market is still showing some positive technical support. The trend in the cash market and box beef prices have been trending lower over the past few trading sessions but it appears that the futures market has already priced in this cash market move. The USDA boxed beef cutout was down $5.29 at mid-session yesterday and closed $7.58 lower at $247.00. This was down from $318.73 the previous week and was the lowest the cutout had been since April 17.
The cutout’s decline has been precipitous, from a peak of $475.39 on May 12. It has fallen for 18 straight sessions, but it is still higher than it was at this time in 2019 or 2018. Cash live cattle traded lower in very limited volume on Tuesday. In Iowa/Minnesota 186 head traded at $106 versus an average price of $108.44 late last week, and in Nebraska 160 head traded at $104 versus an average price $111.99 on Friday. It is starting to become a little clearer that the cash market is going to the one that takes the most heat over the next couple of days, June traded higher during yesterday’s session but traders are now starting to roll over into the August contract so the spread between the cash and futures is still pretty wide. With daily slaughter rates nearing year-ago levels, and approaching 120,000 per day, less and less focus will be put on supply disruption as the attention moves back to end user demand. The USDA estimated cattle slaughter came in at 117,000 head yesterday. This brings the total for the week so far to 234,000 head, up from 226,000 last week, but down from 241,000 a year ago.
