February cattle closed moderately higher on the session yesterday and recovered a large portion of Tuesday's losses. A firm tone for beef prices, a bounce in US equity markets, and a recovery in other commodities lent support. December closed near the highs at 99.35 compared with a cash trade of $98.50 on Tuesday. There were ideas in the market that a number of money managers were shorting livestock this week as hedges against other assets. Positive news from Europe was enough to spark a resumption of the downtrend in the US Dollar and in turn provide support for cattle futures. Reduced concerns that China's actions to control inflation will impact the US cattle market also helped to support futures. Despite higher corn values, traders see October placements of cattle into feedlots near unchanged from last year, as deferred contracts may have been priced high enough to attract placements. As a result, traders are looking for total on-feed supply near 2.5% to 3.0% above last year. The estimated cattle slaughter came in at 131,000 head yesterday, which is higher than expected. This brings the total for the week so far to 393,000 head, up from 388,000 head last week at this time and up from 372,000 head a year ago. Boxed beef cutout values were up $1.40 at mid-session yesterday and closed $1.18 higher at $159.29. This was up from $157.35 the prior week and is the highest beef price since November 3rd.
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