With weakness in the stock market, a higher US dollar and a bearish Cattle on Feed report Friday afternoon, the short-term market direction points lower. The Cattle on Feed report showed June 1st on-feed supply at 101.4% of last year, which was slightly above average expectations. Marketings were significantly lower than expectations at 100.6% of last year, which is bearish for the August contract. Placements were moderately above expectations at 115.3%, which was somewhat bearish for the deferred contracts. The placements total was the largest in five years. Traders cited dry weather and increased imports from Mexico as factors pushing placements above expectations. The cattle market might find some support from the Cold Storage report, which was also released Friday afternoon. Frozen beef stocks at the end of May totaled 498.6 million pounds, down from 517.9 the previous month. This was counter to expectations for a slight increase on the month. And while stocks are running about 11% above year ago levels, the trade was looking for a 16% increase. They were also 4% lower than the previous month versus an average seasonal decline of 1.0%. August cattle managed to close higher on Friday after first trading to their lowest level since May 3rd. Cash cattle traded in Texas at $116.00 per cwt in light volume, $3.00 lower than the previous week. The estimated cattle slaughter came in at 126,000 head Friday and 17,000 head for Saturday. This brought the total for last week to 649,000 head, down from 653,000 the previous week and down from 690,000 a year ago. Boxed beef cutout values were down 31 cents at mid-session Friday and closed 58 cents lower at $196.63. This was down from $198.00 the prior week and was the lowest beef total since June 5th. The Commitments of Traders reports as of June 19th showed non-commercial traders were net long 56,614 contracts, a decrease of 10,159. The long liquidation selling trend is seen as a short-term negative force. Commodity index traders held a net long of 116,700 contracts, down 2,068 for the week.
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