Strong outside market forces strengthened the cattle market on Friday and helped lift it out of a week-and-a-half long consolidation, which was impressive given the sluggish cash markets and heavier cattle weights. Cash cattle traded at $114/cwt last week versus closes on Friday at 119.60 for August cattle and 125.275 in October cattle. This is projecting a rally in cash cattle of $11 over the August-September time frame. This may be difficult to accomplish with the current drought, which could bring an increase in cow/heifer slaughter and force movement of non-fed cattle onto the market due to dry pasturelands and high feed prices. This would be supportive longer-term but could bring some burdensome supply onto the market over the near-term. Last week it was reported that average dressed steer weights for the week ending July 14th were 860 pounds, up from 859 the previous week and up sharply from 845 pounds last year. The 5-year average is 838.2 pounds. This was surprisingly high given the weather and high feed grain prices, and it suggested a higher than expected supply of market-ready cattle onto the market over the near-term. Traders are still thinking weights have been dropping since then. October cattle broke out to the upside on Friday and closed at its highest level since May 22nd. The estimated cattle slaughter came in at 120,000 head Friday and 10,000 head for Saturday. This brought the total for last week to 637,000 head, down from 654,000 the previous week and down from 665,000 a year ago. Boxed beef cutout values were down $1.08 at mid-session Friday and closed $1.31 lower at $176.94. This was down from $179.31 the prior week and was the lowest the cutout had been since April 12th. The Commitments of Traders Futures and Options report as of July 24th for live cattle showed non-commercial traders were net long 35,721 contracts, a decrease of 5,559 for the week. Non-commercial and nonreportable traders combined held a net long position of 6,727 contracts, a decrease of 6,372. These numbers were taken as of last Tuesday, and the selling trend on the part of the sellers was clearly broker on Friday's upside breakout.
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