CME: Early Lift in Futures Supported by High Beef and Cash Trade19 August 2013
US - News that producers will switch to competing weight enhancers following Zilmax tensions has provided a moderate market effect, according to market analysts at the Chicago Mercantile Exchange.
Friday's close saw August cattle up 20 cents at $123.90.
December cattle pushed up to the highest level since March 13th into the pit opening and then fell as much as 152 off of the highs into the mid-session.
The choppy trade continued with October closing 17 lower on the day and December closing up 17.
Higher beef prices and ideas that cash might trade higher on the week helped to support the early bounce.
The market saw volatility on news that US drug maker Merck said it would temporarily suspend sales of Zilmax due to concerns for animal health. While less Zilmax might cause weights to drop, many traders saw the news as neutral to bearish.
Many producers will just switch to competing weight-enhancing drugs. Since only one of this type of drug is under scrutiny, there is no longer a concern that cattle weights will drop off rapidly in the weeks ahead.
Packers seem to have little difficulty in obtaining market-ready cattle in recent weeks and many traders see ample supply for another 4-6 weeks before numbers begin to tighten. The premium structure of the market plus continued use of growth-enhancing drugs suggests weights and production could rise ahead.
Average dressed steer weights for the week ending August 3rd came in at 866 pounds, up from 862 the previous week and last year.
The 5-year average weekly weight is at 847.8 for this time of the year.
Boxed-beef cut-out values at mid-session came in at $193.99, up $.69 on the day and up from $188.99 last week at this time. Beef production for the week ending August 17th came in at 490.6 million pounds, down 2.4 per cent from the previous week and down 3.7 per cent from last year.
TheMeatSite News Desk