CME: Futures Close Lower, Friday11 March 2013
US - April cattle closed sharply lower on Friday and just off the lows of the session, write market analysts at the Chicago Mercantile Exchange.
April cattle saw a strong recovery from early lows of 127.00 to close higher on the session at 127.50.
The market traded slightly higher on the session into the mid-day.
The US dollar subsided to trade just slightly higher on the day after a surge higher overnight and the recovery in the US stock market to trade just slightly lower on the day are factors which might have help support the recovery bounce from the early lows.
The rally in grain markets also supported a more positive tone for commodity markets from fund traders even with the weakness in outside market forces.
The early break pushed the market down to the lowest level since January 19th before closing slightly higher.
Monday's weakness pushed prices down to a new 8-session low and marked a 285 point slide from last week's high of 131.50.
The cattle market had traded as much as 50 higher earlier in the day due to supportive news from the USDA Cattle-on-Feed report from Friday.
Ideas that the market may need some time to absorb higher beef prices and that that it will take further gains in beef in order to revive packer margins were seen as negative factors for cattle prices.
Many traders remain concerned that higher beef prices will slow consumer demand, especially in combination with rising gasoline prices.
Retail prices for beef hit a record high for January, with forecasts for tightening supply being the foundation for this rally.
Beef production normally increases in the second quarter from the first quarter at the same time that demand increases into the spring barbeque season. However, beef production this year is expected to drop from the first quarter for the first time in at least 21 years.
An unexplained virus has spread from Germany to England in January, and has already been reported in 74 farms.
The virus impacts sheep and cattle and it causes still born and birth defects. There have been 1,000 reported cases in Europe since the first sign of the virus last summer in the German town of Schmallenberg. It is called the Schmallenberg virus.
Boxed beef cutout values were up $1.33 at mid-session Thursday and closed $1.14 higher at $198.56.
This was up from $191.81 the prior week and is the highest beef market since 200.65 on October 20th, 2003.
The estimated cattle slaughter came in at 122,000 head on Thursday, up from 104,000 head last week but down from 126,000 head last year at this time.
TheCattleSite News Desk