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The market is seeing a strong rally off of the lows with talk of better demand and talk of the weaker dollar helping to boost exports. However, the market is still faced with slowing pork, poultry and beef exports and this can still force too much meat on the domestic market at the same time. In addition, the surging dollar could spark an increase in beef imports over the near-term. While traders are talking about better consumer sentiment, boxed beef cutout values were down 75 cents at the mid-session yesterday and closed $1.24 lower at $141.71. This was down from $144.38 a week ago. Tighter supply of market ready cattle this week did help to boost cash cattle prices by $1.00 to $92.00 and volume was seen as active. The market drove sharply higher on the session yesterday as there was relief from the aggressive selling pace of index funds and then new short-covering from managed fund traders helped to support. A bounce in the beef market, ideas that consumer spending on beef could pick-up a bit with more stable stock markets and the discount of futures to the cash market helped support. Talk of declining production ahead and the surge higher in the stock market added to the more positive tone. The estimated cattle slaughter came in at only 110,000 head yesterday. This brings the total for the week so far to 365,000, down from 381,000 last week at this time and down from 387,000 a year ago. Rallies look like selling opportunities with uncertain demand and hefty total meat supply.

The idea that consumer spending will increase and that exports will be enhanced by a turn lower in the US dollar may be wishful, or at least optimistic, thinking. Total meat supply relative to production and exports seems to be well above total demand and cold storage supply is already high.