Minimal trading resulted last week in the states as producers held their ground for steady asking levels. After the smoke had cleared, it appears upholstery type hides had adequate interest and this resulted in slightly higher levels being obtained. Interest was widespread, with decent inquiries coming in from overseas, while US upholstery tanners appeared a little less enthused. Meanwhile, offers of big packer branded selections we met with stern resistance, with a limited amount of interest roughly $2 below asking levels. There were some rumors of a limited amount of trading on HTS at $1 below asking levels; however quantities were not believed to be enough to influence the market. Heifer selections are reported difficult to come by as we have heard several stories of tanners out looking for wet-salted material. Interest on bulls remained strong and the limited offers available had little problem finding interested buyers overseas. Meanwhile, most cow selections report sluggish interest with very few bids to report. Processors report the majority of the bids were at levels about $2 below asking levels and there were some suspicions producers may be more inclined to consider less money this week after a dismal week of sales last week.

The Markets

Courtesy: AgCenter.com

Nebraska cattle traded two higher in the beef at $146-147 compared to $144 last week. Packers are expected to raise bids in the south today and test the current deadlock of cattle owners pricing cattle at $95. The test will be the resolution of the sellers. Futures prices dropped then recovered after news of higher prices in Nebraska entered the marketplace. Traders, cattle owners, and market analysts will be watching this week for signals of a market direction. This marketing period is thought to be the most abundant for supplies and if demand outstrips supply now then it may place a premium on the out months. Cattle owners will attempt to leverage last week's $90 price to test the pre-mad cow benchmark of $92 -- a number that has proved to be a barrier for the entire year and the multiple times the market has attempted to breach it.

The choice/select spread is narrowing. Choice boxes were up almost $2 and quoted at $156 with select $14 back. Slaughter numbers this week are moving towards a 680,000 number. Packers are restraining the kill numbers in order to manage their margins which are hovering at a breakeven or slight profit. Corn prices firmed after the recent selloff. Corn has been moving up and down in very volatile trading patterns reflect the condition of the new crop vs. the low carryout number.

Broad demand across all weight groups of cattle caused another jump in stocker and feeder cattle. The benchmark 750# steer was selling at $110. Feedyard placements in May increased for many yards. Some yards, low in numbers, paid the price and filled the pens. Confidence levels of buyers is improving with the market and feedlots are purchasing large volumes of $90 breakevens when they passed on $80 breakevens a couple months earlier. Supplies of replacement cattle will remain tight for many months and competition for replacements will force some yards to close because of the lack of numbers.