The higher beef supply is largely due to fewer fed cattle coming to market. We estimate total cow and bull slaughter for the week was 132,000 head, about 6.5 per cent higher than the previous year. Steer and heifer slaughter for the week at 520,000 head, 6.6 per cent lower than a year ago.

The reduction in fed cattle slaughter has helped support higher beef prices. It appears cattle on feed may be even tighter than some think and this has underpinned the rally in cattle futures. On Friday, the average steer value was quoted at $122.13/cwt.

The June futures contract closed on Friday at $119.875, adding about 220 points in the last two trading sessions. Choice beef supplies appear to be current, in part due to some significant retail promotions.

Hog slaughter for the week was pegged at just a little over 2 million head, only 0.2 per cent higher than the same period a year ago. The number of hogs coming to market has outpaced the level implied by the March Hogs and Pigs report since April. It is possible that we did pull some of the marketings forward.

While hog futures were modestly lower on Friday, they have far outpaced what has happed in the cattle complex. Since early May, lean hog futures have gained almost $10/cwt and they are back to levels seen in March, before the LFTB debacle and the purported slowdown in export demand. Just as was the case last year, the break in hog futures likely created opportunities to book out front orders and now that the grilling season is upon us, end users that decided to stay short bought are finding out that spot supplies are tighter than expected.

Lower hog weights are supportive for wholesale prices. This is particularly the case for pork trimmings, which were hit hard in April and May. The price for the benchmark 72CL pork trim is currently running as much as 25 cents per pound higher than only a few weeks ago, a 45 per cent improvement.