July 31, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle was once again quiet in feedlot country with the only test of the market being that of cattle selling through the upper Midwest auction markets. Packers continue to bid a mostly larger showlist offering at $92 live with feedlots firmly priced at $98 live and $1.55 dressed. The money they put on the beef on Tuesday was taken away on Wednesday, however I continue to believe that we are getting close to a near term bottom in the beef market. The board continues to be supported on any setbacks, which is going to give feedlot managers enough resolve to hold out for higher money. I don’t know if this is a good situation or not, because as I have been mentioning the last couple of days, we need to some of these cattle that haven’t been sold for the last couple of weeks gone. Again, it’s not a big deal if we can get them cleaned up in a timely manner, as numbers going forward remain current going into October/November. The problem is that packers know these backed up marketing’s are out there as they see weekly increases in weights and YG 4’s. They also claim to have enough contract and formula cattle around them for a couple of weeks, and considering they were willing to buy these cattle a couple of weeks ago at $100 live and everyone passed, I find it hard to believe they are going to let these guys out with a better market this week or next. Like I say, the sooner we get these near term cattle cleaned up, the sooner we can begin to rally the cash again. For these reasons I will continue to call for a mostly $94 live and $1.48-$1.50 dressed market for this week.

In the auction markets, fed cattle selling in Sioux Falls and Yankton, SD yesterday were bringing mostly steady money with the beef steers and heifers selling for $92-$96 and the Holstein steers actually bringing $1-$2 better at $82-$85. Slaughter cows continue to trade on a steady to slightly lower market with the cutter and boning utility cows bringing $50-$63 and the breakers and whites bringing $63-$67. Feeder cattle markets continue to be mixed with strength in the yearling cattle and weakness in the lightweight calves. The majority of medium/large frame #1-#2 feeder steers weighing 600 lbs-800 lbs throughout the midsection of the country continue to bring $105-$116.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 127,000 head, which would be 6,000 head above the same day last week and 4,000 head above the same day a year ago. The week-to-date kill now stands at 379,000 head, which would be 5,000 head above the same period last week, with the industry looking for a 670,000 head production week. The boxed beef market was mixed yesterday with the choice cutout closing $1.87 lower to settle at $158.52 and the select cutout closing $.45 higher to settle at $152.65. Sales volume was moderate with 317 loads of beef sold (123.73 loads of choice fab cuts, 113.20 loads of select fab cuts, 19.77 loads of trim, 60.48 loads of grinds). The choice/select spread settled at $5.87 a loss of $1.45.

The beef market was mixed yesterday with gains in the choice cutout from Tuesday being erased Wednesday on further weakness in choice rib and loin cuts. End meats were mostly steady to instances higher especially in choice and select short ribs and gooseneck rounds, which can likely be attributed to renewed export business. Select top butts were also trading on a higher market yesterday, which helped support higher settlements in the select cutout. The coarse ground beef market was higher yesterday, which helped support steady to higher boneless beef values. I will continue to look for a mostly sideways trend to the boxed beef market for the rest of the week, with some possible strength coming back to the market by early next week. Beef exports for the week of July 18-24, 2008 are as follows:

Beef: Net sales of 17,900 MT were primarily for South Korea (8,100 MT), Mexico (3,800 MT), Canada (2,600 MT), Russia (2,000 MT), and Vietnam (600 MT). Exports of 13,900 MT were mainly to Mexico (5,900 MT), Canada (2,600 MT), Japan (1,600 MT), Russia (1,300 MT), South Korea (800 MT), Taiwan (700 MT), and Vietnam (600 MT).

Futures Market Situation and Outlook:

August live cattle settled at $97.87 a gain of $.32, October live cattle settled at $106.15 a gain of $.55, and the December live cattle settled at $108.15 a gain of $.62. In the feeder cattle pit, August feeder cattle settled at $112.52 a gain of $.25, September feeder cattle settled at $113.65 a gain of $1.00, and the October feeder cattle settled at $114.62 a gain of $.75. The reported CME feeder cattle index for 7/29/08 was $111.31 a loss of $.07.

Yesterdays live cattle volume saw 20,518 contracts trade in the pit and 10,180 contracts trade on Globex. Live cattle open interest declined 144 contracts to come in this morning at 294,233. Yesterday’s feeder cattle volume saw 3,427 contracts trade in the pit and 744 contracts trade on Globex. Feeder cattle open interest declined 349 contracts to come in this morning at 32,109.

Live and feeder cattle futures settled mostly higher on continued light fund buying, short covering, and ideas this week’s cash fed cattle market might not be any worse than steady. My opinions of the cash fed cattle market are outlined above, and its not to say that I am right, but I still think with what’s going on out in the country that we will see more of a steady to lower trade rather than steady to higher. Nonetheless, we continue to find very good buying in August live cattle at $97 and in the October live cattle at $105. I am of the opinion that we need to break the market hard one last time and get some backlogged cattle sold at lower money and then we will have a better base from which to rally going into mid/late August. I am still positive the December live cattle market and will continue to look for buying opportunities in that contract on any near term weakness. I still think August live cattle eventually need to go fill a gap left between $96.40-$96.80, and will look to sell rallies until we either break the board and fill it, or we sell cash cattle at lower money on decent volume. I still like the feeder cattle market and want to be a buyer on breaks in either August or September. August feeders are going to be supported by strength in the cash market, however they may not rally as much as the September as August keeps in line with the CME index ahead of the end of the month expiration. Might want to use some weakness in the September feeder cattle next week during the Goldman Roll as a place to initiate long positions. Look for a $.10-$.20 higher open to live and feeder cattle futures, but be careful of a break coming in the August live contract today or tomorrow. Trade Well!!!

Any one wanting a more detailed report on the cattle and beef markets including fundamental, chart and technical analysis, plus spec/hedge recommendations for packers, processors, producers, and meat buyers feel free to contact me by phone or e-mail to set up a free trial.

There is risk in trading futures and options.

Have a Good Day,

Troy Vetterkind

Chicago Board of Trade

141 West Jackson Blvd.

Suite 1220A

Chicago, IL 60604

1-888-299-1477 Toll Free

1-312-896-2068 Direct

1-708-224-5985 Mobile

tvetterkind@linngroup.com

Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn Group, Inc. the information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. This material and any view expressed herein are provided for informational purposes only and should not be construed in any way as an inducement to buy or sell commodity futures or options contracts. The Linn Group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.

Vetterkind Opening Cattle Report

July 30, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market was non-existent yesterday with a few light packer bids of $92 going unmatched against feedlot offering prices of $98 live and $1.55 dressed. Showlist numbers are larger in Kansas and Colorado, however smaller in Texas and Nebraska and packers say that they have July contracts and formula cattle to finish killing before the end of the month, which has them touting they have enough cattle around them for this week. They can draw off of August contracts and formula cattle beginning next week, which combined will have them trying to buy cattle out of the cash market at lower money this week. The beef market posted some hefty gains as reported by the USDA yesterday, however private sources indicate that the market may not have been as high as the USDA values were indicating. I do think we are getting close to a near term bottom in the beef, which will help to stabilize cash fed cattle values, however we are not likely to see a big rally in the beef until mid-late August. The board reacted positively to the higher beef market yesterday, but here again, I don’t know if we will be able to hold onto the gains in the August live contract for the rest of the week. I am still going to call for a mostly steady/lower fed cattle trade for this week (i.e. $94 live and $1.48-$1.50 dressed) until we get some of these problem cattle cleaned up. This can happen pretty quick and we can easily get the front-end supply of the fed cattle market back to current status, at which time we can begin another leg up in cash prices as numbers of fed cattle going forward are by no means burdensome. The cattle selling through the sale barns are all bringing steady to higher money in regards to slaughter cattle. The feeder cattle market continues to be two-tiered, with weakness in the lightweight calves and strength in the yearling feeder cattle. Superior Livestock is holding a large video sale this week from Winnemucca, NV with 238,000 head of feeder cattle and bred cattle on offer. So far they have been selling southern and southeastern weaned calves and calves on cows, but they will start on southern plains, northern plains, and western yearling’s and calves today.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 127,000 head, which would be 1,000 head above last week and 3,000 head above the same day a year ago. The week-to-date kill now stands at 252,000 head, which would be 1,000 head below the same period a week ago, with the industry looking for a 670,000 head production week. The boxed beef market was higher yesterday with the choice cutout closing $1.92 higher to settle at $160.92 and the select cutout closing $.64 higher to settle at $152.20. Sales volume was moderate with 293 loads of beef sold (149.75 loads of choice fab cuts, 88.81 loads of select fab cuts, 15.91 loads of trim, 38.68 loads of grinds). The choice/select spread settled at $8.19 a gain of $1.28.

The beef market was reported higher by the USDA yesterday on decent movement. As I mentioned above, private sources we talk to say the market wasn’t as high as the USDA was quoting, and part of that explanation can be found in the fact that the USDA didn’t have any reported transactions on 109A rib roasts and 114 shoulder clods on Monday, but did on Tuesday. With that said though, there were some higher transactions on choice boneless rib eyes and PSMO’s yesterday, which along with a few price increases in certain chuck and round items gave us the higher cutout quotes yesterday. The story remains the same for the most part in the beef complex; packers cite having difficulty in finding a clearing level for loin meat and to a less extent certain rib cuts. We did see some secondary distributors come in and take on some rib and loin inventory late last week, which helped to support prices coming into early this week, but many of the large retail and institutional buyers say it will be a couple weeks before they get interested about procuring late fall/early winter and end of year holiday needs. It is reported that there has been a slight pull back in export business, however with the recent price declines in chuck and round values, it is also said that business could pick back up soon. Boneless beef items were discounted slightly for no other reason except to adjust inventory positions at certain packinghouses. Ground beef demand remains very robust and this will be supportive to trimming and end meat prices. I will continue to look for a mostly sideways trend to the boxed beef market for the rest of the week.

Futures Market Situation and Outlook:

August live cattle settled at $97.55 a gain of $.47, October live cattle settled at $105.60 a gain of $.80, and the December live cattle settled at $107.52 a gain of $.62. In the feeder cattle pit, August feeder cattle settled at $112.27 a gain of $1.12, September feeder cattle settled at $112.65 a gain of $1.55, and the October feeder cattle settled at $113.87 a gain of $1.37. The reported CME feeder cattle index for 7/28/08 was $111.38 a loss of $.07.

Yesterdays live cattle volume saw 24,551 contracts trade in the pit and 12,596 contracts trade on Globex. Live cattle open interest declined 2,454 contracts yesterday to come in this morning at 294,381. Yesterday’s feeder cattle volume saw 2,836 contracts trade in the pit and 800 trade on Globex. Feeder cattle open interest declined 114 contracts yesterday to come in this morning at 32,461.

Live and feeder cattle futures started the day yesterday under some pressure on follow through selling from Monday. However, as the day wore on, higher mid day beef quotes and oversold chart conditions prompted a round of short covering to keep values positive going into the close. As pointed out above, perhaps the beef market might not have that strong yesterday and I still think we are going to eventually see this weeks fed cattle trade come in at steady to lower money. This could give the August live cattle contract a little trouble in terms of holding onto yesterday’s gains. I would expect to see August live cattle to continue to lose more value compared to deferred month live cattle until we can get the cash fed cattle market to turn around, which don’t get me wrong could very well happen later this week. But until then I think August live cattle will remain under a degree of pressure. Looking at deferred month live cattle, I still like them from a fundamental standpoint and I think once we can get the front-end of the cash fed cattle market cleaned up, we can see another rally in prices going into late summer early fall. Feeder cattle continue to be supported in the cash market and in the futures and I will continue to look for more of the same by the end of the week. I continue to view the feeder cattle market as a buy on any near term breaks. Look for a $.10-$.20 lower open to live and feeder cattle futures this morning. Trade Well!!!

Any one wanting a more detailed report on the cattle and beef markets including fundamental, chart and technical analysis, plus spec/hedge recommendations for packers, processors, producers, and meat buyers feel free to contact me by phone or e-mail to set up a free trial.

There is risk in trading futures and options.

Have a Good Day,

Troy Vetterkind

Chicago Board of Trade

141 West Jackson Blvd.

Suite 1220A

Chicago, IL 60604

1-888-299-1477 Toll Free

1-312-896-2068 Direct

1-708-224-5985 Mobile

tvetterkind@linngroup.com

Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn Group, Inc. the information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. This material and any view expressed herein are provided for informational purposes only and should not be construed in any way as an inducement to buy or sell commodity futures or options contracts. The Linn Group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.

July 29, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market was untested yesterday with no packer bids evident as of last night and cattle feeders beginning the week pricing their new showlists at $98 live and $1.55 dressed. A look at last weeks sales price and volumes shows Texas/Oklahoma feedlots selling 27,987 head of fed cattle for $95 live, Kansas feedlots selling 23,038 head of fed cattle for $94-$95 live and $1.49 ½ -$1.50 dressed, Nebraska feedlots selling 47,388 head of fed cattle for $95-$95.50 live and $1.52-$1.52 ½ dressed, Colorado feedlots selling 4,814 head of fed cattle for $94.50-$95 live and $1.52 dressed, and Iowa/MN feedlots selling 17,034 head of fed cattle for $94.50-$95 live and $1.49-$1.51 dressed. Once again we see a rather slow marketing pace in all of the major feeding areas, which again is backed up by larger showlists this week, another estimated 2 lbs increase in carcass weights (777 lbs this week vs. 775 lbs last week), and cattle continuing to grade 56.8% choice. We need to get these cattle cleaned up, and until we do I don’t know if the cash market will rally very much. Packers continue to say they are seeing too many YG 4 cattle coming through their plants and say they have enough July contract and formula cattle to finish killing and as such will be bidding the market lower, and no doubt getting cattle bought cheaper this week. The beef market remains under pressure, however the velocity of the declines appears to have slowed down, and as I mentioned in previous writing’s I believe we can see some stability come back into this market by the end of the week. I will call for a $94/$1.48-$1.50 fed cattle trade by the end of the week.

Fed cattle selling through the sale barns are mostly steady to start the week with $94-$95 tops noted on the beef cattle and $82-$85 on the Holsteins. Slaughter cows are mostly steady at $54-$62 on the cutters and boners and $64-$71 on the breakers and whites. Feeder cattle are steady to higher as evident by Oklahoma City calling their market steady on the yearling cattle and $4-$8 lower on the calves. The bulk of the 600 lbs to 800 lbs feeder steers in OKC yesterday were bringing $105-$114.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 125,000 head, which would be 2,000 head below the same day last week and 2,000 head above the same day a year ago. The industry is looking for a 680,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $.03 lower to settle at $158.47 and the select cutout closing $1.01 lower to settle at $151.56. Sales volume was light with 219 loads of beef sold (99.17 loads of choice fab cuts, 54.43 loads of select fab cuts, 9.51 loads of trim, 55.41 loads of grinds). The choice/select spread settled at $6.91 a gain of $.98.

The beef market was lower again yesterday as packers continue to search for a clearing level for product after a weekend of average at best beef movement. Again middle meats remain a challenge for packers and discounting is needed to entice buyers. The bright spot of the beef market continues to be the ground beef market and this will be the case for several more weeks. I do think we will see some buying come into the end meat complex by the end of the week; however middles will likely remain under pressure. Interest in chucks and rounds along with ground beef should help to offset some of the losses experienced in the rib and loin markets by the end of the week.

Futures Market Situation and Outlook:

August live cattle settled at $97.07 a loss of $.75, October live cattle settled at $104.80 a loss of $.30, and the December live cattle settled at $106.90 a loss of $.40. In the feeder cattle pit, August feeder cattle settled at $111.15 a loss of $.60, September feeder cattle settled at $111.10 a loss of $.82, and the October feeder cattle settled at $112.50 a loss of $.77. The reported CME feeder cattle index for 7/25/08 was $111.45 a gain of $.11.

Yesterdays live cattle volume saw 21,603 contracts trade in the pit and 9,192 contracts trade on Globex. Live cattle open interest declined 3,407 contracts to come in this morning at 297,048. Yesterday’s feeder cattle volume saw 1,999 contracts trade in the pit and 520 trade on Globex. Feeder cattle open interest gained 2 contracts to come in this morning at 32,575.

Live and feeder cattle futures closed yesterday under pressure from selling linked to the lower cash fed cattle trade last week, ideas the cash fed cattle trade will be lower again this week, and the moderately bearish numbers from the cattle on feed report. August live cattle did manage to hold the $97 area of support by the close, however I don’t know if that will be the case today or tomorrow. I think we need to break the front of the board one last time really hard to get some of these guys who are holding onto cattle for the last couple of weeks to sell them before we can rally again. Bear spreads were working in full force yesterday and I would expect that to continue. Keep in mind that the back end of the live cattle board does not have to follow the front lower as different fundamentals of the market are in place there. Feeder cattle found decent buying underneath the market in the August contract and I would expect this to be the case for the majority of the week. I still like buying Dec live and August feeders on breaks. Look for a $.10 lower open to live cattle futures and $.10 higher to feeder cattle this morning. Trade Well!!!

Any one wanting a more detailed report on the cattle and beef markets including fundamental, chart and technical analysis, plus spec/hedge recommendations for packers, processors, producers, and meat buyers feel free to contact me by phone or e-mail to set up a free trial.

There is risk in trading futures and options.

Have a Good Day,

Troy Vetterkind

Chicago Board of Trade

141 West Jackson Blvd.

Suite 1220A

Chicago, IL 60604

1-888-299-1477 Toll Free

1-312-896-2068 Direct

1-708-224-5985 Mobile

tvetterkind@linngroup.com

Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn Group, Inc. the information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. This material and any view expressed herein are provided for informational purposes only and should not be construed in any way as an inducement to buy or sell commodity futures or options contracts. The Linn Group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.

Opening Cattle Report July 28, 2008

July 28, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We left last week with a fed cattle market that trades mostly $2-$3 lower, a cattle-on-feed report that came in neutral to slightly bearish, and a cattle inventory report that came in mostly neutral. First we will recap the on-feed and inventory reports. Cattle-on-feed in the nations feedlots July 1, 2008 totaled 10.295 mil head or 95.9 % of a year ago (95.5%), placements during the month of June totaled 1.513 mil head or 91.3% of a year ago (91.8%), and marketing’s during the month of June totaled 1.973 mil head or 92.2% of a year ago (95%). The semi-annual cattle inventory report showed all cattle and calves in the United States July 1 at 104.3 mil head or 99.5% of a year ago (99.3%), total cows and heifers at 42.4 mil head or 99.8% of a year ago (99.2%), beef cows at 33.1 mil head or 99.4% of a year ago (98.8%), milk cows at 9.3 mil head or 101.1% of a year ago (100.6%), and beef replacement heifers at 4.6 mil head or 97.9% of a year ago (96.1%). Other categories of importance in the inventory report were heifers 500 lbs and over at 16.5 mil head or 99.4% of a year ago (99.4%), milk replacement heifers at 3.9 mil head or 100% of a year ago (100.3%), other heifers at 8 mil head or 100% of a year ago (101.5%), steers over 500 lbs at 14.7 mil head or 98.7% of a year ago (99.8%), bulls over 500 lbs at 2.1 mil head or 100% of a year ago (98.2%), and calves under 500 lbs at 28.6 mil head or 99.7% of a year ago (99.3%). The annual calf crop was estimated at 37.3 mil head or 99.6% of a year ago (99.4%), cattle on feed in all feedlots was estimated at 11.7 mil head or 95.1% of a year ago, and feeder cattle and calves outside of feedlots was estimated at 39.6% of a year ago. Pre-report estimates are in parenthesis.

The on-feed report will be considered a neutral to slightly bearish as the marketing number came in below pre-report expectations, however I think the market knows this already as evident by an increase is carcass weights the last couple of weeks and the fact that we are still killing 58% choice cattle. Also there were less Canadian cattle in the slaughter mix this year compared to last, which along with overall fewer numbers of U.S. cattle on feed would help to explain some of the discrepancy in the estimates. The placement breakdown showed we placed 40,000 head or 5% less cattle weighing under 700 lbs and 94,000 head or 10% less cattle weighing over 700 lbs. This combined with a decrease of 155,000 head or 11% less cattle weighing over 700 lbs in May is still going to be supply friendly the Oct, Nov, Dec fed cattle market. I think this is also friendly the feeder cattle market, as there is a reason we have placed 249,000 head less cattle weighing over 700 lbs in the last two month, that reason being the cattle are not out there. Much of the on-feed report has been priced into the futures market, however we still need to get some of these backed up cattle gone, which is going to keep some pressure on the front end of the board.

The inventory report came in pretty much as expected and once again showed the nation’s cattle herd is shrinking, not expanding. The entire inventory as expected declined by 500,000 head, due mainly to a 200,000 head decline in the nations beef cow herd. Some analysts, including myself think that the USDA may have over estimated the beef cow herd, considering our total cow slaughter ytd is running 6% above a year ago, with the beef cow slaughter alone being 9% above a year ago. One important aspect to the inventory report for later this year is the fact that feeder cattle and calves outside of feedlots totaled 300,000 head more than a year ago as cattle continue to be warehoused outside of feedlots due to the high price of corn. These cattle, just like last year, will be coming off of grass late this summer and early fall and will be placed into the first of the year fed cattle marketing timeframe, which leaves Feb and April live cattle futures a little vulnerable on rallies. I don’t think the inventory report will have much of an affect on the market this morning; however it does provide support from a supply standpoint going into next year.

Next was last Friday’s fed cattle trade where we saw Texas/Oklahoma feedlots sell cattle for mostly $95 live, Kansas sell cattle for mostly $94 live and $1.49-$1.50 dressed, and Nebraska feedlots sell cattle for mostly $94.50-$95.50 live and $1.52 dressed. Sales volumes again look to be moderate with the USDA estimating 85,000 head of cattle sold in their late Friday afternoon report. I will report on the actual totals tomorrow morning once everything is counted and reported this morning. We need to be selling more cattle than this on a weekly basis and until we get some of these backed up marketing’s cleaned up, the market is going to have a hard time rallying. Last weeks feeder cattle market was mostly $2 higher across the board as yearling feeder numbers remain tight and backgrounders came into the calf market to purchase some inventory, thus supporting the lightweight feeder cattle market. The slaughter cow market was mostly higher last week. I will continue to look for a steady to higher feeder cattle and slaughter cow market for this week. The fed cattle market will have a hard time rallying, and will be lower early in the week, however if we get some of these numbers moved we could find some support late in the week and going into next week.

Cash Beef Situation and Outlook:

Last weeks cattle slaughter was estimated at 668,000 head and included at Friday slaughter of 126,000 head and a Saturday slaughter of 42,000 head. The weekly kill produced an estimated 518-mil lbs of beef. The year-to-date cattle slaughter is running 1.1% above a year ago at 19.552 mil head with ytd beef production running 1.9% above a year ago at 15.037 bil lbs. Through Thursday of last week the choice boxed beef lost $9.29 to settle at $160.38 and the select boxed beef lost $5.77 to settle at $155.57 on increased movement of 1,138 loads of fabricated cuts of beef sold. Friday saw another lower day in the beef market with the choice cutout closing $1.88 lower to settle at $158.50 and the select cutout closing $3.00 lower to settle at $152.57. Sales volume was good with 415 loads of beef sold (220.96 loads of choice fab cuts, 135.33 loads of select fab cuts, 7.90 loads of trim, 50.74 loads of grinds). The choice/select spread settled at $5.93 a gain of $1.12 on the day, however a loss of $1.57 for the week.

The boxed beef market was mostly lower last week on capitulation in the middle meat markets. A lack of export business and overall negative psychology weighed on chuck and round cuts, however those items were beginning to find some support late in the week from export customers and grinders. More importantly though, we were beginning to see some buyers step back into the rib and loin complexes, as they perceived the recent break as a buying opportunity. Volumes were not huge, but the fact that someone was willing to come back into the market for these items should provide a little support to prices this week. Ground beef and boneless beef items remain in good demand and price reflects this. I will call for a steady to lower boxed beef trade early this week, with the market stabilizing by late week.

Futures Market Situation and Outlook:

For the week August live cattle settled at $97.82 a gain of $.32, October live cattle settled at $105.10 steady on the week, and December live cattle settled at $107.30 a loss of $.77. In the feeder cattle pit, August feeder cattle settled at $111.75 a loss of $2.12, September feeder cattle settled at $111.92 a loss of $2.58, and the October feeder cattle settled at $113.27 a loss of $3.00. The reported CME feeder cattle index for 7/24/08 was $111.34 a loss of $.11 for the day, however a gain of $.18 for the week.

Fridays live cattle volume saw 19,309 contracts trade in the pit and 9,849 contracts trade on Globex. Live cattle open interest gained 1,653 contracts to come in this morning at 301,140. Friday’s feeder cattle volume saw 3,351 contracts trade in the pit and 1,255 contracts trade on Globex. Feeder cattle open interest gained 184 contracts to come in this morning at 32,631. For the week live cattle open interest gained 3,628 contracts and feeder cattle open interest declined 2,311 contracts.

The latest commitment of traders report for the period ending 7/22/08 showed funds net long 41,980 contracts of live cattle futures and options a decline of 13,453. Commercials were net short 237 contracts of live cattle F/O a decline of 11,898, and the small specs were net short 41,743 contracts of F/O a decline of 1,555. In the feeder cattle market, funds were net long 4,737 contracts of futures and options a gain of 1,943, commercials were net long 3,212 contracts of F/O a decline of 1,452, and the small specs were net short 7,949 contracts of F/O a gain of 489.

The live cattle futures market for the most part held together in the front month contracts as we already had a mostly lower fed cattle trade priced in for last week. Accounts continued to take premium out of the back end of the live cattle board last week, which meant those contracts lost more then the front. Feeder cattle futures lost ground last week as they carried too much premium to the CME feeder cattle index and the losses incurred in the deferred live cattle futures. Looking into this week, as I mentioned above I think most of the on-feed report was priced in and the inventory report will be mostly a non-event. We do need to do something with the basis in August and October live cattle early today and we can expect to see a lower open there. However, I think an early week break will need to be bought in all live and feeder cattle contracts, especially the December live and August feeder cattle, as both the on-feed and inventory report paint the most bullish picture for these two contracts. With that said, I do expect August live cattle to find good support at $96 early this week and October to find support at last weeks low of $103.80. Look for a $.20-$.30 lower open to live and feeder cattle futures this morning. Trade Well!!!

Any one wanting a more detailed report on the cattle and beef markets including fundamental, chart and technical analysis, plus spec/hedge recommendations for packers, processors, producers, and meat buyers feel free to contact me by phone or e-mail to set up a free trial.

There is risk in trading futures and options.

Have a Good Day,

Troy Vetterkind

Chicago Board of Trade

141 West Jackson Blvd.

Suite 1220A

Chicago, IL 60604

1-888-299-1477 Toll Free

1-312-896-2068 Direct

1-708-224-5985 Mobile

tvetterkind@linngroup.com

Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn Group, Inc. the information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. This material and any view expressed herein are provided for informational purposes only and should not be construed in any way as an inducement to buy or sell commodity futures or options contracts. The Linn Group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.

Vetterkind Cattle Report

July 25, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market was quiet again yesterday with no reported trade out of any of the major feeding areas. Packers continue to bid $94-$95 live and $1.52 dressed for cattle with feedlots offering cattle at $99-$100 live and $1.58 dressed. Trade will no doubt get going at some point today; however I don’t imagine we will trade many cattle until after the on-feed and inventory reports, set to be released after the close. I will still call for a mostly steady to lower trade for this week, with the possibility of the cash market stabilizing next week. The beef market remains under pressure; however we could begin to see some stabilization in that market as well next week. I am going to look for a mostly $96 live and $1.52-$1.54 dressed trade by the end of the day and then we will have to come back next week and see how many cattle were sold and reassess beef demand. Going home for the weekend cash fed cattle selling through the auction markets are lower, slaughter cows are mostly higher, and feeder cattle are mixed, lower on the light weight cattle and higher on the heavier weight cattle. We should probably see more of the same early next week.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 126,000 head, which would be even with a week ago and 1,000 head below the same day a year ago. The week-to-date kill now stands at 500,000 head, which would be even with the same period a week ago, with the industry looking for a 685,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $3.21 lower to settle at $160.38 and the select cutout closing $2.30 lower to settle at $155.57. Sales volume was moderate with 337 loads of beef sold (183.64 loads of choice fab cuts, 82.89 loads of select fab cuts, 27.30 loads of trim, 43.06 loads of grinds). The choice/select spread settled at $4.81 a loss of $.91.

It was another lower day in the boxed beef complex as packers try to find a price level for middle meats that will clear building inventory levels. Choice boneless ribeyes, short loins, boneless strips, and PSMO’s were all the leaders on the downside as retail demand for these items is said to be dismal. There were a few price markdowns on clods, two-piece chucks, inside rounds, and peeled knuckles, however not to the extent of that which occurred in the middle meats and sources feel there could be some support that comes into the end meat complex as export buyers and grinders will begin to find some value in these items after the recent price break. Coarse ground beef prices were in need of some price discounting yesterday as well, and this kept some slight pressure on boneless beef items. With yesterday’s close we are now currently on a $13 cwt break from the highs on the choice cutout and $11 cwt on the select cutout. We could begin to see some of the losses begin to slow down a bit going into next week.

Futures Market Situation and Outlook:

August live cattle settled at $98.55 a gain of $.40, October live cattle settled at $105.95 a gain of $.45, and the December live cattle settled at $108.30 a gain of $.37. In the feeder cattle pit, August feeder cattle settled at $112.37 a loss of $.22, September feeder cattle settled at $112.35 a gain of $.05, and the October feeder cattle settled at $113.60 a loss of $.15. The reported CME feeder cattle index for 7/23/08 was $111.45 a gain of $.07.

Yesterdays live cattle volume saw 26,101 contracts trade in the pit and 12,163 contracts trade on Globex. Live cattle open interest gained 750 contracts to come in this morning at 299,501. Yesterday’s feeder cattle volume saw 4,794 contracts trade in the pit and 586 contracts trade on Globex. Feeder cattle open interest gained 97 contracts to come in this morning at 32,448.

Live and feeder cattle futures were under pressure most of the day yesterday, however late fund buying and short covering brought most front month live cattle contracts back into positive territory going into the close. I would imagine that today will be another slow day with position evening ahead of the cash trade, the cattle on feed report, and the cattle inventory report. My ideas on the cash market are laid out in the cash cattle section of the letter. Estimates for the reports are as follow; on feed July 1, 2008 95.5%, Placed during June 91.8%, and marketed during June 95%. For the inventory report the market is looking for all cattle and calves 99.3%, annual calf crop 99.4%, total cows and heifers 99.2%, beef cows 98.8%, milk cows 100.6%. Another big number in the report will be the beef replacement number, which is estimated at 96.1%. As I mentioned earlier in the week, if the numbers come out as expected it would be supply friendly for the market late this year and the balance of next year as we have a growing demand base for our beef overseas and a shrinking cattle herd. The futures market is on a pretty good break and we have a lot of bearish news already priced in (i.e. lower cash, lower beef, etc.). We have some bullish inventory reports ahead of us and it seems as though we are seeing some decent buying under the market as of late. All of which leads me to believe we could see a more pronounced bounce in the market early next week, so you might want to be a little careful about being short. If we don’t trade any cattle until after the reports are released and we have some surprises in the numbers, Monday could be a pretty volatile day. Look for a $.10-$.20 lower open to live and feeder cattle futures this morning. Have a Good Weekend and Trade Well!!!

Any one wanting a more detailed report on the cattle and beef markets including fundamental, chart and technical analysis, plus spec/hedge recommendations for packers, processors, producers, and meat buyers feel free to contact me by phone or e-mail to set up a free trial.

There is risk in trading futures and options.

Have a Good Day,

Troy Vetterkind

Chicago Board of Trade

141 West Jackson Blvd.

Suite 1220A

Chicago, IL 60604

1-888-299-1477 Toll Free

1-312-896-2068 Direct

1-708-224-5985 Mobile

tvetterkind@linngroup.com

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