August 19, 2008

Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

It was a typical quiet Monday in the cash feedlot trade with no bids being posted and offers of $102-$103 live and $1.62 dressed to start the week. A look at last weeks feedlot movement shows Texas/Oklahoma cattle feeders selling 35,667 head of fed cattle for $100 live, Kansas feeders selling 29,003 head of fed cattle for $100 live and $1.58 dressed, Nebraska cattle feeders selling 63,774 head of fed cattle for $100 live and $1.58-$1.59 dressed, Colorado feedlots selling 9,141 head of fed cattle for $99.50-$100 live and $1.58-$1.59 dressed, and Iowa/MN feedlots selling 36,592 head of fed cattle for $98-$99 live and $1.58 dressed. Weekly totals include negotiated cash and negotiated grid sales as reported to the USDA. Showlists are coming in a little larger in the southern trading regions of the country with smaller numbers showing up in the north. This is a result of the moderate movement in the south last week. This week my opinion remains the same, I think we will see a slight pull back in boxed beef prices ahead of the Labor Day holiday, which in turn will prompt a small pull back in cash fed cattle prices. I will look for a mostly $99-$100 live trade and $1.56-$1.58 dressed by the end of the week. To start the week fed cattle, feeder cattle, and slaughter cows selling through the auction markets are mostly steady with last week.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 124,000 head, which would be 3,000 head below last week and 2,000 head below the same day a year ago. The industry is looking for a 665,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $.04 lower to settle at $164.29 and the select cutout closing $.35 lower to settle at $157.41. Sales volume was light with 203 loads of beef sold (81.94 loads of choice fab cuts, 69.16 loads of select fab cuts, 4.07 loads of trim, 47.62 loads of grinds). The choice/select spread settled at $6.88 a gain of $.31.

The boxed beef market was modestly lower as weekend beef clearance was described as average, which led to minimal fill-in business yesterday. Last weeks larger slaughter figures left packers with extra inventory of rib and loin meat to sell, which had them offering discounts on those items yesterday. For the most party end meats, ground beef, and boneless beef items were steady and this should be the case for most of the week.

Futures Market Situation and Outlook:

August live cattle settled at $101.92 a gain of $.25, October live cattle settled at $105.95 a gain of $.10, and the December live cattle settled at $106.75 a gain of $.37. In the feeder cattle pit, August feeder cattle settled at $113.65 a loss of $.25, September feeder cattle settled at $113.57 a loss of $.82, and the October feeder cattle settled at $113.50 a loss of $1.02. The reported CME feeder cattle index for 8/15/08 was $113.15 a gain of $.18.

Yesterdays live cattle volume saw 19,932 contracts trade in the pit and 7,272 contracts trade on Globex. Live cattle open interest gained 199 contracts to come in this morning at 274,020. Yesterday’s feeder cattle volume saw 2,768 contracts trade in the pit and 1,635 trade on Globex. Feeder cattle open interest declined 556 contracts to come in this morning at 32,986.

There were more deliveries against the August live cattle contract last night with Rosenthal delivering 10 loads out of Amarillo, TX and another Rosenthal account receiving all 10 loads. The last date on deliveries was 6/30/08 with a settlement price of $101.92. Futures saw a bounce from last Friday’s sell off, however as expected the early rally didn’t last long as technical sellers emerged shortly after the open. The $106 area couldn’t hold in the October live cattle yesterday, which now leaves support at $105 as the next target. Feeders were weak all day and next level of support in that market looks to come into play about $1 lower in Sep, Oct, and Nov from yesterday’s settlement. 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

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