September 16, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

Yesterday’s cash fed cattle market was at a standstill as participants spent the day assembling this week’s showlist. Packer bids were not being posted with asking prices form feedlot managers starting the week firm at $102-$103 live and $1.60 dressed. A look at last weeks cash trade shows Texas/Oklahoma feedlots selling 39,407 head of fat cattle for $99 live, Kansas feedlots selling 41,680 head of fed cattle for $99 live and $1.55/$1.56 dressed, Nebraska feedlots selling 56,333 head of fed cattle for $98-$98.50 live and $1.51-$1.52 dressed, Colorado feedlots selling 4,931 head of fed cattle for $98 live and $1.53 dressed, and Iowa/MN feedlots selling 23,698 head of fed cattle for $95-$96 live and $1.50-$1.52 dressed. Feedlot showlists are coming in mostly smaller in the south and a little larger in the north, reflecting the ample supplies of cattle in that part of the country that need to be sold the last couple of weeks. I believe this to be a short term bump in numbers in the north and I would expect market ready cattle to become more manageable in the coming weeks as in the south due to reduced first quarter feedlot placements. The beef market remains in fairly good shape in terms of demand, and this should be a supportive factor in the coming weeks as well, as there should be a seasonal increase in beef buying ahead of us. For right now, I will call for a cash fed cattle trade that is no worse than steady with last week at $99 live in the south and $98/$1.52 in the north.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 128,000 head, which would be 1,000 head below last week and even with the same day a year ago. The industry will look for a 670,000 head production week. The boxed beef market was mixed yesterday with the choice cutout closing $.26 higher to settle at $160.83 and the select cutout closing $.09 lower to settle at $153.52. Sales volume was light with 195 loads of beef sold (80.74 loads of choice fab cuts, 80.85 loads of select fab cuts, 9.25 loads of trim, 23.72 loads of grinds). The choice/select spread settled at $7.32 a gain of $.17.

The beef market was mostly steady yesterday as packer inventories and retail/wholesale demand seem to be in balance. Buyers spent most of the day going over inventory positions and assessing demand from over the weekend, where the storm hampered some beef purchasing. I will continue to look for a mostly steady to higher beef market by the end of the week.

Futures Market Situation and Outlook:

October live cattle settled at $103.75 a gain of $1.60, December live cattle settled at $105.32 a gain of $1.55, and the February live cattle settled at $105.75 a gain of $.20. In the feeder cattle pit, September feeder cattle settled at $109.70 a loss of $.20, October feeder cattle settled at $108.82 a loss of $.10, and the November feeder cattle settled at $108.87 a gain of $.10. The reported CME feeder cattle index for 9/12/08 was $110.43 a loss of $.55.

Yesterdays live cattle volume saw 42,032 contracts trade in the pit and 20,792 contracts trade on Globex. Live cattle open interest gained 2,976 contracts to come in this morning at 278,427. Yesterday’s feeder cattle volume saw 3,301 contracts trade in the pit and 1,616 contracts trade on Globex. Feeder cattle open interest declined 275 contracts to come in this morning at 27,161.

Live cattle futures settled sharply higher yesterday on short covering after we couldn’t push through support at yesterday morning’s low. The market is going to be sharply lower on the open on further economic worries and ideas yesterday’s market was overdone. Look for support to come into the market at last week’s low of $101.35 in October live cattle and $102.40 in the December live cattle. Feeder cattle will follow live cattle lower early today, and pushing through $108 basis Oct and Nov feeders will attract more technical selling. Look for a $.50-$.75 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
Vetterkind Cattle Brokerage, LLC
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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