September 19, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market turned active yesterday at mostly steady money with the week before. Cash cattle ended up trading at $99 live and $1.56 dressed in Texas/Oklahoma and Kansas yesterday afternoon. The market was mostly $98 live in Colorado and they finished up selling cattle in Nebraska at $98-$99 live and $1.50-$1.51 dressed. Sales volumes look pretty good and given everything that was going on in the financial markets this week, a steady market should be considered a victory for the cattle feeder. Going home for the weekend feeder cattle and slaughter cow markets are on the defensive and I would look for that trend to continue into early next week. As far as the fed cattle market goes, I will look for a steady to higher market for next week.

Cash Beef Situation and Outlook:

Yesterday’s cattle kill was estimated at 122,000 head, which would be 6,000 head below last week and the same day a year ago. The week-to-date kill now stands at 503,000 head, which would be 7,000 head below the same period a week ago with the industry looking for a 670,000 head production week. The boxed beef market was mixed yesterday with the choice cutout closing $.44 lower to settle at $160.77 and the select cutout closing $.06 higher to settle at $154.33. Sales volume was light with 269 loads of beef sold (113.74 loads of choice fab cuts, 77.39 loads of select fab cuts, 23.55 loads of trim, 53.83 loads of grinds). The choice/select spread settled at $6.44 a loss of $.50.

The beef market was mostly steady yesterday as weakness in middle meats was offset by strength in end meats. There is a good steady call for chuck and round meat going into domestic and retail channels. Choice rib cuts were higher yesterday, however packer cite they still have a little problem moving loin meat. The beef market feels in pretty good shape for the time being and I will call for steady to higher prices into early next week.

Futures Market Situation and Outlook:

October live cattle settled at $100.50 a loss of $2.10, December live cattle settled at $101.72 a loss of $2.32, and the February live cattle settled at $101.70 a loss of $2.05. In the feeder cattle pit, September feeder cattle settled at $107.30 a loss of $.70, October feeder cattle settled at $104.17 a loss of $2.12, and the November feeder cattle settled at $103.82 a loss of $2.05. The reported CME feeder cattle index for 9/17/08 was $109.75 a loss of $.18.

Yesterdays live cattle volume saw 52,613 contracts trade in the pit and 24,107 contracts trade on Globex. Live cattle open interest declined 9,149 contracts yesterday to come in this morning at 263,963. Yesterday’s feeder cattle volume saw 6,973 contracts trade in the pit and 1,164 contracts trade on Globex. Feeder cattle open interest declined 376 contracts to come in this morning at 26,190.

Massive fund liquidation yesterday linked to further problems with Wall Street firms sent some live and most feeder cattle contracts limit down yesterday. Live cattle open interest was down 9,000 contracts after yesterday’s session as fund accounts were being forced out of the market. As I said earlier in the week, cash traders shouldn’t worry about what the futures were doing this week as problems in the financial world were dictating cattle futures price direction and not fundamentals. The fundamentals of the fed cattle market are actually in fairly good shape, and it was good to see both packers and feeders agree to mostly steady pricing on cattle inventories this week. The futures certainly got too cheap in my opinion yesterday, and with the Government bail out being proposed early this morning, the stock is trading sharply higher this morning and we can expect to see the same in live and feeder cattle futures. The market will now focus on the cattle on feed report set to be released after the close of trading today. Estimates for the report are as follows, on feed Sep 1, 97.9%, placed during August 100.2%, and marketed during August 90.3%. I would think that the market has most of this priced in already, and if anything I think the placement number and the marketing number could be a little light. Look for a $.50-$1.00 higher open to the futures market today and we will see if we can hold onto the rally today, I think we should be able to. 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
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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