September 2, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We left last week with a fed cattle market that was mostly steady with the previous week at $99 live and $1.55-$1.56 dressed in both the northern and southern feeding regions of the country on moderate movement. Feeder cattle values were off by $1-$2 last week as were slaughter cows. Coming back to work this week, I would expect to see boxed beef values to stabilize a bit, and I think we will see some active fill-in business from the holiday. The fed cattle offering should be steady to lower this week, which leaves me thinking that we could see a steady to better fed cattle trade. I would expect to see feeder cattle values on the defensive early this week along with slaughter cow markets, as we see more and more numbers of that class of cattle come to market.

Cash Beef Situation and Outlook:

Last weeks cattle kill was estimated at 677,000 head and included a Friday slaughter of 128,000 head and a Saturday slaughter of 40,000 head. For the week the choice boxed beef lost $.53 and select boxed beef values lost $2.54 on moderate volume. Friday saw a mostly steady beef trade with the choice cutout closing $.20 lower to settle at $160.79 and the select cutout closing $.11 lower to settle at $153.83. Sales volume on Friday was light with 133 loads of beef sold (53.43 loads of choice fab cuts, 35.55 loads of select fab cuts, 18.61 loads of trim, 25.08 loads of grinds). The choice/select spread settled at $6.97 a loss of $.09.

Last weeks boxed beef market was mostly flat to lower as buyers went to the sidelines ahead of the Labor Day holiday taking a wait and see approach to the market. Most primal sections of the beef carcass were in need of some sort of discounting last week. There was also talk in the marketplace last week that beef and pork exports to Mexico, Russia, and China could be in question as those countries say they will either be increasing their production, or in the case of Mexico, will not be buying as much beef and pork from us due to the USDA delisting Mexican meat plants from exporting to the U.S. I think a lot of this import/export talk is politically related and I would caution about getting too bearish our meat markets because of this. I would look for the boxed beef market to be flat for the first part of this week and firming late.

Futures Market Situation and Outlook:

On Friday, October live cattle settled at $104.05 a gain of $.22, December live cattle settled at $106.40 a gain of $.52, and the February live cattle settled at $106.72 a gain of $.52. In the feeder cattle pit, September feeder cattle settled at $111.15 a gain of $.05, October feeder cattle settled at $110.95 a gain of $.52, and the November feeder cattle settled at $110.27 a gain of $.40. The reported CME feeder cattle index for 8/28/08 was $112.33 a loss of $.43.

Fridays live cattle volume saw 27,142 contracts trade in the pit and 11,491 contracts trade on Globex. Live cattle open interest gained 116 contracts to come in this morning at 273,690. Friday’s feeder cattle volume saw 3,673 contracts trade in the pit and 622 contracts trade on Globex. Feeder cattle open interest declined 403 contracts to come in this morning at 31,830.

We left last week with a futures market that sold off hard early on talk of import/export restrictions with some of our major trading partners, and firmed late on the better than anticipated cash markets. My opinion of this week’s futures market is steady to higher by the end of the week. I think we will start off a little better in both live and feeder cattle futures, however with the outside markets in such disarray early this morning we have to be careful that some of this weakness doesn’t spill over into the cattle market. If it did and we saw a sell off today or tomorrow, I would say that it would be a buy going into the end of this week. There were 18 deliveries posted against the August live cattle contract on Friday, with RJO delivering 15 loads and Penson delivering 3 loads, all out of Tulia, TX. Rosenthal received all 18 loads. Look for October live cattle to find early week support at $103 and December live cattle to find early week support at $105. Look for a $.10-$.20 higher 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.