September 29, 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 $99 live and $1.56 dressed on the southern plains, steady with the previous week and $97-$99 live and $1.50-$1.52 dressed on the northern plains. Movement looked to be moderate and I will report on weekly totals once everything is counted and reported to the USDA this morning. For the week feeder cattle were mostly $1-$3 lower, however some sales were reporting slightly higher by the end of the week. Slaughter cows were mostly lower on the week. Looking into this week, I am going to call for lower cash cattle markets across the board. Probably not a lot lower, but I think we can take $1-$2 off fats, feeders, and cows by Friday. With all the uncertainty in the financial markets and the beef market dipping lower by the end of last week, I think packers will be hard to do business with.

Cash Beef Situation and Outlook:

Last weeks kill was estimated at 647,000 head, which would be 39,000 head below the previous week and 9,000 head below the same week a year ago. The beef market was $1.80 lower on the choice cutout last week and $2.41 lower on the select cutout through last Thursday on moderate movement of 972 loads of fabricated cuts sold. Friday saw another lower day in the beef market with the choice cutout closing $2.58 lower to settle at $155.42 and the select cutout closing $.72 lower to settle at $149.95. Sales volume on Friday was light with 257 loads of beef sold (90.96 loads of choice fab cuts, 86.43 loads of select fab cuts, 22.31 loads of trim, 57.21 loads of grinds). The choice/select spread settled at $5.47 a loss of $1.86.

The beef market held steady for the first part of the week however began to capitulate late in the week as demand for middle meats really grew weak and buyers backed away from the market. Ribs and loins were lower most of the week and there was some strength in the chucks and rounds, however that strength in the end meats began to fade late in the week as well, and it was becoming obvious that packers were over killing given the level of demand. As such we saw packers cut kills late in the week in an attempt to stabilize the market. I would look for a lower start to the beef trade this week, until we can get product cheap enough to spur demand.

Futures Market Situation and Outlook:

For the week, October live cattle lost $.60 to settle at $100.95, December live cattle lost $.45 to settle at $102.80, and the February live cattle lost $.10 to settle at $103.07. In the feeder cattle pit, October feeder cattle lost $.05 to settle at $105.80, November feeder cattle gained $.27 to settle at $105.57, and the January feeder cattle gained $.73 to settle at $105.80.

Live and feeder cattle futures ended the week under pressure again on further liquidation due to financial concerns and ideas cash markets would drift this week. This week isn’t going to start out any better, with concerns over whether or not the Federal Governments bail out plan will get passed or even work, and more bank failures looming and a further tightening of credit. With most other commodity markets lower this morning, cattle aren’t going to fare much better. We will be down testing support from the major sell off two Thursday’s ago at $100.05 on the October live cattle and $101.05 on December live cattle. Feeder cattle will gravitate towards lows set the same day at $103.30 on the October contract and $102.87 on the November contract. Failure of the above mentioned support areas on any of these cattle contracts will likely open the door for further liquidation to contract lows. Look for a $.25-$.50 lower start 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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