September 8, 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 $1-$2 lower early and steady to $.50 higher late. Moderate numbers of fed cattle traded in Nebraska at $97 live and $1.55 dressed on Thursday. Cattle feeders on the southern plains that were determined to get at least steady money held out and were rewarded Friday afternoon, as trade developed at $99 live and $1.56 ½ dressed in Texas and Kansas, with packers paying $99-$99.50 live for cattle in western Nebraska and Colorado on Friday afternoon as well. All in all, it wasn’t a bad trade in the south and it looks as though movement was adequate in all trading areas. As fed cattle numbers get tighter in the next couple weeks and we see beef demand pick up a bit, I think we will see the fed cattle market hold together and trade higher in the coming weeks. I will call for at least steady money on this weeks fat cattle market by the end of the week. Last week saw a mostly steady feeder cattle market as the holiday curtailed movement on the week. Many feeder sales were actually reporting higher transactions by the end of the week and I will expect to see a mostly steady to slightly lower market early this week. Slaughter cows were mostly lower last week as more and more numbers show up in the western sale barns.

Cash Beef Situation and Outlook:

Last weeks cattle kill was estimated at 590,000 head, which was 90,000 head below the previous week and 16,000 head below the same week a year ago. The boxed beef market was $2.58 lower on the choice cutout and $1.94 lower on the select cutout on increased movement. Friday saw a mixed beef trade with the choice cutout closing $.11 lower to settle at $158.30 and the select cutout closing $.05 higher to settle at $152.05. Sales volume was good with 341 loads of beef sold (139.92 loads of choice fab cuts, 113.08 loads of select fab cuts, 31.84 loads of trim, 55.81 loads of grinds). The choice/select spread settled at $6.25 a loss of $.16.

The main theme in the beef market last week was packers getting into a better sold position on their beef inventory. And it worked as they offered discounts, primarily on middle meats for the first part of the week, which in turn enticed buyers back into the market. We saw load counts go up and movement for the week was described as very good. This will allow packers to raise prices early this week in an attempt to cover higher live inventory costs. Export demand to Asia remains supportive to the market and we will see our domestic demand begin to pick up in the coming weeks. All of which is going to be supportive to prices going forward. I will call for a steady to higher beef market for the first part of this week.

Futures Market Situation and Outlook:

On Friday October live cattle settled at $102.95 a loss of $.35, December live cattle settled at $104.95 a loss of $.35, and the February live cattle settled at $105.80 a loss of $.30. In the feeder cattle pit, September feeder cattle settled at $111.12 a gain of $.35, October feeder cattle settled at $110.67, and the November feeder cattle settled at $110.22 a gain of $.25. The latest reported CME feeder cattle index was $111.98 a gain of $.33.

Futures spent most of the first part of last week trading lower as wild gyrations in the grain market, talk of export disruptions to Mexico and Russia, and ideas the cash markets were going to be lower all weighed on values. I thought the market actually held together fairly well on Friday as we had live cattle futures on the ropes early, however once the market realized we were going to trade $99 cattle on the southern plains, we saw a pretty good short covering rally. There was some very good buying in October live and feeder cattle futures on Friday morning at there lows, and I think this buyer support will spill over into the first part of this week. If we get some follow though buying early today in the live and feeder futures I think it could end up being a positive week. Look for a $.10-$.20 higher 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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