October 10, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We saw a continued light fed cattle trade yesterday at prices steady with early week declines at $92 live in the south and $1.37-$1.40 dressed in the north. Trade volumes for the week still remain light and we are going to need to move more cattle by the end of the week. Look for further cleanup trade today at or slightly below the above mentioned prices. Next week’s cash market doesn’t look much better right now, unless we see some sort of stabilization in the equity markets, which in turn help stabilize cattle futures and the cash cattle market. Going home for the weekend all classes of fat cattle, feeder cattle, and slaughter cows are trading $2-$5 lower in the auction markets.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 126,000 head, which would be even with a week ago and 2,000 head below the same day a year ago. The week-to-date kill now stands at 498,000 head, which would be 4,000 head below the same period last week with the industry looking for a 630,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $.30 lower to settle at $150.17 and the select cutout closing $.78 lower to settle at $143.89. Sales volume was good with 333 loads of beef sold (149.32 loads of choice fab cuts, 91.02 loads of select fab cuts, 39.53 loads of trim, 52.85 loads of grinds). The choice/select spread settled at $6.27 a gain of $.48.

The beef market was lower again yesterday, however some of the steep price declines seem to have subsided and the load counts are picking up. Middle meats remain a problem to move for quick ship, however there was some interest in pricing ribs and loins going forward. End meats were mostly steady yesterday as lower priced chuck and round meat will be main featured items at retail in the coming weeks. Look for a sideways to lower beef trade going into early next week.
Futures Market Situation and Outlook:

October live cattle settled at $92.12 a loss of $.32, December live cattle settled at $94.30 a loss of $.65, and the February live cattle settled at $94.82 a loss of $.27. In the feeder cattle pit, October feeder cattle settled at $98.45 a loss of $.45, November feeder cattle settled at $98.05 a loss of $.27, and the January feeder cattle settled at $98.05 a gain of $.12. The reported CME feeder cattle index for 10/8/08 was $100.85 a loss of $1.14.

Yesterdays live cattle volume saw 22,826 contracts trade in the pit and 10,123 trade on Globex. Live cattle open interest declined 2,077 contracts to come in this morning at 235,443. Yesterday’s feeder cattle volume saw 4,896 contracts trade in the pit and 2,004 contracts trade on Globex. Feeder cattle open interest declined 514 contracts to come in this morning at 23,959.

Live and feeder cattle futures continue to search for a bottom as the market opened modestly higher yesterday only to sell off on more economic worries. After the close the Dow Jones plunged 700 points lower pushing Globex cattle futures 200 points lower. Overnight Globex cattle futures are trading near limit down, so that is how we will likely open this morning in the pit. There was a supply/demand report released this morning which looks a little negative to the grain market on increased acreage for corn and beans. The USDA for the most part left the beef numbers alone, although they did raise this year and next years production estimates 15 mil and 100 mil lbs respectively on increased cow slaughter and increased feedlot placements for next year. They also raised this years beef exports 35 mil lbs and left next years export number alone. There were no new deliveries against the October live cattle contract yesterday. We will be sharply lower on the open today as we are trading in step with the Dow Jones. When the Dow rallies cattle rally and when the Dow breaks, cattle break. Until this stock market mess gets itself worked out we will continue to move lower in the cash cattle and futures markets. Look for a near limit down 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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