October 14, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market was quiet as participants spent the day putting together showlists and distributing them. The offering looks a little larger in the north and smaller in the south as sales volumes were moderate at best in the northern sections of feeding country last week. There were no packer bids being put out yesterday with offering prices starting the week at $96/$1.46-$1.48. I would look for a late week fed cattle trade that develops at steady to slightly higher money with last week (i.e. $93-$94 in the south and $90-$92/$1.40-$1.42 in the north). Starting the week we see sale barn cattle all trading at $1-$2 lower money. This should continue to be the case until midweek when prices begin to stabilize.

Cash Beef Situation and Outlook:

Slaughter numbers were not released by the USDA yesterday due to the Columbus Day holiday. The boxed beef market was lower yesterday with the choice cutout closing $.43 lower to settle at $149.08 and the select cutout closing $2.01 lower to settle at $141.23. Sales volume was light with 181 loads of beef sold (56.29 loads of choice fab cuts, 83.26 loads of select fab cuts, 3.81 loads of trim, 37.30 loads of grinds). The choice/select spread settled at $7.84 a gain of $1.58.

The beef market was pretty quiet yesterday as participants spent the day going over inventory positions and trying to get a handle on demand. Weekend beef clearance was rated as below expectations. There remains a lot of uncertainty around the beef market and near term demand and many would like to see some sort of stabilization in the equity markets before making any major marketing decisions. Most middle meat and end meat items needed further discounting yesterday in the wake of last weeks larger kill. I would look for most beef items to begin stabilizing by midweek.
Futures Market Situation and Outlook:

October live cattle settled at $91.00 a gain of $1.87, December live cattle settled at $93.00 a gain of $1.70, and the February live cattle settled at $93.45 a gain of $1.62. In the feeder cattle pit, October feeder cattle settled at $96.95 a gain of $1.50, November feeder cattle settled at $96.17 a gain of $1.12, January feeder cattle settled at $96.82 a gain of $1.77. The reported CME feeder cattle index for 10/10/08 was $97.30 a loss of $3.25.

Live and feeder cattle futures settled higher yesterday on short covering linked to gains in the stock market. The Dow Jones had its biggest one day rally on record yesterday after several sessions of utter capitulation. This helped stabilize the severe losses in the cattle futures complex and I would expect to see more of the same early today. While I think we can see a steady to higher tone to the cash cattle and beef markets by late in the week, futures are likely going to price this in during the first part of the week and fade slightly late in the week. We could easily see another $2-$3 higher from yesterday’s settlements in both live and feeder cattle futures by Thursday or Friday of this week, before some profit taking could set in. Deliveries overnight showed 37 retenders from Friday and 7 new loads posted last night. There were no demands posted for any of the loads yesterday. Look for a $.50-$1.00 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
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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