Wednesday, October 22, 2008

October 22, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market went largely untested yesterday; however there were a few hundred head of cattle that reportedly sold in the Nebraska dressed market at $1.37, though numbers were too small to establish a trend. Packer bids in the south start at $86-$87, with feeders offering cattle at $93-$94. In the north packer bids were hard to find, however suspect that if you were to call a packer he would bid you $1.30-$1.32 dressed. Feeders in the north will be priced at $90-$92 live and $1.44-$1.45 dressed. Another late week trade is expected with prices holding mostly steady with last week. Look for a $90-$91 live market in the south and $88-$90 live or $1.40-$1.42 dressed market in the north. Fat cattle selling through the sale barns are mostly steady to lower with last week at $81-$86. Feeder cattle sales are mostly $2-$3 higher across the board on calves and yearling’s, and slaughter cows are mostly $1-$2 better.

Cash Beef Situation and Outlook:

Yesterday’s cattle slaughter was estimated at 127,000 head, which would be 1,000 head above last week and 3,000 head below the same day a year ago. The week-to-date kill now stands at 254,000 head, which would be 2,000 head above the same period last week with the industry looking for a 630,000 head production week. The boxed beef market was mixed yesterday with the choice cutout closing $.52 lower to settle at $145.04 and the select cutout closing $.16 higher to settle at $138.19. Sales volume was light with 267 loads of beef sold (97.45 loads of choice fab cuts, 94.03 loads of select fab cuts, 20.03 loads of trim, and 55.69 loads of grinds). The choice/select spread settled at $6.85 a loss of $.68.

It was the same old story in the beef market yesterday with packers searching for a clearing level on most rib, loin, chuck, and round items. There is still a lot of uncertainty concerning forward beef demand, and as such major buyers of boxed beef are securing product for their most immediate needs. Look for the beef market to remain steady to soft until the end of the week, when we could see a little better demand unfold.

Futures Market Situation and Outlook:

October live cattle settled at $91.82 a gain of $1.00, December live cattle settled at $92.97 a gain of $.90, and the February live cattle settled at $93.85 a gain of $.70. In the feeder cattle pit, October feeder cattle settled at $99.27 a gain of $.62, November feeder cattle settled at $99.45 a gain of $.85, and the January feeder cattle settled at $99.12 a gain of $1.17. The reported CME feeder cattle index for 10/20/08 was $97.39 a loss of $.04.

Yesterday’s live cattle volume saw 18,083 contracts trade in the pit and 10,351 contracts trade on Globex. Live cattle open interest gained 922 contracts to come in this morning at 225,382. Yesterday’s feeder cattle volume saw 2,065 contracts trade in the pit and 596 contracts trade on Globex. Feeder cattle open interest gained 170 contracts to come in this morning at 22,519.

It was another slow day in the CME cattle pits; however prices managed to close higher by the closing bell on short covering and ideas of a stabilizing cash fed cattle market for this week. There were 24 new deliveries against the October live cattle contract last night with MF Global putting out 10 loads, RJO putting out 9 loads, and Rosenthal putting out 5 loads, all out of Norfolk, NE. Rosenthal received all 24 loads and I would imagine that he stops them all. This morning most all of the outside markets are lower along with the stock market so we are likely to see a lower open to cattle futures as well. We will continue to look for support in the October live cattle futures at $90 and in December at $91. Feeder cattle should find some support on an early morning break at $98. Look for a $.50-$.75 lower 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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