October 30, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We saw a moderate fed cattle trade develop yesterday at $1-$2 higher money with Texas feedlots selling 23,000 head of fat cattle for $89-$92.50, Kansas feedlots selling 16,000 head of fed cattle for $89-$92, Nebraska feedlots selling 11,000 head of fed cattle for $1.37-$1.40, Colorado feedlots selling 4,500 head of fed cattle for $90-$92 live, and Iowa feedlots selling 500 head of fed cattle for $1.40 dressed. I would expect to see further clean up of fed cattle sales today and tomorrow at fully steady money with yesterday. Sale barn cattle continue to trade on the defensive with fats, feeders, and slaughter cows off by $2-$3.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 110,000 head, which would be 17,000 head below last week and 17,000 head below the same day a year ago. The week-to-date kill now stands at 365,000 head, which would be 16,000 head below the same period a week ago with the industry looking for a 635,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $1.24 lower to settle at $141.71 and the select cutout closing $.25 lower to settle at $135.16. Sales volume was good with 324 loads of beef sold (107.09 loads of choice fab cuts, 98.92 loads of select fab cuts, 44.62 loads of trim, 72.90 loads of grinds). The choice/select spread settled at $6.55 a loss of $.99.

The beef market was mostly lower yesterday with discounts being offered throughout much of the carcass primals. Near term demand remains an issue and this has buyers still standing on the sidelines waiting for packers to offer bargains. I would look for a mostly steady to slightly softer tone to the beef complex going into next week. Beef exports for the week of October 17-23, 2008 are as follows:

Beef: Net sales of 8,600 MT reported for South Korea (5,400 MT), Japan (1,900 MT), Vietnam (1,400 MT), and Canada (800 MT), were partially offset by decreases for Mexico (1,000 MT). Net Sales of 1,200 MT for delivery in 2009 were primarily for South Korea (600 MT) and Canada (500 MT). Exports of 8,500 MT were mainly to Mexico (2,800 MT), South Korea (2,000 MT), Canada (1,200 MT), Vietnam (800 MT), Japan (800 MT), and Taiwan (300 MT).


Futures Market Situation and Outlook:

October live cattle settled at $91.65 a gain of $1.90, December live cattle settled at $91.00 a gain of $2.12, and the February live cattle settled at $92.52 a gain of $2.20. In the feeder cattle pit, October feeder cattle settled at $95.80 a gain of $.25, November feeder cattle settled at $96.50 a gain of $1.07, and the January feeder cattle settled at $95.90 a gain of $1.80. The reported CME feeder cattle index for 10/28/08 was $96.02 a loss of $.39.

Yesterdays live cattle volume saw 23,516 contracts trade in the pit and 13,162 on Globex. Live cattle open interest declined 2,121contracts to come in this morning at 211,923. Yesterday’s feeder cattle volume saw 2,869 contracts trade in the pit and 547 contracts trade on Globex. Feeder cattle open interest declined 334 contracts to come in this morning at 20,759.

Live and feeder cattle futures settled yesterday with solid gains on short covering linked to the higher cash fed cattle trade. However, with that said packers are beginning to cut kills as the beef continues to be hard to move, which is likely going to keep rallies in check for the rest of the week. Again, keep an eye on the December live cattle contract as closing above $90 by the end of this week could keep the market moving higher into early next week. The same can be said for November feeder cattle closing above $96 by tomorrow afternoon. October feeder cattle expire today at noon and October live cattle expire tomorrow at noon. Deliveries last night saw Rosenthal retender the 28 loads of cattle they got Tuesday and Newedge demand them. Overnight stock market futures are trading higher, which should lead to a $.20-$.40 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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