November 14, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We saw further fed cattle trading in the northern feedlots of Nebraska and Iowa yesterday with prices running generally steady with Wednesday at $90 live and $1.44 dressed. It looks as though an additional 25,000 head of cattle traded at that money between the two states. Southern feedlot trade remains at a standstill with packers bidding $92 live and feedlots wanting $94-$95 for their cattle. Feedlots in the southern section of the country were holding firm with their offering prices after the huge turnaround in the stock market yesterday and they remain very current on their market ready numbers of fed cattle. I would say that short bought southern packers will move closer to asking prices today and we should see a trade that takes place no worse than steady with last week. Next week we may see the market stall out a bit as packers will be buying for a short Thanksgiving kill week and the beef market could begin to fall back from current price levels. Tight fed cattle supplies for the next 3-4 weeks will keep the market from falling out of bed though.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 125,000 head, which would be even with a week ago and 5,000 head below the same period last week. The week-to-date kill now stands at 469,000 head, which would be 14,000 head below the same period a week ago. The boxed beef market was $.12 higher on the choice cutout to settle at $157.37 and the select cutout was $.53 higher to settle at $146.49. Sales volume was good with 291 loads of beef sold (132.65 loads of choice fab cuts, 87.47 loads of select fab cuts, 23.24 loads of trim, 47.82 loads of grinds). The choice/select spread settled at $10.88 a loss of $.41.

The boxed beef market was higher yesterday on renewed interest in procuring choice rib and loin meat. End meats were also trading steady to higher yesterday as packers have done a good job of managing supply with the current level of demand from retail and wholesale buyers. Prices of ribeyes and PSMO’s could be getting close to a near term top though and this could start to level off cutout values. Next weeks attention will also turn to moving turkey product ahead of Thanksgiving, which could have an adverse effect on beef values. Look for a softer trend to begin develop in the beef market by the middle of next week. Beef exports for the week of October 31-November 6, 2008 are as follows:
Beef: Net sales of 18,200 MT were primarily for Mexico (8,900 MT, including 7,300 MT previously reported), South Korea (3,900 MT, including 3,800 MT previously reported), Canada (3,000 MT), and Japan (1,700 MT, including 900 MT previously reported). Net Sales of 700 MT for delivery in 2009 were primarily for the Netherlands (400 MT) and Taiwan (100 MT). Exports of 8,000 MT were mainly to Mexico (2,800 MT), South Korea (1,500 MT), Canada (1,200 MT), Japan (900 MT), Vietnam (900 MT), and Taiwan (300 MT). Note: Accumulated exports were adjusted down for Mexico (7,600 MT), South Korea (3,800 MT), Japan (900 MT), Hong Kong (200 MT), and Vietnam (100 MT).
Futures Market Situation and Outlook:

December live cattle settled at $90.55 a gain of $.02, February live cattle settled at $91.72 steady on the day, and April live cattle settled at $92.82 a gain of $.02. In the feeder cattle pit, November feeder cattle settled at $97.17 a gain of $.32, January feeder cattle settled at $96.37, and the March feeder cattle settled at $97.12 a gain of $.12. The reported CME feeder cattle index for 11/12/08 was $97.42 a loss of $.19.

Yesterdays live cattle volume saw 43,219 contracts trade in the pit and 19,451 contracts trade in the pit. Live cattle open interest gained 1,872 contracts to come in this morning at 213,649. Yesterday’s feeder cattle volume saw 2,907 contracts trade in the pit and 892 contracts trade on Globex. Feeder cattle open interest declined 243 contracts to come in this morning at 18,925.

Live and feeder cattle futures managed to settle mostly steady to modestly higher yesterday following the late come back in the equity markets. It was encouraging to see the cattle futures come back from their midsession sell off, however I am still not convinced we are out of the woods yet. We still need to see December live cattle close above $90 and January feeder cattle close above $95 by this afternoon in order to keep a bullish slant on next weeks early trade. December live cattle will find resistance today and early next week at $92.50 and January feeder cattle will find resistance at $98. We will need to close above those price levels early next week to keep any rally attempts alive. Hedgers will still want to use strength in the market to get some protection on Dec, Jan, and Feb marketing’s. Look for a $.10-$.20 higher open to 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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