November 19, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash feedlot trade was largely untested with just a few cattle reportedly trading in the Nebraska dressed market for $1.40 dressed. The cattle were supposedly of Canadian origin and hedged. The rest of cattle feeding country was quiet with no real packer bids being tendered and feedlots offering this week’s mostly smaller showlist offering at $94-$95 live and $1.46 plus dressed. A late week trade is expected to develop at lower money (i.e. $93 in the south and $1.40-$1.42 in the north) due to imploding futures values and packers buying cattle for a short production week next week. As we enter the mid point of the week, most all classes of cattle selling in the auction markets are bringing lower money from fats to feeders to slaughter cows. Look for more of the same going into the weekend and early next week.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 127,000 head, which would be 6,000 head above last week and 4,000 head below the same day a year ago. The week-to-date kill now stands at 238,000 head, which would be 7,000 head below the same period a week ago. The boxed beef market was higher with the choice cutout closing $.10 higher to settle at $157.49 and the select cutout was $.79 higher to settle at $147.52. Sales volume was light with 200 loads of beef sold (73.87 loads of choice fab cuts, 71.93 loads of select fab cuts, 16.53 loads of trim, 37.75 loads of grinds). The choice/select spread settled at $9.97 a loss of $.69.

The beef market was marginally higher yesterday, however private sources indicate a softer tone beginning to develop on many chuck, round, and loin items. Yesterday saw some price reductions for quick ship of clods, chuck rolls, inside rounds, and boneless strips. Boneless beef markets were lower yesterday with current production out weighing near term demand. I will continue to call for a lower beef market going into next week.

Futures Market Situation and Outlook:

December live cattle settled at $87.15 a loss of $1.15, February live cattle settled at $87.60 a loss of $1.42, and the April live cattle settled at $89.07 a loss of $1.30. In the feeder cattle pit, November feeder cattle settled at $95.75 a loss of $.27, January feeder cattle settled at $91.25 a loss of $2.65, and the March feeder cattle settled at $92.10 a loss of $2.20. The reported CME feeder cattle index for 11/17/08 was $97.26 a loss of $.40.

Yesterdays live cattle volume saw 29,932 contracts trade in the pit and 12,712 contracts trade on Globex. Live cattle open interest gained 799 contracts to come in this morning at 216,423. Yesterdays’ feeder cattle volume saw 2,918 contracts trade in the pit and 890 contracts trade on Globex. Feeder cattle open interest gained 208 contracts to come in this morning at 19,976.

Live and feeder cattle settled yesterday with sharp declines, following the equity markets lower. In the case of feeder cattle we scored new contract lows in every trading month except November, as that contract will expire tomorrow. February live cattle also made a new contract low yesterday. Another late rally in the stock market did manage to pull live cattle contracts $.50 off their lows on the Globex platform after the pit close yesterday, and so far this morning cattle futures are trading $.10-$.30 higher with the Dow and S & P futures trading 135 and 13 lower respectively. We could possibly see a short covering rally in live and feeder cattle futures today as they have been pummeled lower since last Friday. However, the longer term view of the market looks lower and everyone will be looking for rallies to sell. December and February live cattle will remain in a bearish posture holding under $90, as will January feeder cattle below $95. We will need to see some closes back above these strong resistance levels now to negate some of the recent bearishness. Look for a $.10-$.20 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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