November 21, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We saw further fed cattle trade develop in the northern tier of feeding country yesterday at $1.38-$1.39 dressed, which would be about a dollar lower than the bulk of transactions on Wednesday. The southern trade became active yesterday at $86-$87 live and $1.37 dressed. It looks like about 20,000 head of cattle traded that way in both Kansas and Texas. The bulk of trading is likely wrapped up for the week, with any cleanup deals likely taking place at the lower end of yesterday’s trading range. Looking into next week I would say that we could likely hold the market steady and possibly put a dollar on from this weeks $4-$6 drop. Going home for the weekend all classes of cattle selling through the auction markets (i.e. fats, feeders, cows) are all trading at sharply lower money. Here too, we could possibly see some stabilization in these cash markets as we probably took to much money off this week.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 128,000 head, which would be 3,000 head above last week and 128,000 head above the same day last year. The week-to-date kill now stands at 491,000 head, which would be 22,000 head above the same period last week with the industry looking for a 625,000 head production week. The boxed beef market was lower yesterday with the choice cutout closing $.43 lower to settle at $157.79 and the select cutout closing $1.72 lower to settle at $146.15. Sales volume was light with 252 loads of beef sold (65.87 loads of choice fab cuts, 57.28 loads of select fab cuts, 65.61 loads of trim, 63.48 loads of grinds). The choice/select spread settled at $11.65 a gain of $1.29.

The beef market began to soften up yesterday as most on the buy side of the market were content with their beef inventory positions ahead of the Thanksgiving holiday and were moving to the sidelines focusing their attention to moving turkey product. There were a few higher transactions taking place on ribeyes and PSMO’s yesterday, but for the most part the balance of the carcass primals were trading steady to lower. Boneless beef markets were also trading lower yesterday and this will likely be the case going into next week. Look for a lower beef trade until we get Thanksgiving behind us.

Futures Market Situation and Outlook:

December live cattle settled at $85.80 a gain of $1.60, February live cattle settled at $86.52 a gain of $1.37, and the April live cattle settled at $87.45 a gain of $.90. In the feeder cattle pit, January feeder cattle settled at $89.75 a loss of $.10, March feeder cattle settled at $90.35 a gain of $.25, and the April feeder cattle settled at $90.50 a gain of $.30. The reported CME feeder cattle index for 11/19/08 was $95.51 a loss of $1.27.

Yesterdays live cattle volume saw 31,027 contracts trade in the pit and 14,395 contracts trade on Globex. Live cattle open interest gained 274 contracts to come in this morning at 215,928. Yesterday’s feeder cattle volume saw 3,255 contracts trade in the pit and 1,565 contracts trade on Globex. Feeder cattle open interest declined 108 contracts to come in this morning at 19,826.

It was another very choppy and volatile trade in CME cattle futures market as the market continues to be led around by the gyrations in the equity markets. Once again I will say that perhaps we have seen enough down in the market for the very short term simply because the futures market is extremely oversold and we have sold this weeks cash cattle at sharply lower price levels. Also we will have a friendly cattle on feed report out tonight with the market looking for 93.9% on feed Nov 1, 91.1% placements during the month of October, and 95.1% marketed during the month of October. This along with ideas of possibly holding the cash market steady next week with an outside chance of putting a dollar back on the market should help to support a mini short covering rally going into next week. Keep in mind though, market participants will be looking at any rally as a selling and hedging opportunity. 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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