November 24, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We left last week with a disappointing cash cattle market, however a friendly cattle on feed report. On feed November 1, 2008 was estimated at 10.972 mil head or 93.2% of a year ago (93.9% pre-report estimate), placements for October were estimated at 2.438 mil head or 89.5% of a year ago (91.1%), and marketing’s during October were estimated at 1.814 mil head or 96.7% of a year ago (95.1%). The report will be considered supply friendly going into the first of the year, however we will run into more yearling cattle placements from the last couple of months by January 1. It appears as though we continue to warehouse younger/smaller cattle outside of feedlots as placements of cattle weighing less than 700 lbs were down 18%, while placements of cattle weighing over 700 lbs were up 1%. These younger cattle are heading to backgrounding lots or wheat pasture and likely won’t show up as fat cattle until late summer. Last weeks cash cattle market was disappointing with the market trading $4-$6 lower at $86-$88 live and $1.37-$1.40 dressed. Feeder cattle markets were $4-$10 lower with slaughter cows off a couple of dollars as well. I believe this was a little too much and that we will see the market stabilize this week. Much will depend on how the futures market trades, but if the Dow holds together cattle futures should stabilize as well. Look for a steady to $1 higher fed cattle trade this week, with feeder cattle markets steady at best.

Cash Beef Situation and Outlook:

Last week cattle kill was estimated at 633,000 head, which would be 14,000 head above the previous week. For the week choice boxed beef gained $.42 and select boxed beef lost $.34 on moderate sales volume. Late in the week though the beef market began to soften up, with Friday showing a $1.69 loss in choice beef to settle at $156.10 and the select beef off $.92 to settle at $145.23. The beef market will likely be under pressure for most of this week as buyers focus their attention towards moving turkey ahead of the holiday on Thursday. Once we get past Thanksgiving we could see one last mini rally in the beef for the first week in December as buyers cover first of the month feature adds. Friday’s cold storage report showed beef stocks 3% above last month and 5% below last year.

Futures Market Situation and Outlook:

The futures market was under extreme pressure all last week on fund liquidation and spec selling linked to weakness in the equity markets and spec selling. We likely haven’t seen the lows in the cattle market yet, however with the market extremely oversold, a friendly cattle on feed report, and the possible stabilization in the cash markets for this week and next, as well as a higher stock market early this morning, I think we can see the futures market open a little higher and trade that way for most of this week. Much will obviously depend on how the equity markets trade this week, but I think barring any more crashes in the stock market we could see a $3-$4 bounce in live and feeder cattle by the first of December. You can take a shot at the long side of the market here for a minute and use last Thursdays lows in live and feeder cattle futures to step away from those longs. Look for a $.25-$.50 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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