November 28, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle trade became active after the close of futures trading on Wednesday with prices running generally $2-$3 higher at $90 live in the south and $1.43 dressed in the north. Trade volumes look like there was close to 40,000 head of cattle sold in all trading areas according to the USDA afternoon slaughter cattle report, however I will report on actual numbers on Monday once everything is counted and reported to the USDA today. Feeder cattle and slaughter cow markets were also starting to firm up Tuesday and Wednesday after last weeks huge declines. I think we can go into next week looking for a firmer tone to all classes of cattle. I will call for a steady to $1 higher market for fats and feeders, and mostly steady for slaughter cows. We probably won’t rally straight up, but I think we could have put a low in the fed cattle market last week for a little while.

Cash Beef Situation and Outlook:

Wednesday’s cattle slaughter was estimated at 127,000 head, which was 2,000 head above last week and 2,000 head below the same day a year ago. The week-to-date kill stands at 384,000 head compared to 363,000 head for the same period a week ago. The boxed beef market was lower Wednesday with the choice cutout closing $1.55 lower to settle at $152.39 and the select cutout closing $1.98 lower to settle at $142.03. Sales volume was good with 326 loads of beef sold (102.68 loads of choice fab cuts, 108.91 loads of select fab cuts, 27.20 loads of trim, 87.64 loads of grinds). The choice/select spread settled at $10.35 a gain of $.43.

The beef market was lower on Wednesday which should have been expected given the proximity of the Thanksgiving holiday. I wouldn’t expect to see much out of the boxed beef market today either as many will be out of the office for an extended weekend. Most chuck and round items were trading at lower money on Wednesday, however there were a few instances of higher rib and loin cuts. Boneless beef items were under pressure yesterday with the biggest declines being found in the boneless cow 90’s. Next week I would look for a lower trade early values firming up late as retail and wholesale interests cover their first of the month needs and finish buying middle meats for end of the year holiday celebrations.

Futures Market Situation and Outlook:

On Wednesday, December live cattle settled at $87.42 a gain of $1.60, February live cattle settled at $88.15 a gain of $.82, and the April live cattle settled at $89.70 a gain of $.55. In the feeder cattle pit, January feeder cattle settled at $92.20 a gain of $.80, March feeder cattle settled at $92.92 a gain of $.67, and the April feeder cattle settled at $93.35 a gain of $.95. The reported CME feeder cattle index for 11/25/08 was $92.70 a gain of $.84.

Wednesday’s live cattle volume saw 17,407 contracts trade in the pit and 7,111 contracts trade on Globex. Live cattle open interest declined 915 contracts to come in this morning at 212,918. Wednesday’s feeder cattle volume saw 1,385 contracts trade in the pit and 504 contracts trade on Globex. Feeder cattle open interest gained 83 contracts to come in this morning at 19,632.

Live and feeder cattle futures had a nice rally on Wednesday as a higher cash trade and short covering linked to optimism towards higher cash markets until mid December lifted values. The futures market acts and feels a whole lot better than it did coming out of last week and weekly and monthly charts could be indicating that we have put a near term bottom in the futures market as well. Much will depend on how the stock market acts, but here too, that market feels like it could rally into the end of the year as I think we could already have the end of the world priced into that market for the time being. I want to be a buyer of live and feeder cattle on breaks for the immediate near term, looking for higher cash fed cattle, cash feeder cattle, cash beef, and futures market into mid December. Look for a mixed open to live and feeder cattle futures today (i.e. $.10 higher to $.10 lower), with some support being found underneath the market on any big break. Keep in mind all livestock, grain, financial, and stock markets will close at noon today. Have a Good Weekend and 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


Reproduction or rebroadcast of any portion of this information is strictly prohibited without the written permission of the Linn Group, Inc. the information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. Opinions expressed are subject to change without notice. This material and any view expressed herein are provided for informational purposes only and should not be construed in any way as an inducement to buy or sell commodity futures or options contracts. The Linn Group and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.