November 7, 2008


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

Yesterday’s cash fed cattle market was pretty quiet on the southern plains with some activity reported in the north on a limited basis. Nebraska feedlots sold a few thousand head of fed cattle yesterday afternoon for $1.40-$1.44 dressed. Iowa feedlots sold close to 12,000 head of fed cattle for $1.40-$1.44 dressed as well. The southern feeding states didn’t report any transactions with packer bids of $92-$92.50 going unmatched against offering prices of $95-$96. We should see a more active trade begin to develop this morning as short bought packers move closer to producer offering prices. The futures should see a little rebound from yesterdays sell off and the beef market still feels to be in pretty good shape, so I will continue to call for a $94-$95 live and $1.44-$1.46 dressed trade by the end of the day. Looking out into next week, we should be able to hold the fed cattle market together as beef demand looks to have picked up slightly and fed cattle numbers will remain manageable. Feeder cattle markets remain supported despite yesterdays sell off in the futures. Slaughter cow markets are still lower and this should be the trend gong into next week, higher feeders and lower cows.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 125,000 head, which would be 3,000 head below last week and 6,000 head below the same day a year ago. The week-to-date kill stands at 483,000 head, which would be 10,000 head below last weeks pace with the industry looking for a 635,000 head production week. The boxed beef market was higher yesterday with the choice cutout closing $1.39 higher to settle at $149.03 and the select cutout closing $1.02 higher to settle at $141.34. Sales volume was light with 275 loads of beef sold (110.10 loads of choice fab cuts, 97.30 loads of select fab cuts, 12.78 loads of trim, and 54.77 loads of grinds). The choice/select spread settled at $7.69 a gain of $.37.

The beef market was higher again yesterday on continued strength in the middle meats complex of the beef carcass. Sharp gains were once again posted in ribeyes and peeled tenderloins yesterday, which helped lift choice cutout values back to the $1.49 level. There was also active buying interest in chuck rolls, most round items, strip loins, and tenderloin butts. Most coarse ground and boneless beef markets were higher yesterday as demand from retail interests has picked up on those items. We should continue to see further strength in the beef market going into early next week.

Futures Market Situation and Outlook:

December live cattle settled at $93.30 a loss of $.97, February live cattle settled at $93.12 a loss of $1.32, and April live cattle settled at $93.95 a loss of $1.60. In the feeder cattle pit, November feeder cattle settled at $98.87 a loss of $1.77, January feeder cattle settled at $98.87 a loss of $1.80, and the March feeder cattle settled at $99.02 a loss of $2.15. The reported CME feeder cattle index for 11/5/08 was $96.59 a gain of $.26.

Yesterdays live cattle volume saw 26,368 contracts trade in the pit and 10,882 contracts trade on Globex. Live cattle open interest declined 645 contracts to come in this morning at 218,493. Yesterday’s feeder cattle volume saw 2,228 contracts trade in the pit and 537 contracts trade on Globex. Feeder cattle open interest gained 3 contracts to come in this morning at 18,760.

Yesterday’s price action in the cattle futures was entirely dictated by the steep losses in the stock market following the historic Presidential election of 2008. Fundamentals of the cattle and beef markets would suggest that there is some further upside in the futures and I still think we could see $96-$97 in front month fat cattle futures and $102-$103 in the feeder cattle futures by the end of the month. If these price targets are achieved we will want to get a little more serious about getting some risk management done on expected late December and first quarter 2009 cattle marketing’s. Keeping December live cattle above $91 and January feeder cattle above $96.50 by the close of trading today keeps the market looking positive into the first half of next week. So far this morning, outside commodity and stock markets are acting more stabile, which should help promote a higher cattle futures market for today. 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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