January 13, 2009


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash feedlot trade was untested yesterday with showlist assembly and distribution the main feature of the day. Packers were not bidding on any cattle so early in the week, with feedlots pricing a mostly larger offering at $87-$88 live and $1.36-$1.38 dressed. The cash feedlot trade likely won’t be tested until late in the week as packers work off of last weeks buy and Jan contract and formula cattle. The beef market acts pretty good for the first part of the week and there seems to be some demand from the wholesale and retail sectors of the equation. The weather is going to get tough in the northern plains cattle feeding regions by midweek and this along with a futures board that so far seems to found a little stability will have me calling for a mostly steady to $.50 higher market. Cattle selling in the salebarns yesterday were bringing lower money on the fat cattle as that market adjusts to last weeks lower feedlot sales. Slaughter cows were mostly steady to instances of $1 lower. Feeder cattle markets were a little softer reflecting the lower futures and cash markets from last week. Oklahoma City was calling their market steady to $1 lower by the end of the day yesterday and this was the case at many sales across the country. Joplin, MO had a big run of 10,000 head yesterday with that market called mostly steady. Look for feeder cattle to remain mostly steady to $1 lower/$1 higher depending on what sale you are at.

Cash Beef Situation and Outlook:

Yesterday’s cattle kill was estimated at 122,000 head, which would be 3,000 head above last week and 7,000 head below the same day a year ago. The industry will be looking for a 610,000 head production week. The boxed beef market was higher yesterday with the choice cutout closing $2.12 higher to settle at $147.60 and the select cutout closing $1.71 higher to settle at $139.46. Sales volume was typical for a Monday at 261 loads of beef sold (110.70 loads of choice fab cuts, 52.46 loads of select fab cuts, 30.99 loads of trim, and 67.32 loads of grinds). The choice/select spread settled at $8.14 a gain of $.41.

The beef market found good buyer demand from the wholesale market yesterday. Of interest was buying in choice, select, and no-roll ribeyes, short loins, and PSMO’s to the tune of $.10-$.20, as guys get product into position for upcoming Valentine Day features. There was the usual buying in the end meats from retail, which kept steady to higher prices in chuck and round items. There was another strong day in chuck roll and short rib pricing with gains of $.05-$.10 noted. Ground beef markets were once again higher on good demand and movement as this is the shining star for the retailer right now. Boneless beef markets were higher yesterday, especially fed cattle 50’s with product said to be falling short of demand right now. Continue to look for a higher trending beef market into the end of the week.

Futures Market Situation and Outlook:

February live cattle settled at $82.90 a loss of $.20, April live cattle settled at $86.50 a loss of $.32, and the June live cattle settled at $85.45 a loss of $.25. In the feeder cattle pit, January feeder cattle settled at $95.20 a gain of $1.10, March feeder cattle settled at $93.32 a gain of $.65, and the April feeder cattle settled at $95.07 a gain of $1.07. The reported CME feeder cattle index for 1/9/09 was $96.48 a loss of $.04. Live cattle spreads: Feb/April settled at -$3.60 a gain of $.12, April/June settled at $1.05 a loss of $.07, and June/August settled at -$.72 a gain of $.27. Feeder cattle spreads: Jan/March settled at $1.87 a gain of $.45, March/April settled at -$1.75 a loss of $.42, and April/May settled at -$1.42 a gain of $.17.

Yesterdays live cattle volume saw 38,582 contracts trade in the pit and 15,486 contracts trade on Globex. Live cattle open interest declined 4,407 to come in this morning at 203,923. Yesterday’s feeder cattle volume saw 2,830 contracts trade in the pit and 580 contracts trade on Globex. Feeder cattle open interest gained 299 contracts to come in this morning at 20,886.

Live cattle futures were under a degree of pressure on continued “Goldman Rolling” and index fund liquidation. Yesterday was the 3rd day of the Goldman Roll and we saw some stuff rolled into April; however there was some outright liquidation as open interest went down 4,407 yesterday. Another big feature of the day was unwinding bear spreads that were put on the last couple of weeks when corn was rallying. August open interest alone went down 1,000 cars because of this. Weekly support in live cattle futures should continue to be found at $81 in Feb and $85 in April. I think we would need to see futures get back above $85 in Feb and $88.50 in April to negate some of last weeks bearishness. Weekly feeder support comes into play at $90.50 on the March, with the market needing to get back above $94 to keep rally attempts alive. We don’t have as much outside commodity selling to contend with this morning, so I will call for a $.10-$.20 higher open to live and feeder cattle futures. 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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