January 14, 2009


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market was untested yesterday with no real packer bids evident and feedlot offering prices remaining at $87-$88 live and $1.38 dressed. Higher settlements on the futures board and in the beef market along with winter weather in the northern feeding sections of the country should continue to support ideas of a higher cash trade by the end of the week. Beef demand and movement hasn’t been too bad this week and it is said that a few packers could be getting a little short bought on inventory. Showlists are a little larger in most feeding regions again this week, which along with Jan contract cattle being available could give packers a little leverage in this weeks price negotiations. I will still call for a mostly steady to $.50-$1 higher cash fed cattle trade by the end of the week.

Cash Beef Situation and Outlook:

Yesterdays kill was estimated at 126,000 head, which would be even with a week ago and 1,000 head below the same day a year ago. Monday’s slaughter was revised down to 119,000 head, which now puts the week-to-date kill at 245,000 head, even with the same period a week ago with the industry looking for a 610,000 head production week. The boxed beef market was higher yesterday with the choice cutout closing $1.66 higher to settle at $149.26 and the select cutout closing $2.47 higher to settle at $141.93. Sales volume was good with 272 loads of beef sold (118.68 loads of choice fab cuts, 79.62 loads of select fab cuts, 33.07 loads of trim, 40.85 loads of grinds). The choice/select spread settled at $7.33 a loss of 4.81.

The beef market continued to trend higher yesterday on renewed interest in middle meats from the retail and wholesale sectors of the market. There continues to be very good demand for ground beef and end meats and this is helping packers to advance cutout values. Continue to look for a mostly steady to higher market for the balance of the week.

Futures Market Situation and Outlook:

February live cattle settled at $84.07 a gain of $1.17, April live cattle settled at $87.57 a gain of $1.07, and the June live cattle settled at $86.00 a gain of $.55. In the feeder cattle pit, January feeder cattle settled at $96.35 a gain of $1.15, March feeder cattle settled at $94.90 a gain of $1.57, and the April feeder cattle settled at $96.45 a gain of $1.37. The reported CME feeder cattle index for 1/12/09 was $96.59 a gain of $.11. Live cattle spreads: Feb/April settled at -$3.50 a gain of $.10, April/June settled at $1.57 a gain of $.52, and the June/August settled at -$.47 a gain of $.25. Feeder cattle spreads: Jan/March settled at $1.45 a loss of $.42, March/April settled at -$1.55 a gain of $.20, and the April/May settled at -$1.37 a gain of $.05.

Yesterdays live cattle volume saw 34,921 contracts trade in the pit and 21,811 contracts trade on Globex. Live cattle open interest de3clined 2,794 contracts to come in this morning at 201,142. Yesterday’s feeder cattle volume saw 2,506 contracts trade in the pit and 745 contracts trade on Globex. Feeder cattle open interest declined 183 contracts to come in this morning at 20,710.

Live and feeder cattle futures settled higher yesterday on ideas the cash market would be no worse than steady this week. There was some short covering from last weeks sell off and continued unwinding of bear spreads linked to lower corn and winter weather hitting cattle feeding country. This morning the market looks like it is going to open lower on weakness in the stock market. We should find some support under the market on a lower open however as fundamentals of the fat cattle market remain friendly enough to support a higher cash trade for this week. I will continue to look for weekly support in Feb live cattle at $81 and April live cattle at $85 to hold. March feeders continue to look positive to me above $92. Look for a $.25-$.50 lower 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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