January 26, 2009


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

We left last week with a fed cattle market that trades mostly $2-$4 lower at $82 live and $1.32 dressed. For the week feeder cattle values were off by $2-$4 and slaughter cows were mostly $1-$2 higher. The USDA released its monthly cattle on feed report on Friday, with on feed Jan 1 at 11.234 mil head or 92.9% (93.9% pre-report), placed during December 1.647 mil head or 96.8% (100.1% pre-report), and marketed during December at 1.683 mil head or 102.3% (99.3% pre-report). The report will be considered friendly at the placement numbers came in below expectations and the marketing number came in above pre-report estimates. The overall on feed number will continue to be supply friendly into spring/early summer marketing timeframes and continues to show feedlots remain current on marketing’s. Placements of cattle continue to run below year ago levels on cattle weighing less than 700 lbs. This week’s cash fed cattle market should be steady to $1 higher, feeder cattle values will likely remain under pressure for the first part of the week, and I would look for continued support in the slaughter cow market.

Cash Beef Situation and Outlook:

The boxed beef market lost $1 on the choice product and the select cutout held mostly steady according to the USDA on moderate movement. Retail and wholesale interest for boxed beef began to wane early last week as many buyers filled their most immediate needs and moved to the sidelines looking for improved consumer demand and bargains in the beef complex. Discounts were noted throughout the entire beef carcass last week, with the exception of select rib items and ground beef. I would look for more of the same early this week in the beef market and I will still target the $1.43-$1.45 on the choice cutout and $1.39-$1.40 area on the select cutout.

Futures Market Situation and Outlook:

The futures market was choppy and volatile all of last week as the market anticipated a lower cash fed and feeder cattle market. The futures market was also very sensitive to the wild gyrations in the stock market. This week we should open a little higher on the friendly cattle on feed report and the possibility of a higher cash fed cattle market. The market will once again be on pins and needles in terms of what the stock market does early this week and I’m sure we will find people who will want to sell a higher open. However, I still think we will get our near term fed cattle supplies cleaned up in a couple of weeks and I expect to see improved beef demand by mid-February, both domestic and international. It’s not to say that we can’t see the stock market go and test old lows at 7500 basis the Dow, which would inevitably push fed cattle futures down into new lows, but if such a scenario were to develop I don’t think it would last very long and I still think higher prices are in the cards by March/April. 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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