February 6, 2009


Good Morning from the Chicago Board of Trade,

Cash Cattle Situation and Outlook:

The cash fed cattle market became active in eastern Nebraska and western Iowa yesterday with close to 30,000 head of cattle changing hands at $1.31 dressed. The Omaha packers were reportedly paying $1.32 dressed on a limited basis on better grading cattle. Southern feedlots were continuing to resist $80 packer bids yesterday and offer their cattle at $84-$85. Both sides will undoubtedly have to give a little bit in order to get business done today, and as of now I would expect to see a fed cattle trade in Texas and Kansas that transpires around $82-$83. Looking into next week, packer margins will take a pretty good hit by the close of business today and as such I would expect them to get pretty serious about cutting kills. I don’t expect to see much out of the beef market early next week either, and we will need to see some sort of early week beef business to make the packing community to want to pay any kind of higher money for fat cattle. Going home for the weekend feeder cattle and slaughter cow markets are firm and will likely remain that way into the first part of next week.

Cash Beef Situation and Outlook:

The boxed beef market was lower yesterday as late week demand from the retail/wholesale sector remains dull. There were a few higher price transactions on choice ribeyes and top butts yesterday, however for the most part discounts were needed throughout the rib, chuck, round, and loin primals of the beef carcass. Ground beef demand after the Super Bowl weekend is also said to be waning, which weighs on course ground markets as well. About the only good thing that can be said about yesterdays beef trade was that trade volumes did pick up again on the lower market, indicating that buyers are willing to take on some extra inventory at the lower price levels. I will continue to look for a lower beef trade into the middle of next week.

Futures Market Situation and Outlook:

The futures market opened under some pressure yesterday, however once news of the higher fed cattle trade in Nebraska hit Chicago we saw the market rally on hedge lifting and local short covering. I don’t expect to see a whole lot today as we have a higher fed trade priced in for Texas and Kansas and participants in the market will be looking out into next week to determine where that cash market should be priced. As mentioned above, packers will likely be tough to do business with next week and we are going to need to see something happen with the beef in order to keep any rally attempts alive. The stock market has opened sharply higher, which could add a level of support to live and feeder cattle trade today. Feb live cattle will continue to find support at $82 and resistance at $85 into early next week and a breach of either the support or resistance would likely indicate a couple dollar move in the direction of the breakout. Front month March feeders should have some support back at the $92.50 area, with the next formidable resistance being found at $96. Keep in mind today is option expiration for Feb live cattle and first notice day for Feb is Monday. Look for a mixed open $.10 higher to $.10 lower in live and feeder cattle futures this morning. 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


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