Market instability creeps into cattle trade

Dec 3, 2008
Market instability creeps into cattle trade

The troubles on Wall Street bled through to agricultural commodities last week and spurred feedlot managers to move cattle early in the week. Fed cattle trade got underway in earnest last Thursday as live cattle contracts plummeted on the Chicago Mercantile Exchange (CME). Southern Plains cash trade led the market last week at $97-98 while dressed trade in the north came in a range of $146-148 with a discount noted for some of the heavier cattle that have occurred as a result of the slow pace of marketings in portions of the Corn Belt over the last several weeks.

Thursday’s CME trade, which closed sharply lower after trading limit-down for much of the session, rebounded slightly but remained well below cash markets, causing a number of deliveries against the October contract. October live cattle closed down 287 points at $95.70 while December dropped 240 points to close at $98.07 and February 2009 live contracts shed 282 points to end the volatile session at $97.80.

Much of the sell-off in commodities followed a rough session on Wall Street and in the grain markets as predictions about a slowing economy caused widespread concern, particularly among retailers who are reportedly trimming their expectations for 2009. Analysts are concerned that consumer spending is likely to continue to fall well into next year which will hurt discretionary spending and hamper restaurant trade, spelling more difficulty in the middle meat complex. In fact, the National Restaurant Association said last week that its members reported the tenth consecutive month of weakness in August. Restaurantoperators continued to report a same-store sales decline in August, though results were an improvement over the previous two months. In addition to soft sales results, restaurant operators continued to report negative customer traffic levels in August.

“The recent lack of change in the Restaurant Performance Index reflects the wait-and-see sentiment in the financial markets and overall economy. Restaurant operators reported negative samestore sales for the eighth time in the last 10 months, and their outlook for sales growth in the months ahead remains uncertain,” said Hudson Riehle, senior vice president of research and information services for the National Restaurant Association. “The uncertain economy and rising food costs continue to pose a challenging

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