· May 1 Cattle on Feed: On Feed 100.3%, Placements 98.0%, Marketings 110.7%

· We’re all aware of crude oil prices but does it have any bearing on the commodity markets?  According to Cattle-Fax it does.  Spot crude oil prices are twice as high as a year ago and surged to record highs recently at over $135/barrel. At the same time, spot corn prices have increased approximately 60 percent. In the last year, corn and crude oil prices have become tightly correlated. In a 5-year period from 2002 to 2006 the relationship between the two was non-existent, but over the past 12 months, the correlation has been unmistakable at 0.86. What this means is that crude oil prices have explained 86% of corn’s price movement. The correlation between soybean and crude oil prices were also unrelated from 2002 to 2006 period, but they moved nearly lock-step with one another from January 2007 through February of 2008.

· On Thursday, the South Korean government announced that it will move forward with the resumption of beef trade with the U.S.  There is some anticipation of further anti-government protests since the beef deal has caused a lot of resentment among Korean consumers.  Because of this and other political issues, approval ratings for the new president are only at 25%. 

· The Farm Bill and points directly affecting cattle producers:

1.       MCOOL – retailers must label their products by September 30, 2008 or face a fine of $1,000 maximum per offense

2.      The tax credit for ethanol blenders would be reduced from $0.51/gallon to $0.45/gallon

3.      An extension to 2010 for a $0.54/gallon tariff on imported ethanol

4.      Removes the provisions calling for a ban on packer ownership of cattle

· April’s commercial red meat production for the U.S. totaled 4.30 billion pounds.  This is up 14 percent from the 3.75 billion pounds produced in April 2007. Beef production, at 2.25 billion pounds, was 12 percent higher than in 2007.

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