· Not seeing the premiums for Choice cattle like you have in the past?  The Choice/Select spread has not been above $5 since February 12^th according to Cattle Buyers Weekly.  The demand for Choice has been soft but retailers who typically like selling Select are ever so slowly moving towards selling more Choice since the price differential is minimal.

· The corn and soybean markets have had a very strong week on the board after the Midwest received more heavy rains.  Experts caution that crop development could be slowed which will ultimately result in production losses.  It’s not only because of wet conditions but also because of low soil temperatures in some places.  Low soil temps prevent the plants from developing strong root systems making them more susceptible to damage from dry, hot weather typically experienced in July and August.

· What factors are at work in the beef market?

   Bullish:

§      Export trade is increasing – even without the South Korean market.

§      Corn prices are increasing and should equate to fewer feedlot placements and lower beef supplies in the third and fourth quarter of 2008.

  Bearish:

§      A weak economy, high gas prices, consumer demand for less expensive beef cuts and lower prices for competing proteins may turn people from beef towards other meats.

§      Beef prices, especially steak cuts, must sell for higher money in order to support $100 live cattle trade.

· Beef by-product, or drop credit values are supporting the live cattle price.  Every week since October of 2007, drop credit values have been higher than the record we saw in January 2004 of $127.04/head.

· The CFTC has withdrawn a proposal that would have expanded position limits for speculative traders in agricultural futures contracts.  Several other issues are currently being reviewed including; the lack of convergence between futures and cash (widening of basis levels), the effects of higher margin calls, and the role of speculators and index funds in the market.  The Acting Chairman of the CFTC, Walter Lukken, recently stated that "We want to encourage access to markets, but we want to be sure too much money isn't distorting markets artificially."  The CFTC is also working with the Federal Reserve Banks of Chicago and Kansas City along with the Farm Credit Administration to address various credit challenges currently facing the industry.

· The U.S. – South Korean beef deal is off again.  Street protests, occurring daily, are threatening to completely disrupt the deal.  In addition to protests, over 100,000 people signed a petition in just five days asking the government to nullify the free trade deal that would boost two-way trade by $20 billion per year.   It’s not just consumers upset with the President.  Nine top aides to the President submitted their resignations today, this according to Reuters. 

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