Tyson Foods was also the highlight in the beef pits on Monday. They announced quarterly results for the fourth quarter of 2007. A whopping $85 million loss was posted for the beef segment. Keep in mind they only do beef processing, and not cattle feeding, in the US. This underscores the big problems we have been noting for the past six months in beef processing. It also makes it clear why they announced on Friday the ending of slaughtering at the Emporia Kansas plant. Excess capacity along with a lack of beef exports, are big problems here. With that in mind the CME bear spread the futures, selling the nearby's and buying deferreds (August on out...).
One less plant bidding for cattle is bearish for the near term. We do not see it affecting long-term prices though. The Cattle on Feed report from last Friday afternoon was pushed aside Monday morning. It posted lower than expected Placements and better than expected Marketings, which were both supportive. For this week we would look for cash cattle to hold at $91 (last week's price). On the bearish end we have Tyson news. On the bullish end we have smaller show lists and better wholesale beef prices. We still feel the June and August contracts are overpriced. Though our April/June fat cattle spread went against us Monday morning we still feel it will get to $3 to $4. For hedging we have added new orders to our hedging plan as laid out in the Allendale Hedge Advice page in the Allendale Advisory Report.
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