** AgResource Daily Cattle Analysis: Cattle futures finished sharply mixed at the end of another emotional day of trading on Tuesday, and a mixed outlook is offered for early trade this morning. Strong demand again developed just after the open on Tuesday and most months again rallied to new contract highs in early trading. However, futures were sharply mixed by the close, with June stopping just under limit gains, August was just $.625 higher, and October was down by $.30. The preliminary futures volume estimate of 158,267 contracts for Tuesday looks to be record large.
Cash cattle markets stayed very quiet through Tuesday, and given the recent volatility at the CME could remain paralyzed into late week. Offers for cattle this week were quoted on Tuesday at $142-145, though packers have yet to show any interest in trading this week. Meaningful negotiations could wait until the CME settles down, but packers are again thought to be short on cattle for this week. The Fed Cattle Exchange auction will start later this morning, and offer packers the first chance to get cattle bought, though this week’s sale bill shows just 1,745 head consigned.
Beef cutout values were again higher Tuesday morning and even better in the afternoon beef report. The choice cutout value was up $3.18 at $229.45 (+$7.67 for the week) and the select value jumped $3.83 to $213.28 (+$5.60 from Friday). The USDA noted moderate to good demand and light offerings.
The latest rally in cattle futures ahead of the April expiration is close to a record. We think producers should now consider 3rd quarter hedges. The upside is becoming limited in cattle/feeders.
** Central US Weather Pattern Discussion : The US and EU models remain in good agreement, but have gone colder with E Midwest temps this weekend and early next week. A frost/freeze is now likely across E IL, IN, OH on Sunday and Monday AM which could hit a reproducing SRW wheat crop. Moreover, the forecast offers another round of heavy rainfall for the flooded areas of MO, IL and IN. The Midwest pattern remains cool too cold for the next 10 days with just a few days of warmth around May 10th. This cool pattern will slow evaporation rates and retard crop growth. Cloudiness will also help contribute to disease pressures in wheat. Any planting progress will occur across the N Plains and the NW Midwest where warming next week will allow planters to return to the fields.
The forecast models are consistent in offering .5-3.00” of rain for the already flooded areas of the SW Midwest from late today into Friday. The attached GFS 6z graphic shows precip accumulations expected over the next 10 days. A drying trend is noted across the N Plains and the NW Midwest. No real warmth will be seen with clouds and a flow of Canadian air southward keeping high temps in a range of the 50’s to the mid 60’s and lows in the 30’s/40’s in the east.
** 10 Day GFS Rainfall Estimate
