** AgResource Daily Cattle Analysis: Cattle futures closed with steep losses on Monday and a weaker outlook is offered for early trade this morning. After a slightly better start to the morning, cattle futures quickly turned south and selling kept the market lower into late in the day. The only positive thing that can be said about Monday’s trade is that futures narrowly avoided a limit down settlement. Feeder futures closed out last week’s chart gap, and collapsed, while the cash index was down $.50 at $142.98.
Cash cattle markets were typically quiet through Monday, and no business is expected until later in the week. Beef cutout values were mixed Monday morning and mixed again in the afternoon. The choice value was up $1.71 from Friday at $249.40 and the select value was down a penny at $225.50 on light to moderate demand and offerings. The rally in choice beef has been historic, but not unprecedented. 2010 was another year that had a more than 20% rally from the start of the year, which also topped out in late May as seasonal demand slowed.
Fundamentally, cattle futures are fully valued through the 3rd quarter, and it’s still the 4th quarter that looks too cheap. Volatility looks to stay high, and key for the market today is that last week’s low in June holds?
** US Weather Pattern Discussion: The US/EU models are in good agreement with cool/wet weather for the W Midwest and Plains this week while warm/drier weather allows the E Midwest to plant/replant on firming soils. US corn and soybean planting progress should score average progress this week with the E Midwest and Delta playing catch up. ARC would look for the US corn seeding pace to reach 83-85% as of Sunday, right at or slightly above average.
The US weather pattern features a Trough West and a weak Ridge east. A slow moving front and wide open flow of Gulf moisture to the north will allow for soaking rains across the W Midwest and the Plains. Severe weather is likely across the Plains in the coming days which will lodge wheat, with any new flooding concern will be focused on OK/E KS where 2-3.00” of rain will be focused.
The attached map depicts 10 day rainfall totals from the 6z GFS model. Note that the heaviest rains will be targeting OK/KS/MO/IA this week with a slow moving cold front. Mostly dry weather will prevail across the E Midwest until the rains arrive late Friday. This remains a wet US weather pattern with a parade of storms lined up in the Pacific. The 11-15 day period will feature a new system.