** AgResource Daily Cattle Analysis: Cattle futures closed higher on Friday and lower for the week, and a steady outlook is offered for early trade this morning. Cash trade last week was $2-3 lower at $134-135, and packers this week will be buying cattle for a holiday shortened work week. The outlook for this week’s cash market is steady at best, with $1-2 lower, likely on reduced demand. Beef cutout values were down $.55 for the week on choice and $4.09 on the select, and steady weaker trend is expected with holiday demand now mostly filled. However, estimated beef packer margins jumped sharply in the last 2 weeks to more than $220/head. With steady beef prices, we estimate a break even cattle price of $155.
Spot cattle basis was nearly unchanged for last week, with the week’s cash business at $11-12 over June cattle futures, versus the 5 year average of $7 over and the 10 year average of $5 over. Basis should quickly narrow in the coming weeks as the June expiration approaches. The cash market is expected to trend lower, but the record basis is expected to offer support to June cattle on breaks. Beef prices will be a drag on rallies.
** US Weather Pattern Discussion: The US and EU weather models are in better agreement this AM. Both forecasts have warmed up slightly from what was offered on Friday, but they are wetter. It’s the wetness and cold to cool temps that has caused Central US corn and soybean crops to be ragged/yellow and for soybean seeding to fall behind the 5 year average starting this week. The rains will be diminished across the Midwest this week, but cold temps will prevail until Friday and the weekend. Rainfall totals during the closing days of May and opening days of June look to be more potent across the Plains and Midwest.
GFS’s 6z 10 Day precip forecast is attached. The heavy rains that have battered the W Plains and W Midwest last weekend will be shifting south and east. This shift is in response to cold Canadian air pushing southward which will produce a cool to cold week across the Central US. Lite showers will be noted with two storm systems each of which can produce .15-.65” of rainfall. The first system is noted across the Plains this AM with a second midweek. More seasonal temps return for the US holiday weekend with a new storm system noted for May 30-31st. A forth potent storm system is offered in the 11-15 day period which will exacerbate Midwest soil wetness.
