** AgResource Daily Cattle Analysis: A steady outlook is offered for early trade in the cattle markets at the start of the week. August cattle were sharply lower for the week, but at the low were more than $10 under the previous week’s high, and also $10-15 under the week’s cash business. The market started to stabilize in late week trade, and strong basis against August and deeply oversold technical conditions are expected to offer support for early week CME trade. Also, a number of fundamental reports will be released this week, starting with the June Cold Storage and Livestock Slaughter reports on Thursday, followed by the Cattle on Feed.
Beef prices were down slightly for the week, with the choice value off $1.37 and select was $.49 lower. While the beef trade was slightly weaker, cattle prices were $5-10 under the previous week. The chart shows estimated slaughter margins surging to $290/head for the week.
Nearby, we are neutral cattle futures, but prices are now more aligned with fundamental supply outlooks, and strong rallies can be used to hedge production to the end of the year.
** US Weather Pattern Discussion: The US & EU models are in better agreement for the next 7 days. A north to south upper air flow will close off gulf moisture with any showers related to instability. This will produce a below normal rainfall trend for the next 10 days. Each run of the models has been trending drier and cooler since Saturday’s midday solution.
June is normally the wettest month of the year for the Central US, so the below normal precip trend for June is important. It places considerable pressure for near to above normal July rainfall as the moisture needs of crops increase in coming weeks.
The attached 10 day rainfall map is from the EU model. ARC would note that the GFS model has less rain across the Dakotas and Lake States. Two tropical storms in the Gulf of Mexico look to cause fluctuations in the model forecasts this week, but with the tropical systems tying up gulf moisture and the upper air flow out of the north, none of the storm systems in the next 10-14 days will be excessively wet.
The next chance of rain is late week across the Midwest with soil moisture in the Plains and W Midwest in retreat. High temps range from the 70’s to mid 80’s.