** AgResource Daily Cattle Analysis: A steady outlook is offered early week trade in CME cattle futures. Neither rallies or breaks were able to get much traction last week, and weekly support was established against the 100 day moving average while a chart gap at $112.15-112.20 that was left back in April remained unfilled. Negotiated cattle trade last week was thought to have been light, with sales ranging from $117-119 or a range of +/-$1 from the previous week. The beef market continued it’s seasonal descent with both choice and select values down nearly $6 each for the week. Beef prices are expected to decline into late July early August, with initial targets $5-10 lower. The spread between cattle and beef prices narrowed last week, though slaughter margins are estimated at $213/head, a record for early July.
Upside targets on a further recover are at the 50 day moving average at $119-120, and an open chart gap at $120.425-120.60. Longer term, increased summer placement rates warrant 4th quarter sales on rallies.
** US Weather Pattern Discussion: The US & EU models are in only fair agreement on the forecast. The models agree on the 5 day forecast and then disagree and diverge in the 6-15 day period. The US GFS model is too far west with a high pressure Ridge and then keeps trying to form tropical systems in the Gulf that never materialize. The GFS has been highly erratic, and our advice to clients is to only pay attention to the first 5-7 days of this model run. Friday’s midday shift to below normal temps for the Central US was way off the mark.
The EU model is much more consistent and has a far better track record in recent week forecasts. The EU model takes an amplified high pressure Ridge across the Intermountain West and progresses it eastward to a positon across the Plains, the Delta and the southern half of the Midwest. The Ridge in this position would produce above too much above normal temperatures with limited rains. Highs would range from the 90’s to lower 100’s.
The EU model 10 day rainfall map to the left reflects a lack of moisture for the entire Plains along with limited totals for IA, IL, MO and the Delta. The drought in the N Plains is spreading south and east to the detriment of US crop yields.
** 10 Day EU Model Rainfall Forecast:
