** AgResource Daily Cattle Analysis: Cattle futures closed lower on Monday, and a weaker outlook is offered for early trade this morning. Cash markets were quiet through Monday, but the generally tone is lower for this week as the beef market continues to trade down under seasonal pressure.
Beef prices on Monday were mixed with the choice cutout value down $1.33 at $217.54 and select was up $.16 at $202.67 on light to moderate demand and moderate to heavy offerings. The spread between the 2 quality grades continues to narrow, as the choice rib value remains in free fall. From the high scored just 5 weeks ago, the choice rib value has fallen $109.
Fundamentally, we think that the downside in August cattle should be limited, based on current 3rd quarter supply projections, while rallies will struggle against $119-121. Longer term, tightening supplies of fed cattle should produce a rally into year end.
** US Weather Pattern Discussion: The US & EU models are in better agreement on the forecast this AM. There are still some differences on rainfall locations and amounts in the next 5 days with the GFS being wetter than either the EU or the Canadian models, but all of the models have the long wave features in the pattern as similar which raises our confidence in its correctness.
This remains a threatening pattern for Central US crops with considerable heat/dryness into late July as the Ridge in the Intermountain West progresses eastward and stalls across the South Central US. The Ridge in this location will block the flow of Gulf moisture and raise temperatures to the 90’s to lower 100’s next week. Limited rainfall is expected across the Midwest over the next 10 days with the best totals falling across the Lake States.
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. The pending heat will only advance the loss of soil moisture. US crop conditions will continue to decline.
** EU Model 10 Day Rainfall Estimate:
