** AgResource Daily Cattle Analysis: Cattle futures marked good gains last week on better than expected cash business, and a steady outlook is offered for early trade at the start of the week.
Cash cattle trade last week got underway at midweek with cattle trading around $120, or $2-3 better for the week. While cattle prices moved higher, the beef market continued to drop, putting a further squeeze on packer margins. At week’s end, the choice cutout value was down $9.49 and the select value was $7.09 lower. Estimated slaughter margins slipped to a 10 week low of $141/head – but are still more than $20 higher than a year ago and a record for mid-July. The seasonal outlook for the beef market is lower, but after a historic correction support is expected at $200-205.
October and December cattle each closed at 5 week highs, and our view is neutral on a further rally amid an outlook for record 4th quarter beef production following big summer placements. Upside technical targets for August are at the 50 day moving average just above $119, and then a chart gap at $120.425-120.60
** US Weather Pattern Discussion: The US & EU models are in mostly good agreement to start the week. The forecast models form/and place an amplified high pressure Ridge across the South Central US this week which will lead to extreme heat from Kansas through the southern half of the Midwest later this week. Heat will also bubble northward into the N Plains and W Midwest with Des Moines to endure a string of 90 degree heat with a few of those days later this week registering close to 100 degrees. Unfortunately, there is just not much rain in the forecast for the Plains or the southern 2/3’s of the Midwest for the next 10 days. Rainfall will be centered on the Great Lakes as storm systems ride over the top of the Plains and South Central High Pressure Ridge and drop southeast. The best rains this week look to fall across E MN, WI, MI and portions of NE IL, N IN and OH. The EU model 10 day rainfall map reflects this trend. For crops that have not enjoyed rain this week, the heat outlook is worrisome with the Midwest corn crop pollinating. Temps will be just too warm for corn with lows overnight only falling to the mid 70’s and lower 80’s. This will cause problems for corn respiration. The Ridge reforms over the Intermountain West in the 12-15 day period and continues to the same overall US upper air flow.
** EU Model Rainfall Forecast Next 10 Days;
