** AgResource Daily Cattle Analysis: Cattle futures closed lower on Tuesday, and a weaker outlook is offered for early trade this morning. Late Tuesday afternoon the USDA announced an atypical case of BSE in an 11 year old cow in Alabama. The USDA stated that the cow never entered slaughter channels and presents no health risk. Atypical BSE generally occurs spontaneously in older cattle and does not present a threat to the herd or food supply, and the USDA noted that this case will not change US trade risk status.
Negotiated cattle markets in the Plains have been quiet in the first half of the week, and early sales have been $3 lower at $117 on very thin volume, and a similar trend is expected for the bulk of this week’s business. Beef cutout values turned down on Tuesday, with the choice value down $1 and select $.56.
NASS will release the Cattle on Feed report on Friday. Ahead of the report, the average trade estimate calls for a June placement rate at 106% of last year, a marketing rate of 105%, with July 1st on feed expected at 103% of last year.
Our view is neutral 4th quarter cattle futures on rallies amid an outlook for record 4th quarter beef production following big summer placements. Short term support in August cattle is expected on a break back to $114.00.
** US Weather Pattern Discussion: The US and EU weather models are in only fair agreement. The long wave forecast pattern is similar in the forecasts, but the GFS continues to be too wet and is over-amplifying Troughs. As has been the case for months now, the forecast below is based on the EU model forecast.
There’s no real change to the pattern ahead, with upper level high pressure of varying degrees to dominate North America from the Intermountain West to the South Central US. This will keep the mean position of the jet stream largely north and east of major crop areas. The heat will accelerate the loss of soil moisture and support bouts of heat into the opening days of August. The pattern remains drier than normal for the Plains, southern 2/3 of the Midwest and Delta. There is a chance for some rains across the E Dakotas which could help ease drought stress.
Isolated soaking showers will impact E SD, MN and WI over the next few days. Totals are pegged as high as 1-3”, but we mention that the area of heavy rain has been reduced. A few showers will fall in IA, but a good soaking rain is lacking. The same applies for IL and IN where soil moisture will be in fast retreat.
