** AgResource Daily Cattle Analysis: Cattle futures closed finished lightly mixed but little changed for the day on Monday, and a steady outlook is offered for early trade this morning. Neither rallies or breaks could get much traction on Monday, which left cattle futures to trade in a narrow, inside day. October cattle remained under it’s 200 day moving average, and December cattle again tested, but closed under it’s 50 day moving average.
Boxed beef cutout values were mixed on Monday, with choice down $.32 at $191.56 and select up $.41 at $190.38. The choice/select spread continues to trade at a historically narrow seasonal level of just $1.18/cwt. Slaughter and production totals have held at multi year highs for a number of weeks, while the percentage of high graded carcasses has been record large. The latest quality grade data, for the week of Sep 1 showed 79.6% of steer/heifer slaughter was rated at choice or above, versus the 5 year average of 70%.
December cattle continue to bump up against the 50 day moving average, and a close above sets the next upside target at the 100 day moving average near $115. Our view stays bearish on this rally as we expect that record large 4th quarter beef and pork production will weigh on livestock prices into late in the year.
** US Weather Pattern Discussion: The EU & GFS models are in agreement that a change lies ahead for the North American weather pattern. Hurricane Irma will produce a Trough/Ridge pattern across North America that will lead to increased rainfall chances across the Plains and Midwest with time. This rain will come too late to help many Midwest crops, but it will start a process of soil moisture restoration for winter wheat. The rain could also cause harvest delays, but that will be judged later in September.
Irma is quickly falling apart and by late Wednesday, will be only a memory as the system pushes east. The remains of Irma will provide additional rain for TN, KY and the far southern portions of OH/IN. A Trough is digging southward into the PNW with a Ridge to the east producing a broad reversal of the summer weather pattern – or a Trough/ Ridge. This pattern will allow for improved rains through the Plains and the Midwest beyond September 19th. There is no evidence of a frost/freeze risk for the Midwest for another 2 weeks. After Sept 30th, the impact on any frost will be modest as the harvest starts to gain momentum.
** 10 Day EU Model Rainfall Expectations: