** AgResource Daily Cattle Analysis: Cattle futures closed higher on Wednesday and a firm outlook is offered for early trade this morning. Early selling cattle found good demand that carried futures higher into the close. October cattle closed back towards the top end of a trading range that developed over the last 5 weeks, while December cattle once again traded through, but settled just below the contract’s 50 day moving average. Key for today’s trading is whether the bulls can push December cattle back above the 50 day moving average and trigger another round of technical buying.
The Fed Cattle Exchange auction had sales of 1 lot of 128 heifers at $104.75, out of 1,063 head that were offered. Business away from the FCE remained quiet on very light demand. Quotes on bids and offers were far apart, and it’s possible that trade again holds until Friday. Packer buyers were quoted as bidding cattle at $102-103, while feedlot asking prices were quoted from $107-108. Cattle owners will likely hold their ground, with October cattle trading at Wednesday’s cash offers.
The beef market was weaker Wednesday morning and lower again in the afternoon, with the choice/select spread correcting back to a choice premium. The choice value was down $.39 at $190.40 and the select value was off $2.17 at $188.69 on light to moderate demand and moderate offerings.
Our view stays bearish on rallies as we expect that record large 4th quarter beef and pork production will weigh on livestock prices into year end. A higher close today sets the next target for December cattle at the 100 day moving average, near $115.
** US Weather Pattern Discussion: The EU & GFS models are in agreement on the forecast. A Trough/ Ridge pattern across North America will lead to increased rainfall chances across the Plains and W Midwest with time. The Central and Eastern Midwest will continue to hold in a relatively dry weather pattern with near to above normal temps pushing crop maturity. The Delta and Southern US will enjoy the drier weather to speed the harvest.
The rainfall forecast below is from the EU model for the next 10 days. Notice the heavy rains slated to drop across MT, ND, SD and portions of the W Midwest. The rain starts out across MT and slides slowly eastward during the weekend.
Ahead of the rain some warm temps will be noted with highs ranging from the mid 80s to the mid 90s. Such warmth will push crop maturity and in some cases cause premature plant death. The warmth continues across the E Midwest, but a cold front will cause highs to fall to the 60’s and 70’s across the west. There is no evidence of a frost or freeze event for Central US crops into Oct 1. The extended range 11-15 day forecast offers hints for better rain returning to the E Midwest/Delta. However, this depends on the exact positioning of Hurricane Jose which comes close to the Eastern US shore.
** EU Model 10 Day North American Rainfall Forecast:
