** AgResource Daily Cattle Analysis: Cattle futures were again higher at the end of Wednesday’s trading, and a firm outlook is offered for early trade this morning. Very limited cash business has been done this week and the CME is likely to trade steady/higher, at least until a cash trend for the week has been established. Feeder futures generally marked gains against the fat market, and all trading months marked new contract highs at midweek. Spot feeder futures continue to hold just under highs set last spring, while the cash index was up $.42 at $157.34 or the highest level since April 2016.
Cash markets across the major cattle feeding regions in the Plains remained very quiet through Wednesday. The afternoon Slaughter Cattle Review showed very thin trade of just 654 head traded (274 head at the Fed Cattle Exchange), with an average price of $120 or $2 higher than a week ago. No bids or offers were quoted through midweek, though initial asking prices are expected to be around $123-125.
The beef market continues to trade mixed, with choice gaining on select, but has yet to reflect sharply higher cattle prices of recent weeks. Through Wednesday, the choice cutout value was up $.95 at $207.39 and the select value was $.19 lower at $193.71.
Strong 4th quarter demand has driven cattle prices to extreme levels (relative to supply), and while both cash and CME values have far exceeded expectations, cattle futures for the 1st quarter have quickly moved back inline with fundamental valuations. Rallies over $130 February should be used for 1st quarter sales.
** South American Weather Pattern Discussion: A favorable forecast is offered for the next 2 weeks across all of South America. The forecast is wet for N and C Brazil with heavy rains to drop as far east as Bahia, while needed dryness starts across Argentina and S Brazil on the weekend. The only real concern would be the ongoing heavy rains that could produce low lying flooding in Parana and Santa Caterina. These states have endured nearly 200% of normal rainfall since October 1st and soils are saturated.
The jet stream is displaced south and a rich monsoonal flow will benefit N and C Brazil crops with meaningful rain in the next 14 days. Rainfall totals are estimated in a range of 2-6.00” with some locally heavier amounts.
A drier weather profile will emerge for Argentina following the current system. The EU model forecast offers limited rains beyond Friday which should favor seeding.
There is no evidence of a high pressure Ridge for any part of South America into mid November. Cooler than normal temps will prevail for the next 10 days and crops will continue be quickly seeded/established.
** 10 Day EU Model South American Rainfall:
