** AgResource Daily Cattle Analysis: Cattle futures closed lower on Monday, and a steady outlook is offered for early trade this morning. Early strength in the CME cattle trade had resistance above unchanged, and technical selling developed as December slipped back into the red within the first hour. Cash markets were quiet through Monday, though the general consensus is for at least steady to $2 higher trade later this week.
The beef market continues to edge higher following sharply higher cash trade of recent weeks, with choice continuing to gain on select. The choice cutout value on Monday was $1.83 higher at $210.57 and select was $1.69 higher at $194.77. The Weekly Steer/Heifer Grading Percent Report, with data for the week of Oct 27 showed a sharp drop in the percent of top graded carcasses. 76.8% were graded as choice or above, which was the lowest weekly percentage since June.
Cash and futures markets have blown past all fundamentally related price targets, while the next technical targets for the CME are at the spring highs of $130-135.00. Hedgers should sell rallies on production out to the 2nd quarter, as production in the 1st half of 2018 again increases.
** South American Weather Pattern Discussion: A favorable forecast is offered for the next 10 days across South America, but a pattern shift offers a drier trend across N Brazil thereafter. This pattern shift has to be closely monitored with much of N Brazil in need of more rain and a replenishment of soil moisture. The extended forecasts have gone drier for N Brazil.
Wet weather will persist across N Brazil with heavy rains to drop into Bahia and Sao Paulo. Needed dryness will develop across Argentina and S Brazil. This will help speed spring planting as soil moisture is adequate to surplus. Showers are noted across Argentina this AM with rain totals of .15-1.00”. This rain looks to shift slowly eastward this morning. Dry weather follows for the next 5-7 days.
The EU model forecast is attached depicting South American rainfall for the next 10 days. Note the drying trend for Argentina/S Brazil.
No extreme heat is foreseen for South America, but a trend to warming temps will be noted across Argentina and Chile in the 7-14 day period as strong zonal upper air flow develops. Some warming impacts N Brazil after Nov 14th.
** EU Model 10 Day Rainfall Forecast for South America:
** 15 Day Temperature Anomaly for South America:
