** AgResource Daily Cattle Analysis: Cattle futures finished mixed on nearby weakness at the end of Tuesday’s trading, and a steady outlook is offered for early trade this morning. December cattle were under pressure from follow through technical trade, with early resistance noted above unchanged, while late day put December well above the lows at the close.
Light cash trade was reported on Tuesday, with the afternoon slaughter cattle review showing sales of nearly 6,000 head at $124, or $1 lower from last week. The majority of the week’s business is still untraded.
Beef cutout values were strong Tuesday morning, and even higher in the afternoon. The choice value was up $2.07 at $212.64 and select was $2.99 higher at $197.76 on moderate to good demand and moderate offerings. After falling to a historically narrow $.60 choice premium in early September, the choice cutout has quickly gained on select beef over the last 2 weeks, with Tuesday’s quote near $15.
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: The US and EU weather models are in good agreement. This raises our confidence in the forecast. A favorable outlook is offered for the next 10 days across South America; however more rain will be desired across N Brazil and Argentina in the 11-15 day period. The last third of November should help in outlining the extended forecast for December.
Wet weather will persist across N Brazil with heavy rains to drop into Bahia and Sao Paulo through the weekend. Needed dryness will develop across Argentina and S Brazil aiding spring planting. Showers are noted across SC Brazil this AM with totals of .25-1.25”. This rain will wane as it tries to push northward.
The EU model forecast is attached depicting South American rainfall for the next 10 days. Note the drying trend for Argentina/S Brazil. This drying is favorable for the next 2 weeks, but would be concerning for crops thereafter.
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. No static high pressure Ridge is evident.
** South American Rainfall forecast for the next 10 Days:
** 15 Day South American Temperature Anomalies:
