** AgResource Daily Cattle Analysis: Cattle futures closed lower on Wednesday, and a steady/weaker outlook is offered for early trade this morning. Selling developed right from the morning’s lower open, and the market stayed under pressure into late in the day, under pressure from technical liquidation and disappointing cash business.
Cash cattle markets began to trade on Thursday, with the USDA reporting across the Plains cattle markets at $124-125, near steady in the south and $1-3 lower for the week in the north.
Beef cutout values were higher through Wednesday, with choice up $.49 and select was $1.13 higher on light to moderate demand and moderate offerings. The choice rib value scored an early seasonal low in September and has since rallied more than $80 (28%) versus the 5 year average gain of $73. Typically, highs are not reached until early December, but the point is that the upside is quickly diminishing.
December cattle traded into, but did not close out a chart gap left from early last week, where initial support is expected. We continue to advise sales on rallies for feedlot production out to the 2nd quarter, as beef 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 Argentina in the 11-15 day period.
The planting pace will quicken across Argentina and S Brazil where recent heavy rains has saturated the soils. The sunshine and drier weather will firm soils allowing for speedy planting progress. However, by early December the return of a more normal rainfall pattern will be desired. Until then, the dry weather across Argentina and S Brazil is viewed as favorable.
Wet weather will persist across N Brazil with heavy rains to drop into Bahia and Sao Paulo through the weekend. Some showers return to Argentina midweek and push northward into Brazil next Thursday/Friday.
The EU model forecast is attached depicting South American rainfall for the next 10 days. 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.
