** AgResource Daily Cattle Analysis: Cattle futures closed mixed to higher on Thursday, and a steady outlook is offered for early trade this morning. Selling developed right from the morning’s lower open, but the markets were able to stage a recovery into the close on renewed fund buying.
Cash cattle market trade was slow 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 slightly lower on Thursday, with choice down $.39 while select was off $.59 on light to moderate demand and moderate offerings.
The rib market has been the major driver of the cattle rally on the reduced grade. 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 $73.00. A top in the rib market should correlate to a top in the futures market, so we are running the chart again. ARC research is willing to be that some seasonal high will be scored in the next 10 trading days. A sharp break should follow as rib prices start to ease after holiday needs are fulfilled. ARC cautions clients about being bullish, and hedgers should look at current prices as providing a hedge opportunity.
** 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 during the next 2 weeks. The sunshine/drier weather will firm soils. However, by early December the return of a more normal rainfall pattern will be desired. Until then, the dry weather across Argentina is viewed as favorable.
Wet weather will persist across much of 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 week 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. It would be December before any real worry about Argentine dryness could evolve as soil moisture is surplus.
** 10 Day South American Weather:
