** AgResource Daily Cattle Analysis: Cattle futures closed slightly lower on Monday, and a steady outlook is offered for early trade this morning. Monday’s trade reflected overall uncertainty with early selling finding good demand, while a midday rally back above unchanged could not be sustained.
Cash markets were quiet through Monday and significant trade is not expected until the last half of the week. Cattle supplies for this week are thought to be a little tighter, but packers are also buying for a short work week, which keeps the outlook for this week to no better than steady.
Boxed beef prices were lower to start the week, with choice down $1.04 at $212.81 and select was off $.68 at $193.83 on light to moderate demand and offerings. The weekly Grading Percent report showed a further decline in percent of high grade carcasses, with the percent graded at choice or better falling the lowest level since May, and also below a year ago.
Initial support for this week in December cattle at $119-120 held through Monday’s trading, however the near term trend is still down and rallies are expected to struggle ahead of the on feed report. Our view stays bearish on rallies for the 1st quarter.
** South American Weather Pattern Discussion: The EU & GFS models are in good agreement on the 10-day forecast. The pattern features a strong northerly displaced jet stream across Brazil and some developing high pressure Ridging across W Argentina and Chile. Another 2 weeks will pass without any meaningful rainfall for Argentina. The chances for rain in the 11-15 day period have been reduced. If needed rains don’t arrive by early December, crop production and yield will be impacted. The focus on South American weather will be increasing.
The graphic below features the rainfall results of the US GFS model. There could be a few lite showers for Argentina, but the best rain chances are relegated to Southern Buenos Aires. Totals outside of this area will be mostly less than .5” with heat noted for another 2-3 days (89-96 degrees) before a cold front drop temps to the upper 70’s to mid 80’s on the weekend. The 90’s then return again next week.
The Brazilian weather forecast is wet across Northern and Central Brazil for the next 14 days with heavy rainfall of 5-8.00” likely. The rains will allow for additional soil moisture restoration. There is no evidence of any lasting heat.