** AgResource Daily Cattle Analysis: Cattle futures closed firm on Wednesday, and a steady outlook is offered for early trade this morning. Buying developed in the cattle market following a slightly weaker start to the day, and futures spent much of the day trading higher, even as the cash market traded lower. Cash markets began trading Wednesday morning, with cattle in the South selling for $119 or $4-5 under last week. Sales farther North were $2-3 lower for the week at $121-122. Any additional business that might develop later this week is expected at similar prices.
Beef cutout values traded down again on Wednesday, with the choice value down $.54 at $210.13 and select fell $2.88 to $190.61. The chart plots the relationship between 3rd quarter lows and 4th quarter highs for the choice cutout. Typically, highs are not scored until early December, though the chart indicates very limited upside potential, and it’s possible that a high was scored last week.
December cattle again had support below $119, 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, while large late year placement rates will work against 2nd quarter futures.
** South American Weather Pattern Discussion: There is not much change in the overnight forecast with below normal rainfall to persist across Argentina and far S Brazil. 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 Argentina and Chile. Another 2 weeks will pass without any meaningful rainfall for Argentina and far southern Brazil. The chances for rain in the 11-15 day do not look good either. The pattern of below normal rainfall looks to persist into December. The graphic features the rainfall results of the EU model for the next 10 days.
The Brazilian weather forecast is wet across Northern and Central Brazil for the next 14 days with heavy rainfall of 4-8.00” likely. The rains will allow for additional soil moisture restoration.
Brazilian temps look to average near normal with highs in the 80’s to lower 90’s. Argentine temps will be cooler with highs in the 70s to upper 80’s. Such temps are 4-8 degrees below normal which will help preserve soil moisture amid the lack of rain. The Argentine dry weather trend looks to persist.
