** AgResource Daily Cattle Analysis: Cattle futures marked strong gains through Wednesday, which looks to support early trade this morning. Strong demand developed on a slightly lower start to the day, which carried futures higher into the close. February cattle traded to, but closed just under limit gains, and the rest of the market followed along.
Cash markets were generally quiet through midweek. No bids were quoted, but the rally at the CME will have sellers looking to add $2-3 to last week.
Beef cutout values were each down $.28 through Wednesday, with choice at $205.30 and select at $199.61, on light to moderate demand and offerings. The choice/select spread was unchanged for the day at a $5.69 choice premium, though the spread should continue to narrow into the quarter as cattle/beef supplies tighten up and premium demand for choice beef slackens.
February cattle closed out 1 chart gap just above $119 and also finished back above the 100 day moving average. The 50 day moving average and another gap both sit just above $122. It’s the 2nd quarter, where we see cattle futures as over valued. June cattle back to $115-118 should be sold.
** South American Weather Pattern Discussion: The EU and GFS weather models are in better agreement. Below normal rainfall and warming temps are expected across Argentina for the next 10 days with rainfall accumulations to be limited to .2-.85”. The rain will not be enough to counter evaporative losses and soil moisture levels will continue to decline. And dryness is starting to become an issue for NE Brazil and areas farther west as 4 weeks of below normal rainfall has dropped soil moisture to short levels. The EU model’s 10-day cumulative rainfall outlook is attached. It’s key that more normal rainfall returns to N Brazil in the 9-14 day period. Likewise, it’s important that more sunshine and less rain fall across the southern third of Brazil where excessive rainfall is fostering rust and disease.
The 10 day attached forecast offers two areas of ongoing dryness with above normal rains sandwiched in-between. A high pressure Ridge holds across NE Brazil while a fast moving jet stream produces heavy rains from N Argentina into the southern 1/3 of Brazil. Temps will be warmer than normal across N Brazil and S Argentina with highs in the 90’s.
** EU Model 10 Day Rainfall Forecast:
