** AgResource Daily Cattle Analysis: Cattle futures finished lower last week, and a steady outlook is offered for early trade this morning. April cattle had late week support at the 100 day moving average, so key for early week trade is whether the market is able to hold $123, or if a deeper correction is going to unfold. Cash markets stayed quiet through last week as buyers and sellers were unable to agree on value for the week. Packers raised bids to steady late in the week at $126, but only light sales were reported. Asking prices were higher at $129-130 and feedlots were not willing to budge. Cattle supplies are thought to be above a year ago, though packer owned inventory holds at multi year lows.
Beef production last week slipped to a 5 week low last week, but was also the lightest non holiday week figure since last May. Pork production was also slightly lower for the week, but in line with 2018 weekly average. Combined red meat production held above 1 Bil Lbs and 8% over the 5 year average.
Last week’s WASDE report showed even larger beef production forecasts for the 1st quarter, which will make a lasting rally’s difficult to sustain.
** South American Weather Pattern Discussion: The EU and GFS weather models are in good agreement. Our confidence in the forecast remains high.
The weekend featured a few T storms across N Argentina with rainfall totals generally disappointing – at less than .5”, with coverage of the rain estimated at 35% of Argentina. The southern half of Argentina was dry. High temps ranged from the 80’s to the lower 90’s. Brazilian weather was within Friday’s expectation, but less than expected rain fell across RGDS.
The Argentine weather forecast is warm/dry for the next 10-14 days which will cause a deepening of the drought and acute crop stress. We really don’t see a meaningful chance of rain for the next 2 weeks with heat to return in the last half of the week. A high pressure Ridge will return in the last half of February which looks to add to the heat risk. There could be a few lite instability showers, but there is no meaningful chance of rain into February 26th. The 2017/18 Argy drought looks to rival the dire drought of 2008/09!
The Brazilian forecast is drier across the northern and eastern crop areas which will aid harvest and the early winter corn planting pace. Seasonal temps are expected with a warming/drying weather trend across RGDS adding risk to crops.
** EU Model 10 Day Rainfall Forecast: