** AgResource Daily Cattle Analysis: Cattle futures fell to steep losses on Friday, and a steady/weaker outlook is offered for early trading this week. Selling developed right from the morning open on Friday which left February down the $3 limit at the close, though the rest of the market managed to settle above a limit decline. Cash trade last week was $2-3 higher at $121, while beef cutout values fell $5 in choice and $4 on select.
The chart shows that commodity fund traders took their cattle position from net long nearly 78,000 contracts in September, to 132,000 contracts in early November. Traders started to liquidate their position 3 weeks ago, and had cut back to 120,000 contracts as of Tuesday. Hedgers on the other hand, have a near record amount of cattle sold at the CME.
The break to 5 week lows also left February cattle back under the 50 day moving average, which is expected to produce additional fund liquidation early this week. The next levels of technical support are noted at $119-120 February, while a recovery back to $125 or better offers the next 1st quarter sales opportunity.
** South American Weather Pattern Discussion: The weekend rains across Argentina and Southern Brazil were disappointing ranging from traces to .45”. There was a few localized areas that received more than 1.00”, but that was a localized event, not the rule. High temps ranged from the mid 70s to the 90s.
The major forecasting models are in good agreement and consistent with prior days, which raises our confidence in their forecast solutions. A period of arid weather will prevail across Argentina and S Brazil over the next 10 days with limited rain totals that will be mostly less than .50” cumulative for the period. Seasonal temps will prevail this week with highs ranging from the mid 70’s to the lower 90’s, but the heat will start late week and then continue for the next 7 day period. High temps will ratchet up to the mid 80’s to the mid 90’s with a few lower 100’s. The heat will further exacerbate soil moisture declines. A few lite showers could fall across Argentina/S Brazil, but our confidence that far out is extremely low.
Central and Northern Brazil will receive 3-8.00” of rainfall over the next 10 days. Seasonal temps will prevail. Its the southern 1/3 of Brazil will be drying out much like Argentina.
**10 Day EU Model Rainfall Forecast:
** 15 Day Temperature Deviations:
