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Cash Cattle Trade Expected Later Today, CME In Waiting Mode; Argentine Rains Expected in 8-12 Days

Feb 15, 6:55 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures closed higher on Thursday and a steady outlook is offered for early trade this morning. April cattle fell to new lows for the week just after the open, but that early break found good to demand that lifted the market into late in the day.

  Cash markets were largely quiet with, only light sales reported in the W Cornbelt at $124 or $1 lower. However, most of the week’s business has yet to develop. On Thursday bids were quoted at $122 with offers at $126.00.

  The weekly US Export Sales Report with data through the week ending Jan 3rd confirmed that exports and sales remained slow through the holiday season. There was a record amount of 2018 sales that were rolled forward into the current year, and outstanding 2019 sales start the year record large. The Feb WASDE report forecast annual 2019 beef exports would increase 2% in the year ahead, and the early year sales total loosely supports that idea.

  Support in April cattle is at the 50-day moving average, just under $126. ARC continues to advise summer hedges on rallies for producers.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. The forecast calls for needed rain across the entirety of Brazil while a dry pattern holds across Argentina for the next 7-8 days. There are clear signals of Argentine rains that are being pulled forward to the 8-10 day period which raises our confidence in their ultimate development. This is a new positive development for Argentine crops. 

  The 10-day EU model rainfall forecast is attached. Rains will fall almost daily across Brazil. The Brazilian winter corn crop is being planted and the forecast is favorable with enough rain for corn seed germination. High temps range from the 80’s to the lower 90’s. Soil moisture is still low in some key crop areas; the moisture demands of the just seeded corn crop is low for another few weeks.    

  Argentina’s forecast offers a nice mix of sunshine/near normal temps over the next 8 days. The forecast is warm which will accelerate soil moisture losses. Yet the prospect for rains between February 22-25th would be ideal. These rains will be critical for Argentine crops to hold their above normal trend yield potential. Any heat is across Western Argentina.

** 10 Day South American Rainfall Estimate: Improved Rains for Argentina

 

CME Cattle Called Steady/Weak Awaiting Cash Trade; Argentine Weather Forecast Features a Return of Rain

Feb 14, 6:54 am | AM Weather

* AgResource Daily Cattle Analysis: Cattle futures closed lower on Wednesday, and a steady/weaker outlook is offered for early trade this morning. Cattle were under pressure at the start of trading on Wednesday and had resistance on a recovery back to unchanged at midday. April cattle marked new lows for the week.

  Cash markets went untraded through Wednesday, and bullish optimism is dwindling on the CME correction. Midweek bids were quoted at $122, while showlists are for sale at $126 or better. The outlook at midweek is steady.

  Beef cutout values were down $.72 on choice and $.99 on select, and the overall weakness in is diminishing the odds of higher cattle trade.

  After a counter-seasonal break early in the year, the choice cutout recovered in late January and has been flat since. Seasonally, a 1st quarter rally gets underway next week. A normal rally would take the cutout to $230-235 by late March.

  Support in April cattle is at the 50-day moving average, just under $126. ARC continues to advise summer hedges on rallies for producers.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. The forecast calls for needed rain across the entirety of Brazil while a dry pattern holds across Argentina for the next 7-8 days. There are clear signals of Argentine rains that are being pulled forward to the 8-10 day period which raises our confidence in their ultimate development. This is a new positive development for Argentine crops. 

  The 10-day EU model rainfall forecast is attached for South America. Rains will fall almost daily across Brazil. The Brazilian winter corn crop is being planted and the forecast is favorable with enough rain for corn seed germination. High temps range from the 80’s to the lower 90’s.    

  Argentina’s forecast offers a nice mix of sunshine/near normal temps over the next 8 days. The forecast is warm which will accelerate soil moisture losses. Yet the prospect for rains between February 22-24th would be ideal. These rains will be critical for Argentine crops to hold their above normal trend yield potential.

  The S American weather forecast leans positive for Argentine crops/winter corn crop in Brazil. Its Brazilian soybeans that were harmed by weeks of dryness.

 

Cattle Called Steady on Steady Cash Trade Views; Argentine Forecast Dry – Some Concern Developing

Feb 13, 5:42 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures closed lower on Tuesday, and a steady outlook is offered for opening trade this AM. April cattle briefly traded over Monday’s high and finished near the lows of the day on profit-taking. Cash cattle markets stayed quiet through Tuesday, while the beef market was mixed. The choice cutout gained $.28 and select was down $.86 on light/moderate demand and moderate offerings.

  The CFTC is slowing catching up with reports released on Tuesdays and Fridays. Tuesday’s report for the week ending Jan 15, showed that funds were net long close to 96,000 live cattle contracts and net short nearly 2,600 feeder contracts. The LC position was the largest since last March, while the net difference between LC and FC markets of more than 100,000 contracts was the largest since December 2017.

  Support in April cattle is at the 50-day moving average, just under $126. Next upside targets are back near contract highs at $129, then $131-132 which should mark a seasonal top. We continue to advise summer hedges on rallies for producers.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. The forecast calls for needed rain across the entirety of Brazil while a dry pattern holds across Argentina. A normal flow of upper air moisture from the Amazon allows for frequent rains across Brazil, while a strong zonally flowing jet stream produces arid Argentine weather for another 10 days.

  Argentina soil moisture is becoming short over the southern half of the nation which is staring to become a worry for both corn/soybean crops. The

extended 11-15 day forecast does call for rain to return to Argentina. However,  our confidence this far out is low and we advise clients to play close attention to the daily forecast updates.

  The 10-day EU model rainfall forecast is attached for South America. Rains will fall almost daily across Brazil. The Brazilian winter corn crop is being planted and the forecast is favorable. High temps range from the 80’s to the lower 90’s. The soybean harvest advances.   

  Argentina’s forecast offers a nice mix of sunshine/near normal temps over the next 10 days. The forecast is warmer than prior runs which will accelerate soil moisture losses. Our concern for Argentine crop is rising amid the dryness.

** Southern Argentine Dryness Bears Watching Amid Warming Temperatures: 

 

Cattle Called Steady/Firm To Start; South American Weather is Favorable for Crops into late February

Feb 12, 5:58 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures closed higher on Monday and a firm outlook is offered for early trade today. On Monday April cattle spent much of the day in a tight range, but repeatedly had support below unchanged and late day buying put the market on the high of the day for the close. Feb cattle led the rally and stopped just short of contract highs.

  Cash markets were quiet through Monday and trade is again expected to hold until late week. Weights remain down, and the weather forecasts offer no relief. Feeders will be looking to sell no worse than steady.   

  Beef cutouts jumped higher to start the week, with select gaining on choice. The choice value was up $1.53 and select gained $2.69 on moderate/good demand and light offerings. The choice/select spread went out at a $3.02 choice premium, well under a year ago but right in line with the long-term average.

  Next targets for April cattle are back near contract highs at $129, then $131-132 which should mark a seasonal top.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. The forecast calls for needed rain across the entirety of Brazil while a dry pattern holding across Argentina. A normal flow of upper air moisture from the tropical north allows for rain to fall across Brazil, while a strong zonally flowing jet stream produces arid Argentine weather for 10 days.

  Argentina has enough soil moisture and temps over the next 2 weeks average below normal. The extended forecasts call for rain to return across Argentina beyond the next 10 days. Argentine corn and soybean yields could reach record large levels with the right weather mixture thru March.  

  The 10-day EU model rainfall forecast is attached. Rains will fall daily across Brazil. The Brazilian winter corn crop is being planted and the forecast is favorable. Plantings should surpass 40% this week. Some 30% of the Brazilian soybean crop is now harvested.  

  Argentina’s forecast offers a nice mix of sunshine and cooler temperatures over the next 10 days. If rain falls across S Argentina in late February, crops should flourish. There are hints in the long range forecast of improved rainfall.

 

CBOT Firm on US/China Trade Hope and Smaller CONAB Brazilian Soybean Crop Forecast

Feb 12, 5:54 am | AM Weather

** 6:30 AM CBOT Futures: Mar soybeans are up 4.00 cents at $9.09, Mar corn is up 1.50 cents at $3.745 and Mar Chi wheat is down 1.00 cent at $5.1725.

** AgResource Morning CBOT Comment/Analysis: Good Morning! Mostly higher with moderate volume has been the overnight trade. A day of political posturing in the CBOT grains is expected with all eyes on US/China trade progress. 

  US lawmakers have reached a tentative deal to avoid a second Gov’t shutdown that included $1.37 Bil to erect new fencing along the southern US border. The monies would be for the construction of 55 miles of additional barriers that have been used/approved before. There is no word as to whether President Trump will accept the new Congressional budget offer? The US awaits his decision.

  USTR Ambassador Lighthizer arrived in Beijing for meetings with Chinese Vice Premier Liu He on Thursday/Friday. Optimism remains that US/China trade progress can deepen with late week negotiations key to this round’s success.

The best way to measure US/China trade progress (and a likely deal) is watching if a new round of discussions/meetings will be held that would keep the momentum going to reach a final deal during March?  All sides are mum as to progress with today’s talks just finishing.

  The US EPA is considering releasing a draft proposal that expand the sales of higher ethanol blends of US gasoline without a curb on biofuel credit speculation. The curb was promised to the US oil industry for their support in selling E15 year-round. The EPA hopes to release a working draft on E15 by the end of the month and to finish it by June when the new summer driving season begins. ARC estimates that selling E15 year-round could boost US corn demand by some 200-300 Mil Bu this year.

  Algeria launched a new wheat tender for 50,000 MTs, but often takes 400-500,000 MTs in the final decision. The deadline is February 14th with bids to stay open for 24 hours. The shipping period is for LH March and early April.

  The South American weather forecast is like prior solutions with near to above normal rains to fall across Brazil while sunny/mild weather conditions persist across Argentina. The extended forecast offers better rains back into Argentina, but the forecast is of low confidence and needs to be monitored.

  Arctic cold will be sliding south and east into the Central US in the 6-12 day period that poses a winterkill risk to KS/NE winter wheat with minimum temps to slide below 0 degrees. The cold will be some 20-25 degrees below normal and cause elevated worry for poorly established Plains HRW wheat.

  CONAB estimated their Brazilian 2019 soybean crop at 115.3 MMTs with corn at 91.2 MMTs. The soybean crop decline is in line with industry expectations, but still down 3.5 MMTs from the January forecast.

  ARC looks to late week US/China trade progress reports to direct the CBOT going forward.  

** Winterkill Risk for HRW Wheat Early Next Week:

** Limited Snow Cover for KS and and the S Plains into Feb 22nd: 

** More Flooding Rains for the S Midwest/Delta Next 10 Days: 

 

Cattle Called Firm on $1.00 Higher Cash Trade; South American Weather Favorable into Late February

Feb 11, 7:02 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures were higher last week and a firm outlook is offered for early trade this morning. April cattle spent the week inching higher into the previous week’s key reversal, and higher late Friday cash trade looks to support the CME at the start of the week.

  Cash trade held until late Friday with sales quoted at $125 or $1 higher from the previous week. It also marks the highest weekly trade since last March. Beef cutout values ended the week mixed, with choice gaining $1.09 while the select value was nearly $2 lower for the week.

  In the Feb WASDE Report, the USDA backed off their 1st and 2nd quarter beef production estimates, citing smaller than expected placements in late 2018/early 2019. However, 1st quarter production was forecast at the highest level in 29 years, and the 2nd quarter forecast is record large. Quarterly average price forecast were adjusted up to reflect the current market, with the 1st quarter at $122-126, and a 2nd quarter range of $119-$127 (mid $123).   

  Next targets for April cattle are back near contract highs at $129, then $131-132 which would mark a top.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. The forecast calls for needed rain across the entirety of Brazil while a drier pattern holds across Argentina. A normal flow of upper air moisture from the tropical north allows for rain to fall across Brazil, while a strong zonally flowing jet stream produces drier Argentine weather.

  Argentina has enough soil moisture for crops and temps over the next 2 weeks average below normal. The extended forecasts call for improved rain to drop across Argentina beyond the next 10 days. Argentine corn and soybean yields could reach record large levels. Argentine corn/soy crop prospects are bright.

The 10-day EU model rainfall forecast is attached. Rains will fall with frequency across Brazil. The Brazilian winter corn crop is just being planted and is off to a favorable start. Plantings should surpass 40% this week. Some 26-30% of the Brazilian soybean crop is now harvested.  

  Argentina’s forecast offers a nice mix of sunshine and cooler temperatures over the next 10 days. If rain falls across S Argentina in late February, crops should flourish amid the improved weather pattern. There are hints in the long range forecast of better rains for Argentina.  

Cattle Await USDA and This Weeks Cash Trade/Ribeye Demand Strong; South American Weather Improves

Feb 8, 7:18 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures were mixed and little changed at the close on Thursday. A steady outlook is offered for early trade this morning. April cattle were quietly back and forth through the day with buyers active under $126.50, though rallies could not get traction.

  Cash markets again went untraded through Thursday with offers refreshed at $126-127, while lowball packer bids were quoted at $121. The outlook holds steady into the end of the week.   

  Wholesale choice ribeyes started the year near all-time seasonal highs and had since moved higher. Relative to fed cattle prices, ribeyes have sold nearly six times higher on a per pound basis which is a record multiple for Jan/Feb. YTD beef production through last week was down 2.4% year over year, while ribeyes are trading 11% higher. We guess that the stronger meat prices are the result of better US demand from a generational low unemployment rate.

  April cattle have stalled at the middle of last week’s key reversal. The bulls need to see a close over $127.80 to restore confidence; a further grind lower is likely to trigger fund liquidation. Our view stays bearish on rallies.  

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. Needed rain will fall across all of Brazil while a drier pattern holds across the southern half of Argentina. A more normal flow of upper air moisture from the tropical north allows for rain to drop across the entirety of Brazil, while a strong zonally flowing jet stream produces drier Argentine weather. Argentina has enough soil moisture for crops. However, if the dryness persists beyond the next 2-3 weeks, crop concern will develop amid parched topsoil. There are signs in the extended 9-15 day forecast of improved Argentine rainfall chances. The favorable Argentine crop outlook is offered.

 The 10-day EU model rainfall forecast is attached. Rains have started to drop with frequency across Brazil. The Brazilian winter corn crop is just being planted and is off to a favorable start. Plantings should surpass 40% this week.

  Argentina’s forecast offers a mix of sunshine/rain across the northern half of the crop area with drier weather for Buenos Aires and La Pampa. If rain falls across S Argentina in late February, crops should flourish amid cool temperatures. The current dry and cool Argentine weather pattern favors crops.

 

CME Cattle Called Steady/Cattle’s Premium to Hogs Grows; South American Weather Favors Crops

Feb 7, 6:57 am | AM Weather

** AgResource Daily Cattle Analysis: Cattle futures closed lower on Wednesday and a steady outlook is offered for early trade this morning. April cattle marked a new high for the week just after the close, but the early rally was short-lived, and the market drifted lower late day. Feeder cattle futures were similarly weak, with March feeders again hitting resistance at the 50-day moving average and closing lower.

  Cash business was thin through Wednesday with a small number of cattle reportedly trading at $124 in the North or near steady with last week. Elsewhere in the Plains, showlists were offered for sale at $126-127, though packer buyers remained quiet. The outlook at midweek remains steady.

  The spot live cattle/lean hog spread has pushed out to a new multi-year high of more than $70 this week, testing the last major high that was scored in 2017. Both cattle and hog supplies are both historically large, but one protein is likely too high and one is too low!

  April cattle have stalled at the middle of last week’s key reversal. The bulls need to see a close over $127.80 to restore confidence; a further grind lower is likely to trigger fund liquidation. Our view stays bearish on rallies.  

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement. Needed rain is slated to drop across all of Brazil while a drier pattern holds across the southern half of Argentina. A normal flow of upper air moisture occurs from the tropical north allowing for rain across the entirety of Brazil, while a strong zonally flowing jet stream produces drier Argentine weather. Argentina has enough soil moisture for crops. However, if the dryness persists beyond the next 2-3 weeks, crop concerns will develop amid parched topsoil. There are signs in the extended 9-15 day forecast of improved Argentine rain chances. The outlook for Argentine corn/soy is favorable.

 The 10-day EU model rainfall forecast is attached. Rains have started to drop with frequency across Northern Brazil. This will stabilize Brazilian crop yields. The Brazilian winter corn crop is just being planted and is off to a favorable start. Plantings by the weekend should surpass 40%. The coming rains are ideal.

  Argentina’s forecast offers a mix of sunshine/rain across the northern half of the crop area with drier weather for Buenos Aires and La Pampa. If rain falls across S Argentina in late February, crops should flourish amid cool temperatures. 

 

Cattle Await USDA Report and This Week’s Cash Trade; South American Weather Forecasts Improve for Crops

Feb 6, 7:22 am | AM Weather

AgResource Daily Cattle Analysis: The cattle recovery continued through Tuesday, and a steady outlook is offered for early trade this morning. April cattle held in a narrow range through the day and finished near the high. Feeder futures moved the other direction, with March finding resistance above the 50-day moving average, before closing lower. 

  Cash cattle markets stayed quiet through Tuesday, with no bids or offers reported. Trading interest is expected to hold until late week.

  While carcass weights began to turn down in the 4th quarter, quality grades pushed higher. The percent of steer/heifer carcass grading choice or higher pushed to a new all-time high of 81.4% in late November, and have since held above 80%. Last week’s slaughter marked yet another record with 73.8% of carcasses stamped as choice while another 9.3% were marked prime. The combined total of 83% was at a new record.

  Lighter carcass weights are reducing the outlook for production; though, better numbers are expected to start moving later in the quarter. Our view stays bearish on strong rallies.

South American Weather Pattern Discussion: The EU/GFS models are in good agreement on the 10-day forecast. Better rains are slated to drop across all of Brazil while a drier pattern holds across Argentina. A normal flow of upper air moisture occurs from the tropical north allowing for rain across the entirety of Brazil. A strong zonally flowing jet stream produces drier Argentine weather. Argentina has enough soil moisture for crops and the break in recent rains is welcomed. However, if the dryness persists beyond the next 2-3 weeks, crop concerns will develop amid parched topsoil. There are signs in the extended 9-15 day forecast of improved Argentine rain chances.

 The 10-day EU model rainfall forecast is attached. Rains have started to drop with frequency across Brazilian crop areas. This will help stabilize Brazilian crop yields. The Brazilian winter corn crop is just being planted and is off to a favorable start.

  Argentina’s forecast offers dry/sunny weather for the next 8 days. Near to below normal temps will help slow the loss of soil moisture. The cool temps and sunshine will help corn in the filling process. Soybeans are in the bloom stage and will need rainfall after Feb 15th.

Cattle Await USDA Report and This Week’s Cash Trade: South American Weather Forecasts Improve for Crops

Feb 6, 6:57 am | AM Weather

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement on the 10-day forecast. Better rains are slated to drop across all of Brazil while a drier pattern holds across Argentina. A normal flow of upper air moisture occurs from the tropical north allowing for rain across the entirety of Brazil. A strong zonally flowing jet stream produces drier Argentine weather. Argentina has enough soil moisture for crops and the break in recent rains is welcomed. However, if the dryness persists beyond the next 2-3 weeks, crop concerns will develop amid parched topsoil. There are signs in the extended 9-15 day forecast of improved Argentine rain chances.

 The 10-day EU model rainfall forecast is attached. Rains have started to drop with frequency across Brazilian crop areas. This will help stabilize Brazilian crop yields. The Brazilian winter corn crop is just being planted and is off to a favorable start.

  Argentina’s forecast offers dry/sunny weather for the next 8 days. Near to below normal temps will help slow the loss of soil moisture. The cool temps and sunshine will help corn in the filling process. Soybeans are in the bloom stage and will need rainfall after Feb 15th.

** South American Weather Pattern Discussion: The EU/GFS models are in good agreement on the 10-day forecast. Better rains are slated to drop across all of Brazil while a drier pattern holds across Argentina. A normal flow of upper air moisture occurs from the tropical north allowing for rain across the entirety of Brazil. A strong zonally flowing jet stream produces drier Argentine weather. Argentina has enough soil moisture for crops and the break in recent rains is welcomed. However, if the dryness persists beyond the next 2-3 weeks, crop concerns will develop amid parched topsoil. There are signs in the extended 9-15 day forecast of improved Argentine rain chances.

 The 10-day EU model rainfall forecast is attached. Rains have started to drop with frequency across Brazilian crop areas. This will help stabilize Brazilian crop yields. The Brazilian winter corn crop is just being planted and is off to a favorable start.

  Argentina’s forecast offers dry/sunny weather for the next 8 days. Near to below normal temps will help slow the loss of soil moisture. The cool temps and sunshine will help corn in the filling process. Soybeans are in the bloom stage and will need rainfall after Feb 15th.

** Better Rains for S Brazil Next Week, Crop Production Totals Stabilize: