** 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.