** 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.
