** AgResource Daily Cattle Analysis: Cattle futures were quietly back and forth Thursday trading before closing the day firm. A steady outlook is offered for early trade this morning. A lower start to the morning found good demand that continued to support February futures on breaks below unchanged but rallies also could not get much traction.
The week’s cash business has again been pushed to the end of the week. No packer bids were quoted as of Thursday, while showlists are offered $2-3 higher from last week at $125-126. Boxed beef prices were up $.12 on choice and $1.30 higher on select.
Versus 45 days ago, live cattle futures are mostly 2-3% higher, while feeder cattle prices are near unchanged. This has lifted both nearby cattle crush spreads and put forward spreads at or above average into the 4th quarter.
Next technical targets for Feb cattle are at $126 and then $128. Longer term, our view remains one of using strong rallies for hedge sales as we see futures for the 2nd quarter (June) as overvalued. A seasonal cash market top is due in February.
** South American Weather Pattern Discussion: The EU and GFS models agree and are consistent with prior forecast runs. Our forecast confidence stays high.
An arid weather forecast is offered for the N and C portion of Brazilian crop areas while flooding rains fall across the northern third of Argentina over the next 10 days. The weather pattern is stagnant and shows no movement with a high pressure Ridge across much of NC Brazil and a Trough across Argentina. The long range EU weekly forecast called for continued dryness across NC Brazil while more flooding rains fall across Argentina. We see no change in the pattern for another 2-3 weeks – at least.
The EU model’s 10-day rainfall forecast is attached. This morning’s forecast is drier for NC Brazil with diminished rain potential in the 5-9 day period. Some lite showers on day 10 are doubtful.
Cumulative rains of .25-1.25” are expected across; S Mato Grosso, Goias, MGDS and Sao Paulo (10-40% of normal) in NC Brazil while in the northern third of Argentina, totals will reach 4-10.00”. The concern for Argentine summer row crops is increasing. High temps look to range from the 90’s to lower 100’s across NC Brazil while 80’s/90’s are commonplace for Argentina.