* 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.