AgResource Daily Cattle Analysis: Cattle futures closed higher on Monday and a steady outlook is offered for early trade this morning. The Cattle on Feed report did not offer a bearish surprise, and cattle futures traded to strong gains just after the open, and were from $1.45 to $1.80 higher at the close. October was back above its 200 day moving average at the close, and December marked the best close in more than 3 weeks. Cash cattle markets were quiet through Monday, with trade expected to hold until later in the week. Beef cutout values were firm on moderate demand and moderate to heavy offerings.
The latest USDA forecast puts per capita beef disappearance for the 4th quarter at 15 Lbs, 1 Lb more than a year ago, and the largest since 2008. The price model in the chart plots the relationship between per capita disappearance and the quarterly average cattle price. The model projects an average price of $93-97 versus the USDA’s forecast of $110-116, and the CME at $110. December cattle back to $112-114 should be used for 4th quarter sales.
US Weather Pattern Discussion: The EU & GFS remain in good agreement, and very few changes were made to the Central US outlook into mid-September. The forecast is a bit warmer in the 11-15 day period; cool temps will be sustained, but no hard frost in indicated outside of pockets of the Canadian Prairies in the next two weeks. NOAA’s 5-day outlook is attached.
The remnants of Hurricane Harvey in the next few days will travel northwards along the MS River, producing heavy and in many cases flooding rain as it travels. Precip accumulation through Sat/Sun is estimated at 7-9” in parts of LA, AR and MS, and totals of 4+” will be spread across the entirety of the Delta, as well as W TN and far W KY. The remainder of the Central US will be near completely dry, as the upper air pattern has not budged in the face of the season’s first hurricane. A broad Ridge/Trough pattern will remain intact, and the arrival of a fairly deep low pressure Trough aloft SE Canada and the Great Lakes early next week will keep temps across the C and E Midwest some 5-10 degrees below normal.