TDA Daily Agriculture Market Summary 3/13/14

Posted 10 years 260 days ago by

Feeder cattle steady to $10 higher; futures higher.
Fed cattle cash trade inactive; futures higher; beef prices near unchanged.
Cotton higher.
Grains mostly higher, except rice lower; soybeans lower.
Crude oil and natural gas lower.
Stock markets near unchanged.

Texas auctions reported feeder cattle prices steady to as much as $10 higher per cwt as factors influencing the market remain very supportive. Feeder cattle futures were higher. The fed cattle cash trade remained quiet across all major U.S. cattle feeding regions. Wholesale boxed beef values were near unchanged yesterday with Choice offerings slightly higher and Select-grade cuts slightly lower. Estimated cattle slaughter for the week totals 334,000 head, equal to a week ago, but still well behind last year’s pace. Fed cattle futures were higher.

Cotton cash prices and futures were higher, though little fresh news was available. What signals there were tended to be bearish – a drop in soybean prices and expectations for lower weekly export sales. Soybeans and cotton compete for acreage in the southeastern U.S. so lower prices relative to cotton could increase cotton plantings, increasing production and depressing prices. (As for soybeans, there are concerns that a weak Chinese economy could mean lower soybean exports for the U.S.)

Wheat prices were again sharply higher and have now gained 39 cents (nearly 5%) for the week. The increase has been tied to speculative and fund buying, while market fundamentals remain bearish – ample world supplies and slack export demand. However, traders remain concerned about the dry conditions on the U.S. Southern Plains, including Texas, and for now that’s been enough to sustain higher wheat prices. The situation in Ukraine still increased the potential for U.S. export sales, but wire service reports yesterday noted that Morocco bypassed U.S. supplies and bought from the E.U. and the troubled Black Sea region.

Corn and grain sorghum prices followed wheat higher, with little fresh news of their own. Reports from South America were mixed, with a slightly higher corn production estimate for Brazil offset by a lower estimate for Argentina. In the Midwest, corn and soybeans compete for acreage so the lower soybean market will also be a limiting factor for corn, similar to the relationship between soybean and cotton prices in the Southeast.

Stock markets closed near unchanged yesterday as economic weakness in China and the EU raised concerns about global economic growth. European industrial output fell 0.2% during January, compared to expectations for a 0.5% increase. Chinese exports fell unexpectedly during February and wire services reported that last week it had its first domestic “corporate default.”

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed another improvement in conditions in Texas, with the area of the state rated as abnormally dry or in drought down 6 percentage points to 85 percent. The drought-free areas in West, South and Southeast Texas expanded, but the area in Northeast Texas slipped into abnormal dryness. Overall, the areas in rated in severe, extreme and exceptional drought increased, while abnormally dry and moderate drought areas declined. Nationally, 52% of the contiguous states were reported in some degree of abnormal dryness or drought, down 1 point from a week ago.

Disclaimer: The information compiled in the Daily Market Summary is obtained from a variety of sources, including those available on the Internet, that are believed to be reliable and accurate, but are in no way guaranteed. This information is intended to provide only a summary of market trends and a daily snapshot of agricultural markets and economic indicators. It should not be relied upon as a sole source of market information. Commentary is the author’s alone and does not in any way convey official TDA policies.