TDA Daily Agriculture Market Summary, 3/18/14

Posted 10 years 255 days ago by

Feeder cattle mostly steady to $7 higher, few $3 lower; futures higher.
Fed cattle cash trade inactive; futures mixed; Choice beef prices record high; Select lower.
Cotton lower; futures mostly higher.
Grains mostly lower; soybeans higher.
Crude oil lower; natural gas higher.
Stock markets higher.

Texas auctions reported feeder cattle prices mostly steady to $7 higher , though one location was steady to $3 lower compared to record highs set the previous week. As noted in previous reports, feeder cattle fundamentals remain very strong, but some fluctuations in prices are to be expected. Changes in the types and quality of cattle on offer, specific buyer needs at that particular sale, rain or the lack thereof in the trade area, and many other factors can cause prices to bounce around, even as markets generally trend higher. Feeder cattle futures were higher in response to lower corn futures. The fed cattle cash trade was inactive yesterday after holding steady last week at $148 per cwt. Initial asking prices this week were reported at $151-$152 per cwt. No word yet on packer bids. The TCFA daily volume and price summary showed 64,600 head in formula trades for this week, up from 62,800 last week. Wholesale boxed beef values were mixed, with Select-grade offerings lower, but Choice cuts higher to a new record $242.85 per cwt. Estimated daily cattle slaughter on Monday totaled 116,000 head, up from last Monday, but lower than a year ago. Fed cattle futures were mixed, from 22 cents lower per cwt to 25 cents higher.

Cotton cash prices were lower, but futures prices were mostly higher, with only the nearby May contract posting a modest decline. Cotton news was mixed. Higher U.S. stock markets were supportive. There were reports that China is expected to increase sales of its reserve stocks. However, cotton prices are now nearly half of the original purchase price, which may limit sales and “prevent them from unloading stocks in large quantities.” News from India was more bullish, with reports of possible crop damage from heavy rains and hail. Results of a damage assessment are expected later this week.

Wheat prices were lower yesterday as concerns eased about disruptions to trade over the crisis in Ukraine. Reports noted that Crimea voted to join Russia, which may trigger some sanctions from NATO nations, but it does not look like it will have much impact on exports from the region. In fact, the Ukraine ag ministry reported that wheat exports for the year are 38% higher than they were at this time last year. Traders are keeping an eye on the dry weather conditions on the U.S. Southern Plains.

Corn and grain sorghum prices were lower mostly due to speculative selling of the underlying futures contract. There was not much fresh news on Monday to sustain higher prices, so they slipped lower in spite of higher soybeans. Reports noted that “Mexico did buy 107,400 tons of old crop U.S. corn, but there’s just a lot of corn available right now, keeping the fundamentals basically neutral to bearish.” Easing of concerns about Ukraine also pressured corn with the ag ministry reporting solid exports so far this marketing year.

Stock markets were solidly higher yesterday as traders seemed to welcome any resolution to the situation in Ukraine. Currency reforms by China were also supportive. The People’s Bank of China said it will widen the band in which its currency trades versus the dollar. Analysts said that the change “is a positive reform in the long term, but it increases the risks of more volatile capital flows.” As for the situation in Ukraine and Crimea’s vote to secede and join Russia, It remains to be seen what kinds of sanctions, if any, the vote might trigger. Most analysts seem to think that they will be “mild and mainly related to diplomatic relations as opposed to economics and flows of money.”

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.