TDA Daily Market Summary 3/24/14

Posted 10 years 249 days ago by

Feeder cattle $5 lower to $4 higher; futures lower.
Fed cattle cash trade $2 higher; futures lower; beef prices lower.
Cotton higher.
Grains mixed; soybeans mostly lower.
Stock markets modestly lower.

Texas auctions reported feeder cattle prices $5 lower to $4 higher per cwt. with several reports noting the most weakness on steers and heifers weighing 800 lbs. or more. Feeder cattle futures were higher in response to mostly lower corn futures. The fed cattle cash trade was $2 higher for the week. Wholesale boxed beef values were lower on Friday and estimated cattle slaughter through Saturday was well above the previous week, but well below a year ago. For the year, cattle slaughter is running 7.3% behind last year’s pace. Fed cattle futures were lower ahead of Friday’s USDA Cattle on Feed report (see below.)

USDA NASS released its monthly Cattle on Feed report Friday showing the total inventory of cattle in feedlots with capacities of 1,000 or more head at 10.8 million head, down 1% from a year ago and equal to pre-report expectations. This is the 18^th consecutive month that cattle on feed inventories have been blow year-ago levels. Placements on feed during February came in higher than expected, up 15% from the very low placements a year ago. Placements were down 3% from the five-year average for February. Marketings for slaughter were the lowest since 1996, down 3% and equal to expectations. The larger than expected placement figures will mean higher beef supplies this summer. As for Texas, the inventory of cattle on feed totaled 2.47 million head, down 3% from a year ago and 30,000 head lower than Nebraska. Placements on feed were up 22% and marketings for slaughter were 8% lower.

Cotton cash prices and futures were higher. There was no fresh fundamental news for the day, but markets took note of comments from the president of cotton cooperative Calcot that he expects cotton gin data to come in lower than current projections. That would reduce already-tight domestic supplies. Mississippi cotton economist O.A. Cleveland said (here) that strong domestic demand and concerns about the weather are supporting the cotton market. He noted that continued dry conditions here in Texas could push new-crop cotton prices higher.

Wheat prices were lower on Friday mostly due to selling by commodity funds and speculative profit-taking. Traders remain concerned about dry conditions on the U.S. Plains and continued tensions in Ukraine. However, those tensions do not appear to have substantially slowed Ukrainian grain exports and have not resulted in increased U.S. wheat sales.

Corn cash prices were mostly unchanged and grain sorghum was unchanged to higher, while the underlying futures market was unchanged to mostly lower. News that Egypt bought a shipment of U.S. corn was supportive, but large world supplies and the advancing harvest in South America limited the potential gains. Traders are also keeping an eye on Corn Belt weather. Most of the western Corn Belt is in drought and there were new reports last week that it may take longer for the ground to warm-up enough to plant. A USDA meteorologist reported that in parts of the northern Corn Belt, the ground is still frozen 5-6 feet deep.

Stock markets closed modestly lower on Friday, but were higher for the week. There were no economic reports on Friday so traders resurrected concerns that the Federal Reserve will raise interest rates as it ends its bond purchases. On the positive side, the Federal Reserve reported that 29 of the nation’s 30 largest banks passed its “stress test.” The one bank that did not, Zion Bancorp, “will resubmit its capital plan.”

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.