TDA Daily Agriculture Market Summary 4/11/14

Posted 10 years 231 days ago by

Feeder cattle mostly steady, few $5 higher; futures mostly lower.
Fed cattle cash trade inactive; futures mostly lower; beef prices lower.
Cotton lower.
Grains and soybeans mostly lower, except rice higher.
Crude oil lower; natural gas higher.
Stock markets sharply lower.

Texas auctions reported feeder cattle prices were mostly steady with a few locations as much as $5 higher on a portion of their offerings. Feeder cattle futures were lower . The fed cattle cash trade remained quiet across all major U.S. cattle feeding regions, with reports of asking prices at $150 and packer bids a few dollars lower. There were industry reports that cattle traded in Kansas at $5 over April futures, or the equivalent of $149 cash, but those types of “basis trades” are not covered by USDA mandatory price reporting. Wholesale boxed beef values slid lower again yesterday. Estimated cattle slaughter yesterday totaled only 110,000 head, putting cumulative slaughter for the week well behind both last week and a year ago. Fed cattle futures were mostly lower and the April contract, which expires at the end of the month, is still well below cash prices.

Beef export sales for the week totaled 18,500 metric tons (MT), the highest of the marketing year, up 34 percent from the previous week and 21 percent from the prior four-week average. The leading buyers were Hong Kong, South Korea and Japan. Export shipments of 12,400 MT were up 1 percent from a week earlier, but down four percent from the average. The top destinations were Japan, Hong Kong and Mexico.

Cotton cash prices were lower yesterday and futures were mixed, with old-crop contracts lower, but new-crop contracts higher. Prices remain under pressure from the very large world supplies, 60% of which are held by China. A report from the USDA Foreign Agriculture Service noted that while total projected carryover stocks at the end of this crop year are expected to be a record high, stocks outside China are expected to fall to their lowest level in four years. For the U.S. projected ending stocks are the lowest since the 1990/91 crop year and the second lowest since 1950/51. Export data were mixed. Cotton export sales for the week were a negative 10,900 bales as cancellations of 68,700 bales more than offset 57,800 bales in new sales. Advance sales for the 2014/15 crop year totaled 119,300 bales. Export shipments totaled 303,900 bales, up 23 percent from the previous week, 11 percent higher than the prior four-week average, and well above the weekly average needed to meet USDA expectations for the marketing year. The top destinations were Turkey, China and Vietnam.

Wheat prices were lower mostly due to continued pressure from large global supplies and another week of disappointing export data. Wheat export sales totaled only 41,800 MT, the lowest weekly sales of the marketing year, down 88 percent from the previous week and 90 percent from the average. Cancellations mostly offset new sales. The leading buyers were the Philippines, Mexico and Peru. The largest cancellations, amounting to 232,000 MT were for unknown destinations. Export shipments of 553,600 MT were up six percent from the previous week, 14 percent above the average, but lower than needed to meet USDA projections for the marketing year.. The top destinations were Nigeria, Peru and Mexico.

Corn and grain sorghum prices were unchanged to lower as weather forecasts for warmer temperatures and rain in some areas should help boost planting progress. Traders also said that the improved weather forecasts and higher corn prices recently could encourage farmers to plant more corn. Factors that are good for corn production are bad for corn prices, and vice versa. As reports noted, grain prices will likely remain volatile for a while. We’re one bad Corn Belt drought away from tight supplies and higher prices, but also one good growing season away from adding to already-ample supplies. Corn export data were generally supportive. Corn export sales totaled 658,700 MT, down 31 percent from the previous week and 30 percent from the prior four-week average. The leading buyers were South Korea, Japan and Columbia. Export shipments of 1,217,400 MT were down 15 percent from a week earlier, but up 10 percent from the average. The top destinations were Japan, Mexico and South Korea.

Stock markets closed sharply lower yesterday as investors once again dumped higher-risk stocks in favor of safer assets. Tech and bio-tech stocks suffered the largest declines, pulling the Nasdaq index down by more than 3%. Other major indexes were also lower, but to a smaller degree. The Dow-Jones Total Stock Market Index fell by 2.2%. Economic news for the day were mixed. The Labor Department reported that new unemployment claims fell more than expected last week to their lowest level since May 2007. In a separate report, the Labor Department said that both import and export prices rose more than expected last month, with export prices posting their biggest monthly gain in two years.

An Ohio State University economist compared direct crop support payments under the old farm bill to crop insurance payouts by state. Over the 2004-13 period covered by the study, Texas had the third highest share of direct payments (7.9% of the U.S. total), behind Iowa and Illinois. Texas had the largest share of net crop insurance payments, payments minus premiums paid, (16.7%) and the largest difference between the two (8.8%). As a result, Texas stands to gain a little more under the new farm bill, which eliminated direct payments and instead emphasizes insurance programs. And it shows that farming is indeed a risky business in Texas, even more so that in the Corn Belt states.

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.