Texas Daily Ag Market Summary 5/8/14

Posted 10 years 204 days ago by

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

Not much new to report in the cattle markets. Texas auctions reported feeder cattle prices mostly steady to $3 higher, though one location had heavy steers $2-$4 lower. Feeder cattle futures were lower. The fed cattle cash trade remained inactive yesterday across all major U.S. cattle-feeding regions with feedlots asking about $148, up $2 from last week’s average, versus packer bids at $144-$145. Wholesale boxed beef values were lower and estimated cattle slaughter through Wednesday remained higher than last week, but lower than a year ago. Fed cattle futures were lower.

There were reports earlier in the week that Mexico is set to lift its age restrictions to allow imports of U.S. beef from cattle of any age, but markets seemed to take little notice. The policy change would make it easier and cheaper to export beef to Mexico, but the country is already one of the leading destinations for U.S. beef so the impact on overall exports may be minimal. Mexico was the fourth largest market for U.S. beef last year by value, behind Japan, Canada and Hong Kong. Year-to-date in 2014 it’s running third ahead of Canada.

Cotton cash prices and futures were lower yesterday due to higher exports from India and profit-taking ahead of an expected weak export report today and tomorrow’s USDA supply and demand report. India’s cotton exports for April came in much higher than expected and pushed year-to-date shipments to 8 million bales. Projected exports for the current marketing year are now expected to total 8.8 million bales, 10% above the most recent USDA estimate.

Wheat prices drifted lower yesterday as traders staked out positions ahead of this week’s USDA reports. Hot, dry conditions on the U.S. Plains and ongoing tensions in Ukraine continue to support the market. However, the market was hesitant to extend the recent gains until it sees how the reports play out. There were also conflicting reports that Russia might be pulling back some of its troops in Ukraine, which could help ease the situation there to some degree.

Corn and grain sorghum were also lower on reports that some parts of the Corn Belt have made significant planting progress. However, other areas were still too cool and wet, and there is more rain in the forecast. Positioning ahead of the USDA reports was also a factor. Ethanol production was also down from a week earlier and the lowest in the past six weeks.

Stock markets closed mostly higher yesterday. There was not much economic or corporate news so traders again focused on reducing risk and moved out of tech stocks, which pulled the Nasdaq Composite lower by about 0.3%. Federal Reserve Chairwoman said once again that the economy is improving, in spite of recent weather-related setbacks and that the central bank plans to start raising interest rates when it improves further. Disney reported much better than expected quarterly results.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed a further deterioration in conditions in Texas, with 95 percent of the state now rated as abnormally dry or in some degree of drought, up from 90 percent a week ago. The severity of conditions also worsened with higher percentages in the severe, extreme and exceptional categories and smaller percentages rated abnormally dry or in moderate drought. Areas west of I-35 are in the worst shape, though drought is increasing to the east and the drought-free areas in East and South Texas and the normally-arid Trans Pecos region grew smaller. Nationally, conditions declined modestly, with 51 percent the contiguous states reported in some degree of abnormal dryness or drought, up two percentage points 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.