TDA Daily Ag Market Summary 8/7/14

Posted 10 years 113 days ago by

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

Russia yesterday announced a ban on agricultural imports from the U.S. and the EU in retaliation for economic sanctions imposed on Russia for its actions in Ukraine. The situation is still developing, with the most recent reports saying that the ban covers all U.S. ag products and fruits and vegetables from the EU. Last year, U.S. ag exports to Russia were valued at $1.5 billion, with chicken meat, agricultural machinery, soybeans, live cattle and soybeans accounting for 60% of the total. Ag industry comments so far have indicated they expect little long-term impact on U.S. producers as other markets absorb the products that would have gone to Russia. Wheat prices actually got a bit of a boost as the ban might cause some importers to bypass Russia and purchase U.S. wheat.

Texas feeder cattle auctions quoted uneven price trends again yesterday, with several locations fully steady, one steady on steers, but steady to $4 lower on heifers, some $2-$8 higher and one $10-$20 higher. Record high prices will do that as quality and condition are even more important than usual and buyers become increasingly selective. Feeder cattle futures were modestly higher. The fed cattle cash trade was quiet across all major U.S. cattle feeding regions, though there some reports that a few head sold in the North at $164. Wholesale boxed beef values were lower yesterday. Estimated cattle harvest for the week totals 340,000 head, up 4K from last week, but down 20K from a year ago. Fed cattle futures were higher as traders waited for this week’s cash trade to develop.

Cotton cash prices and futures were higher on reports of “inadequate” rains in India and rumors of renewed export demand for higher-quality U.S. cotton. Traders are hoping to see that renewed demand reflected in this morning export sales report from USDA. There were also some concerns that the rain on the Texas Plains that boosted cotton crop prospects are also causing increased weed pressure. On top of that, most of the state’s major cotton areas remain in some degree of drought so timely rains are still needed to keep the dryland crop going.

Wheat prices were higher, at least to some extent due to the import ban announced by Russia. The theory goes that the ban might cause Russia to hold more of its wheat off export markets for use at home, which would, in turn, force buyers to turn to other suppliers, including the U.S. The situation in Ukraine also contributed to the price gains as any escalation of the conflict could impede exports from the Black Sea region. In addition, there are ongoing concerns that wet weather in Europe is hurting the quality of their wheat crop.

Corn and grain sorghum followed wheat higher. USDA reported that Columbia bought 160,000 metric tons of U.S. corn. Weather forecast for the Corn Belt were mixed, with some areas expecting beneficial rains, while others are expected to remain dry.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed very little change in conditions in Texas, with 83% of the state rated in some degree of drought or abnormal dryness, down one percentage point from a week ago. The percentages of the state in each drought category did not change much either. The area in moderate drought declined by four points and the area is severe drought increased by three points. Parts of East and Southwest Texas and a small area in the Trans-Pecos remained drought-free. Nationally, the total area experiencing abnormal dryness or some degree of drought remained unchanged at 48% percent of the contiguous states.

Stock markets closed modestly higher yesterday mostly due to strong corporate earnings reports. The Commerce Department reported that the U.S. trade deficit declined more than expected during June, which should help boost second quarter GDP.

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.