TDA Daily Ag Market Summary 8/8/14

Posted 10 years 112 days ago by

Feeder cattle mostly steady, some higher and lower; futures sharply lower.
Fed cattle cash trade inactive; formula trades $2 lower; futures sharply lower; Choice beef prices higher, Select lower.
Cotton lower.
Grains lower; soybeans higher.
Crude oil higher; natural gas lower.
Stock markets lower.

Russia Export Update: The Russian ban on agricultural imports is starting to firm-up as the details emerge. The ban apparently does not include all ag products from the U.S. and focuses on meat, dairy, fruit and vegetable products. One analysis yesterday said, “Russia, of course, is not nearly as important of an export market for U.S. meat and poultry companies as it once was. U.S. chicken exports to Russia are down 11% year-to-date versus 2013 through June. Exports of U.S. pork had been rising this year as Russia has accepted product from some companies and plants that could guarantee delivery of ractopamine-free pork. U.S pork exports to Russia were zero for every month but one from March 2013 through March 2014 but have increased gradually since then to 8,846 MT in June. Beef exports to Russia are still zero for all intents and purposes, as they have been since December 2012. The real question is “Where does Russia intend to get its food?” One report cited Russian data as indicating that Russia imported about one-third of its food last year. This all reinforces the oft-stated viewpoint of our friend Dr. Paul Aho of Poultry Perspectives in Storrs, CT: Russia is proof that some customers are so bad they are not worth having.” (emphasis added) The White House said “The impact of the ban on the U.S. economy will likely be insignificant.”

Texas feeder cattle auctions quoted prices mostly steady, with a few $2-$8 higher and some $3 lower. Feeder cattle futures were sharply lower with nearby contracts down their $3 daily trading limit, most due to speculative selling. Futures are still prices at a healthy discount to the cash index and there was no fundamental reason for the decline. The fed cattle cash trade remained inactive in Texas, but a few head sold in Kansas at $160, down $2 from last week’s average. Formula prices in Texas were more than $2 lower. Wholesale boxed beef values were higher for Choice offerings, but lower for Select-grade cuts. Estimated cattle harvest for the week through Thursday totaled 454,000 head, up 3K from last week, but down 27K from a year ago. Fed cattle futures were sharply lower, also mostly due to speculative selling. The Russian ban on beef imports from the U.S. may have also played a role in the decline, even though Russia does not buy much of our beef and the ban will likely have little impact on cash prices. The idea seems to be that the extra chicken that the ban will make available to domestic markets will cause chicken prices to drop and thus divert demand from beef.

Beef export sales for the week totaled 12,000 metric tons (MT), down 31% from the previous week and down 13% from the prior four-week average. Japan, Canada and Hong Kong were the leading buyers. Export shipments totaling 14,900 MT were up 4% from a week earlier and 7% higher than the average. The primary destinations were Japan, South Korea and Hong Kong.

Cotton cash prices and futures were lower yesterday in spite of strong new-crop export sales and shipments. Traders are increasingly cautious ahead of next Tuesday’s USDA Crop Production report and buying interest dried up after Wednesday’s small price increase. Cotton old-crop 2013/14 export sales were a net negative for the last week of the marketing year as cancellations outpaces new sales. Nearly a half a million bales in old crop sales were rolled over into the new marketing year that began August 1. Net sales of 251,000 bales for the new crop 2014/15 marketing year were more than double the previous week and nearly double the prior four-week average. Export shipments of 145,100 bales were up 23% from the previous week and up 42% from the average. Accumulated shipments for the marketing year totaled 9,575,000 bales, down 20% from the previous year and nearly 1 million bales below USDA’s most recent projection.

Wheat prices were lower, giving up some, but not all, of the previous day’s gains after Russia said it’s import ban would not affect its wheat exports. Wheat export sales for the week totaled 590,900 MT, down 26% from the previous week and 24% lower than the prior four-week average. Nigeria, Taiwan and Mexico were the leading buyers. Exports of 415,200 MT were down 1% from the previous week and down 7% from the average. The top destinations were Brazil, Nigeria and Mexico.

Corn and grain sorghum prices were also lower yesterday after old-crop export sales and shipments declined with only four weeks left in the marketing year. New crop sales were also called mildly disappointing. Corn old-crop 2013/14 export sales totaled 120,900 MT, down 30% from the previous week and down 66% from the prior four-week average. Japan, Israel and Mexico were the primary buyers. New crop sales for 204/15 of 758,700 MT were down 31% from a week earlier and 3% lower than the average. Columbia, Mexico and unknown destinations were the top buyers. Export shipments totaling 1,071,700 MT were up 24% from the previous week and 8% higher than the average. The leading destinations were Japan, Mexico and South Korea. In addition, forecasts for rain in parts of the Corn Belt were also bearish for prices.

Stock markets closed lower mostly due to turmoil in Ukraine and the Middle East that caused “short-term traders” to sell stocks. The Labor Department reported that new unemployment claims fell last week to their second-lowest level so far this year.

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.