TDA Daily Ag Market Summary 8/11/14

Posted 10 years 109 days ago by

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

Texas feeder cattle auctions quoted prices mostly steady, with a few firm to $10 higher and some $2-$4 lower. Texas direct feeder cattle sales were mostly $2-$4 higher, with a few classes as much as $7 higher. Feeder cattle futures followed fed cattle sharply lower, with most contracts down their $3 per cwt daily trading limit. The fed cattle cash trade was almost $2 lower per cwt in very light trade late Thursday and Friday. Formula trades were near unchanged. Wholesale boxed beef values were lower. Estimated cattle harvest for the week totaled 573,000 head, down 1K from last week and 55K below a year ago. Cumulative cattle harvest for the year is running 7% behind a year ago. Fed cattle futures were sharply lower due to the lower cash market and concerns about demand, going back to the Russian ban on imports of U.S. meats. Russia imports very little U.S. beef, but they are the #3 importer of U.S. chicken. The ban could throw more U.S. chicken on domestic markets and thus depress prices of competing meats. One economist noted a major difference between this ban and ones in the past – this time, Russia’s back door is closed, too. In the past, imports by Ukraine surged when Russia slapped on a ban like this, but no one thinks Ukraine consumers suddenly bought more of whatever products were on the banned list. Given the political tensions between those two countries, the Ukrainian back door is likely closed. The question now is whether Russian buyers will find another avenue for the shadow imports. As the report noted, “It might be wise to observe exports to Russia’s neighbors as this situation plays out.”

Cotton cash prices were unchanged, but futures were modestly higher as buying interest picked up a little following recent price declines. However, the cotton trade pretty much ground to a halt ahead of tomorrow’s USDA reports. Most analysts expect production to come in higher than current estimates, but some of the impact may be softened by an increase in export and decline in projected ending stocks. A prominent cotton economist noted that China will likely turn to the U.S. for higher-quality cotton because of a shortage of higher grades in Brazil and Australia. They need the better-quality cotton to blend with their domestic cotton that is generally of much poorer quality.

Wheat prices were lower as speculative profit-taking and weak supply/demand fundamentals drove they underlying futures contracts lower.

Corn and grain sorghum were lower on forecast for beneficial rains in parts of the Corn Belt and expectations for larger production and carryover stocks forecasts in tomorrow’s USDA reports.

Stock markets were higher on Friday, mostly due to bargain hunting following recent declines. The Commerce Department reported a smaller than expected rise in wholesale inventories during June. The Labor Department reported that U.S. productivity rose much more than expected during the second quarter of the 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.