Texas Daily Ag Market Summary 8/20/14

Posted 10 years 100 days ago by

Feeder cattle $8 lower to $2 higher; futures lower.
Fed cattle cash trade inactive; formula trades $2 higher; futures lower; beef prices lower.
Cotton cash prices unchanged; futures higher.
Grains higher; soybean futures mostly lower.
Crude oil lower; natural gas higher.
Stock markets higher.

As part of its Consumer Price Index report yesterday, the Labor Department said that food prices were up 0.4% during July and up 2.5% over the past 12 months. On an annual basis, food at home is up 2.7% and food away from home is 2.4% higher. The index for meat, poultry, eggs and fish was up 7.6% on an annual basis and dairy products were up 4.3%. Fruits and vegetables posted a 2.0% increase, while grains and bakery products were up only 0.3%.

Texas feeder cattle auctions quoted mixed price trends with prices from $8 lower to $2 higher per cwt depending on location and the type/quality of cattle on offer. Several locations noted an additional discount on fleshy new crop calves. Feeder cattle futures were lower and are trading at a discount to the cash index. However, the market can seem to get any traction amid concerns that beef demand will weaken. The fed cattle cash trade remained inactive yesterday across all major U.S. cattle feeding regions. Formula trades were $2 higher on a dressed basis. Wholesale boxed beef values were lower. Estimated cattle harvest through Tuesday totaled only 223,000 head, 7K below last week and 11K lower than a year ago. Fed cattle futures followed beef prices lower.

China announced on Monday that will not accept pork imports from six U.S. pork packers and six cold storage facilities because of usage of the feed additive ractopamine. Trade barriers associated with ractopamine are nothing new and for some time now China has required third party verification that pork imports are free of the growth promotant. The companies impacted said they will work with USDA and China to obtain the needed approvals. The news contributed to Monday’s and yesterday’s declines in pork and beef prices. However, the overall impact on U.S. pork trade is unknown, likely relatively small, since the largest U.S. pork producer is now owned by Chinese interests – and not covered by the ban. The impact on Texas, other than collateral damage to cattle futures, will be very small since we are not a major pork producer. None of the large pork packers have facilities in Texas. Reports noted that China is producing more pork and has only been buying from the U.S. when prices are attractive. However, ” China can be a swing buyer and that does impact the meat and poultry markets,” according to the Livestock Marketing Information Center. LMIC said that imports of US pork to the Greater China Region in 2013 totaled nearly 420,000 metric tons valued at more than $900 million, making the region the third-leading export market for US pork. Overall US pork exports totaled 2.14 million metric tons, valued at more than $6 billion.

Cotton cash prices were unchanged, but futures managed to post modest gains across all contracts. On Monday, USDA reported a 2 point decline in the percentage of cotton in good to excellent condition. Otherwise, there was not any significant cotton-specific news yesterday, except a report that preliminary customs data for July indicates that Chinese imports from the U.S. for the 2013/2014 marketing year might be about 500,000 bales higher than current USDA estimates.

Wheat prices were higher yesterday, mostly due to quality concerns and harvest delays in Europe. The U.S. winter wheat harvest is completed and that has reduced some of the pressure from new crop supplies. U.S. spring wheat harvest is also running a little behind normal and traders are still monitoring the situation in Ukraine for any signs that U.S. exports will get a boost.

Corn and grain sorghum prices were higher. Nothing changes in the overall supply/demand picture, with traders still expecting a large U.S. crop. One observer noted that the current crop condition ratings are “historically exceptional” for this time of year. However, buying interest picked up a little and that generated a modest price increase. The crops will likely start to see some pressure from new-crop supplies as harvest progresses.

Stock markets closed higher yesterday after reports that housing starts jumped higher in July and consumer prices were in line with expectations. In addition, Home Depot and the parent company of TJ Maxx reported better than expected earnings and revenue. The Commerce Department reported that housing starts jumped by nearly 16% in July and were well above pre-report expectations. New building permits also increased. The Labor Department reported that the overall Consumer Price Index rose by 0.1% during July, as expected, and was up 2.0% over the past 12 months. Excluding food and fuel, the “core index” was also up 0.1%, compared to expectations for a 0.2% rise. Energy prices were 0.3% lower, but food prices were “on the hot side,” up 0.4% during July and up 2.5% over the past 12 months.

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.