Texas Daily Ag Market Summary 8/25/14

Posted 10 years 95 days ago by

Feeder cattle steady to $5 lower; futures higher.
Fed cattle cash trade unchanged; formula trades $5 lower; futures higher; beef prices lower.
Cotton higher.
Grains and soybeans higher.
Crude oil and natural gas lower.
Stock markets mostly slightly lower.

Texas feeder cattle auctions quoted prices steady to $5 lower. Feeder cattle futures were higher. The fed cattle cash trade was unchanged from Thursday at $152 per cwt, down $2.60 from the previous week’s average. Some higher bids were reported Friday in Nebraska/Iowa, but they failed to make it this far south. Formula trades were $5 lower. Wholesale boxed beef values were lower. Estimated cattle harvest for the week totaled 590,000 head, up 13K from last week, but down 46K from a year ago. Cumulative harvest for the year is running 7% below a year ago. Fed cattle futures were higher ahead of the Cattle on Feed report. Cash prices and the soon-to-expire August Live Cattle contract are converging, but unfortunately for cattle feeders, cash prices have declined to meet futures rather than the other way around.

The Wall Street Journal reported last week that the WTO is preparing to issue a ruling against the U.S.A.’s revised Country of Origin Labeling (COOL) requirements. WSJ sources said, “the WTO has decided the new U.S. rules to place mandatory labels on meat packages identifying where the animal was born, raised and slaughtered were just as unfair as the original rules.” An official announcement is expected from the WTO in late September or early October. The U.S. can then appeal the ruling, with a final determination expected early next year. If the ruling stands, Canada and Mexico could impose retaliatory tariffs. The WSJ article noted, “A brief section in the spending bill passed by Congress earlier this year said the U.S. economy could suffer a $2 billion hit if Canada and Mexico made good on their threats to retaliate.”

The USDA NASS Cattle on Feed report released after markets closed Friday afternoon was considered neutral to slightly bullish compared to pre-report expectations. It showed 9.8 million head of cattle in feedlots with a capacity of 1,000 or more head on August 1, down 2% from a year ago and very near pre-report expectations. Placements on feed were down 7%, on the high side of expectations, and marketings were down 9%, on the low end of the expected range. Texas remains the top cattle-feeding state in the nation with 2.47 million head of cattle on feed.

Cotton cash prices and futures were higher, with traders citing weather concerns and the previous week’s modest decline in U.S. cotton condition as primary reasons for the increase. Texas dryland cotton areas have been hot and dry, with only scattered showers providing needed moisture to relatively small areas. Parts of the Mid-South U.S. have been a little too cool. Reports noted that, “The early U.S. crop (Rio Grande Valley and Coastal Bend) has been in strong demand and is about totally committed.”

Wheat prices were higher on Friday amid ongoing concerns about harvest delays in the Upper Midwest and the quality of the European crop. There were reports that some European mills were importing wheat to make up for the poor quality of their domestic crop. Traders were also keeping an eye on the situation in Ukraine. However, large global supplies and slack demand are still keeping a lid on potential gains.

Corn and grain sorghum prices were higher. A Corn Belt crop tour wrapped up with expectations for good yields, but “no major surprises either way on yields.” Traders noted that market fundamentals are still bearish, but that every dip in prices spurs a little more buying interest.

Stock markets were mostly slightly lower on Friday after “a widely watched speech by Federal Reserve Chairwoman Janet Yellen failed to generate fireworks.” She noted improvement in the labor market, but did not offer any clear signals as to when the Fed might start tightening its monetary policies. Traders were also keeping an eye on tensions in Ukraine and the Middle East.

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.