Agriculture Market Summary
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Texas Daily Ag Market News Summary

Posted 6 years 126 days ago by

Feeder cattle auctions higher; futures down.

Formula trades lower; Beef prices down.

Cotton prices up.

Grains and soybeans mixed.

Milk futures up.

Crude oil down; Natural gas down.

Stock markets up.





Texas feeder cattle auctions reported $1 to $10 higher. Texas Direct Weekly reported trading unevenly steady. Trade was active on good demand. January Feeder cattle futures were down $1.22, closing at $147.95 per hundredweight (cwt). The Texas fed cattle cash trade was not active today. February Live cattle futures were lower, losing 5 cents to close at $121.90 per cwt. Wholesale boxed beef values were down, with Choice grade losing 83 cents to close at $204.86 per cwt and Select grade losing 71 cents to close at $200.16 per cwt. Estimated cattle harvest for the week totaled 588,000, steady from last week and up 63,000 from last year’s total. Year-to-date harvest is up 12%. 



Cotton prices were up, closing at 77.75 cents per pound and March cotton futures closing at 83.42 cents per pound.


Corn and Soybeans:

March corn futures were up a penny, closing at $3.53 per bushel. March soybean futures were up 4 cents to close at $9.77 per bushel. March soybean meal futures were up $3.20 to close at $331.60 per ton.



March wheat futures lost 2 cents, closing at $4.28 per bushel.



Milk prices were up a nickel, with January Class III milk futures closing at $13.88 per cwt.


Stock Markets and Crude Oil:

Stock markets were up, with all three major indexes showing gains. February Crude oil futures were down 58 cents to close at $63.37 per barrel.


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From Agri-Pulse:


Grain elevators desperate for tax bill fix

Key senators are scrambling to rework a benefit for farmer cooperatives that was created by the new tax law, and the fix couldn’t come soon enough for owners of private elevators like Doug Bell. 


The co-op provision was meant to replace the cooperatives’ Section 199 deduction that the law repealed, but tax experts say that the new deduction is so lucrative that farmers will have a strong incentive to sell to a co-op rather than a privately owned or publicly held grain buyer. 


In fact, so lucrative is the co-op benefit that some private grain buyers are said to be looking at forming co-ops to take advantage of the new provision. 


“It’s going to be devastating to our business, no doubt about it” said Bell, whose company, Bell Enterprises, operates grain elevators in central Illinois. “If they have any choice whatsoever, which they would in our area, they’re not going to sell to us anymore; we’re done. It’s really that simple.”


Sens. John Hoeven, R-N.D., and John Thune, R-S.D., helped write the original co-op provisions and are now negotiating changes with the National Council of Farmer Cooperatives and National Grain and Feed Association. NGFA’s members include both co-ops and private companies, including Cargill Inc. and Archer Daniels Midland Co. as well as small elevators. 


In a statement released last week, NCFC and NGFA said the goal of the discussions “is to arrive at an equitable solution that preserves the benefits that cooperatives and their farmer patrons previously enjoyed under Section 199 of the tax code, while addressing any unforeseen impacts on producers’ marketing decisions.”


In an interview with Agri-Pulse this week, Hoeven expressed confidence that the senators could work out a compromise in time to include it in an omnibus spending bill that lawmakers hope to pass in February. 

“Everybody is on board … We’ll get it fixed,” said Hoeven, who organized a meeting on Tuesday that included industry representatives as well as aides to several colleagues, including Senate Agriculture Chairman Pat Roberts, R-Kan.


Thune has said the senators were looking at ways to “dial back” the co-op benefit so that private companies won’t be harmed by it. 


Thune said he was surprised that the industry didn’t raise concerns about the provision before the tax bill passed. “Although it was designed to mimic what they (co-ops) got under Section 199 it went farther than that,” Thune said. 


The tax bill created a new, 20-percent, 199A deduction that will be available to pass-through income from all small businesses. The idea is to keep small businesses on a level playing field with C corporations, which saw their taxes slashed by the new law. 


But the 199A deduction works differently for income from cooperatives than from other businesses. A co-op member can deduct 20 percent from their sales to a cooperative. For farmers selling to other buyers, the 20-percent deduction only applies to taxable income, or sales minus expenses. 


“This should come as no surprise, it was written in the old Section 199 and hasn’t changed much in the new code” said Tom Hauschel, CEO and general manager of Iowa-based Heartland Cooperative.


“They’ve continued to do business in the past with private elevators; there will be some that decide they no longer wish to, but I don’t believe it’s as catastrophic as people are leading on to.”


Boyd Brodie, general manager of another Iowa-based co-op, Key Cooperative, said it is still unclear what impact the tax law will have on co-ops. 


“Though passed, the IRS at this time has not released regulations or any other clarification. For this reason, we are leaning on the experts of our auditing firm to educate our team, provide talking points for our members and further develop marketing for 199A as they become informed.”


Tax accountant Paul Neiffer of Clifton Larson Allen warned about the unintended consequence of the deduction before the bill became law. He suggests the new 199A deduction could easily wipe out a co-op member’s taxable income. 


For a farmer with $5 million in sales to a co-op and $4 million in expenses, the 20-percent deduction would be worth the entire $1 million in profit, leaving no taxable income, according to an example provided by Neiffer. But a farmer who isn't a co-op member would have to take the 20-percent deduction against the $1 million in earnings, leaving taxable income of $800,000 and a total tax bill of $296,000.


But Neiffer stresses that every situation differs. “Based on how the code is written and all the ramifications, the potential deduction is five times larger, but there are certain limits on it based on taxable income that can make the deduction absolutely worthless,”

Bell said he has already started to see some of these implications that may take place after receiving a call recently from a farmer asking about his storage options. 


The farmer "asked what our out-charge would be if he were to bring trucks in and take his grain back out. And that’s not something he wants to do, but the margins are so tight right now in farming that I guess I can’t say that I would disagree with him,” Bell said.