Trade Deals and Market Developments: A Week in Review

The US Congress is on the brink of voting on a trio of free-trade agreements with South Korea, Colombia, and Panama, which could see President Barack Obama handed a welcome gift during South Korean President Lee Myung-bak's upcoming state visit. Meanwhile, the finance ministers of the world's richest nations face renewed pressure to regulate commodities markets, and Domino's Pizza Inc. is shifting its marketing strategy to appeal to a broader consumer base. In the agricultural sector, US live cattle futures rose as traders focused on tight supplies, while cash cattle markets remained quiet due to packer margins running in negative territory.

Key Takeaways:

• The US Congress is set to debate and vote on the free-trade agreements with South Korea, Colombia, and Panama, which could be passed quickly, providing a boost to President Obama's diplomatic efforts.
• Finance ministers from the world's richest nations are facing pressure to regulate commodities markets to curb speculative investment, which has been blamed for pushing food prices to record highs this year.
• Domino's Pizza Inc. is transitioning away from price-centric promotions to focus on the quality and uniqueness of its food, shifting its marketing strategy to appeal to a broader consumer base.
• US live cattle futures rose as traders adjusted their strategies in response to tight supplies, while cash cattle markets remained quiet due to packer margins being in negative territory.
• The drought in the US plains has led to yearlong liquidation and tight cattle supplies, driving up wholesale prices.
• Cash hog markets were mostly quiet as pork processors appeared to have filled their current supply needs, but analysts don't expect in-need meat packers to pay higher prices for slaughter-ready animals.
• The margin indices for both cattle and hogs are calculated using current cash values and wholesale cutout values, with a positive number indicating a processing margin above the cost of production.

Statistics:

• 450 economists wrote a letter to G20 ministers calling for measures to curb speculative investment in food markets.
• US live cattle futures rose 1.35 cents, or 1.1%, to $1.2137 a pound in trading at the Chicago Mercantile Exchange.
• December cattle traded higher by 1.27 cents, or 1.1%, to $1.2162 a pound.
• Cash cattle markets were quiet through midday, with asking prices above last week's prices.
• Packer margins ran well into negative territory, incurring to -$70.
• Cattle supplies were tight due to yearlong liquidation from ongoing drought in the plains.
• Recent mild weather expanded average animal weights.
• The estimated cost of production for hogs is calculated by Iowa State University.
• The pork carcass composite value fell 64 cents to $96.92 a hundred pounds.
• Choice beef carcasses closed at $184.99 a hundred pounds, while select was flat at $169.47 a hundred pounds.

Sources:

• Dow Jones Commodities News via Comtex
• Dow Jones
• Cambridge University
• Oxford University
• Iowa State University
• USDA report
• Dow Jones Newswires