Texas Daily Ag Market Summary 5/6/14

Posted 10 years 206 days ago by

Feeder cattle mostly steady; futures lower.
Fed cattle cash trade inactive; futures lower; Choice beef prices higher, Select lower.
Cotton cash prices unchanged; futures modestly higher.
Grains higher; soybeans lower.
Crude oil lower; natural gas higher.
Stock markets modestly higher.

Texas auctions reported feeder cattle prices mostly steady, with some weakness noted on light-weight calves. The Oklahoma City Stockyards yesterday saw feeder prices $1-$5 higher, with feeder steers weighing 850+ lbs. up as much as $8. Feeder cattle future were lower in response to higher corn futures. The fed cattle cash trade was inactive yesterday after rising nearly $1 last week on only about 2,000 head of confirmed cash sales. USDA also reported 99,300 head of formula, grid and forward contract sales last week, down about 2% from both last week and a year ago. Formula trades averaged $230.46 on a dressed basis ($148 live equivalent) and sales on a live-weight basis averaged $147. Cattle and beef market fundamentals -- tight supplies and decent demand -- remain very supportive, but beef values have weakened recently. That is putting pressure on packer margins. Meanwhile, relatively flat fed cattle prices and rising costs of feeder cattle have also squeezed feedlot margins. Wholesale boxed beef values yesterday were higher on Choice cuts, but lower on Select-grade offerings. Estimated cattle slaughter on Monday was up from a week ago, but lower than the comparable week last year. Fed cattle futures were lower.

Cotton cash prices were unchanged for the fourth day in a row, while cotton futures were higher. Traders remain very concerned about the hot, dry conditions on the Texas Plains and lack of irrigation water in the West. There is little rain in the forecast for West Texas, the wind is blowing and temperatures are rising into the upper 90’s and 100’s. And then there are the planting delays in the Southeastern U.S. where the USDA AMS weekly cotton review noted, “Persistent wet weather has forced some producers to reduce their projected acreage 10% to 15% because of an inability to plant on water-logged soils, possibly switching some cotton acres to soybeans.” In addition, there were rumors that China might make further reductions in cotton plantings this year. In Texas, cotton planting advanced to 16% complete, equal to last year’s pace, but well behind the 5-year average of 22%. For the major cotton-producing states, planting was 17% complete, slightly ahead of last year, but lower than the 25% average.

Wheat prices were higher yesterday amid ongoing concerns about the very dry conditions on the U.S. Plains, with some added support from the continuing unrest in Ukraine and spring wheat planting delays in the U.S. Gains were limited by a report from Canada that its wheat stocks are much higher than at this time last year and news that Egypt bought 110,000 metric tons of wheat from Russia and Ukraine. Saudi Arabia reportedly bought nearly 600,000 metric tons of wheat from “optional origins.” After markets closed, USDA NASS reported that the Texas wheat crop is 59% headed, ahead of last year, but behind the average. Texas wheat was rated in mostly poor to very poor condition, with an overall condition index equal to a year ago. U.S. wheat condition also declined somewhat, with 38% of the crop now rated poor to very poor, up from 34% last week, but slightly better than last year’s 39%.

Corn followed wheat higher. Wire service reports noted that the Midwest should make good planting progress this week, but that some locations remain cool and wet, with more rain in the forecast later this week. USDA NASS reported that corn planting in Texas advanced to 73% complete, compared to 70% last year and 76% on average. The crop was rated in mostly fair condition. For the U.S., corn planting was 29% complete, well ahead of 11% at this time last year, but behind the 42% average.

For additional information on Texas crop progress and condition, click here for the USDA NASS report, or here for the national summary.

Brazil confirmed a case of BSE in the state of Mato Grosso. The comment period just closed on a USDA proposal to allow fresh beef imports from 14 Brazilian states, including Mato Grosso. Numerous U.S. agriculture organizations, including the National Cattlemen’s Beef Association and National Farmers Union, have submitted comments opposing the rule due to potential risk of foot and mouth disease being brought into the United States.

Stock markets closed modestly higher yesterday after U.S. service sector data offset a weak Chinese manufacturing index. Stocks plunged lower early in the session after a HSBC index of Chinese manufacturing activity indicated the sector contracted for the fourth consecutive month. However, markets rallied to close modestly higher following a better than expected non-manufacturing index from the Institute for Supply Management. In other news, Pfizer posted better than expected profits on weaker than expected sales. Target’s CEO resigned.

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.