Texas Daily Ag Market Summary 6/26/14

Posted 10 years 155 days ago by

Feeder cattle $2-$10 higher, few steady; futures higher.
Fed cattle cash trade inactive; futures higher; Choice beef prices higher; Select lower.
Cotton lower.
Wheat and soybeans higher; corn and grain sorghum lower.
Crude oil and natural gas higher.
Stock markets higher.

Feeder cattle prices reported by Texas auctions were mostly $2-$10 higher per cwt, with one location steady on a portion of its offerings. Feeder cattle futures higher. The fed cattle cash trade remained quiet yesterday. Wholesale boxed beef values have set new record highs this week, and Choice offerings were higher again yesterday, but Select-grade cuts were lower. Estimated cattle harvest through Wednesday totaled 346,000 head, equal to last week, but down 13K from last year. Fed cattle futures were higher. Across the complex, tight cattle numbers and strong demand continue to support markets. As noted previously, cattle buyers would like to work prices lower to put a little (more) profitability into the cattle feeding and packing sectors, but they’re worried that if they don’t buy now at these prices, costs will go even higher as numbers tighten further.

Along with record and near-record high prices for feeders and fed cattle, prices for cull cows have also risen dramatically. At Oklahoma City this week, prices topped out at $125.50 for 80-85% lean high-dressing boner-grade cows. The low was $93.50 for 85-90% lean low-dressing cows. Last year at this time, prices ranged from $66.50-$88.00 and even that was relatively high at the time. Why the increase? Lower numbers of cows available because of drought-related herd reductions and, now, higher retention rates to rebuild herds, coupled with continued strong demand for lean grinding beef.

Cotton cash prices and futures were lower as conditions continue to point to a larger-than-expected crop this year. There were rumors of a large export sale cancelation, but nothing official yet. Traders are also taking up positions ahead of next Monday’s USDA NASS Acreage report, with many expecting a downward adjustment in acreage, mostly due to a shift to soybeans in the Southeast and Mississippi Delta.

Wheat prices were higher yesterday, mostly due to positioning ahead of the USDA Acreage and Grain Stocks reports on Monday. There were some concerns about ongoing harvest delays, low yields and poor quality, but global growing conditions remain generally-favorable and world supplies remain ample. Harvest is just getting underway in Russia and Ukraine, major U.S. competitors on world wheat markets.

Corn and grain sorghum prices slipped lower also mostly due to pre-report positioning. Weekly ethanol production came in lower than a week ago.

Food Price Inflation: The USDA Economic Research Service said yesterday, “The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, rose 0.3 percent from April to May and is 2.1 percent above the May 2013 level. The CPI for all food increased 0.4 percent from April to May, increased 0.4 percent from March to April, and is now 2.5 percent above the May 2013 level.” Rising dairy, meat and produce prices were behind the increase. Reports also noted that, “Fresh fruits and vegetable prices will go up an estimated 6% in the coming months as California’s ongoing drought continues to hit price tags in grocery stores across the country. Drought conditions in states like Texas and Oklahoma have also driven up beef prices 9% this year, and the department expects that hike to continue.”

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed a very slight improvement in overall conditions in Texas, with 89% of the state rated in some degree of drought or abnormal dryness, down from 90% a week ago. The areas in severe to exceptional drought declined, but areas in moderate drought expanded. Much of East Texas and a section of South Texas remain drought-free. Nationally, the total area experiencing abnormal dryness or some degree of drought remained unchanged at 45% of the contiguous states.

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.