Texas Daily Ag Market Summary 7/10/14

Posted 10 years 141 days ago by

Feeder cattle steady to $20 higher; futures lower.
Fed cattle cash trade inactive; futures lower; Choice beef prices higher (record), Select lower.
Cotton cash prices higher; futures mostly lower.
Grains lower; soybeans higher.
Crude oil and natural gas lower.
Stock markets higher.

Texas feeder cattle auctions quoted prices steady to as much as $20 higher per cwt compared to their last sale (in some cases, 2 weeks ago prior to the July 4 holiday). Feeder cattle futures were lower due to speculative selling and some concerns that the market was over-bought. However, supply/demand fundamentals remain very supportive, which will likely limit any declines to short term adjustments and profit-taking. Slaughter cow prices at Oklahoma City hit a new record high Tuesday, averaging $118.50 per cwt, 51% higher than a year ago, with a market top of $133 for high dressing boner-grade cows. To put that in perspective, it was only last December that fed cattle prices hit $133 for the first time ever. As discussed previously, lower cow numbers due to drought, lower culling rates as ranchers rebuild cow herds and continued strong demand for lean grinding beef has pushed cow prices to these record levels. The fed cattle cash trade was quiet yesterday with feedlot asking prices still at $160. There were reports that a few head sold in Nebraska at $157, down $1 from last week’s average, but the volume was too small to give a good market test. Wholesale beef prices hit a new record high of $251 per cwt for Choice offerings. Select-grade cuts slipped modestly lower. Estimated cattle harvest through Wednesday totaled 343,000 head, down 5K from last week and down 23K from a year ago. Fed cattle futures were lower, also mostly due to speculative activity and profit-taking.

USDA said in a press release yesterday that is has processed 106,000 applications for livestock disaster relief with payments-to-date totaling more than $1.2 billion. The release noted that “USDA estimated that roughly $2.5 billion would be provided in disaster relief to cover losses from October 2011 through September 2014. If those estimates prove accurate, it would mean nearly half of all disaster payments have already been provided.” I did not see a breakdown of payments by state.

Cotton cash prices were a little higher, but futures were mostly lower, with only the October contract posting a very small gain. There was little fresh news as traders waited for this morning’s weekly export report and tomorrow’s USDA supply/demand estimates. Wire services report that “USDA for 2014-15 is widely expected to cut its U.S. acreage abandonment estimate and raise its production forecast. An increase also could be seen in the export forecast but ending stocks also are expected to rise to the largest since 2008-09.”

Wheat prices were lower again yesterday, under pressure from increasing harvest-time supplies and weak supply/demand fundamentals. Reports noted that, “World wheat weather remains mostly good with problems limited to spring wheat growing areas of the former Soviet Union.”

Corn and grain sorghum prices were lower, with few changes in the factors impacting the market. There are no weather threats in the forecast and most of the discussion is about just how big this year’s corn crop is going to be. Some folks are talking about record-high yields per acre this year, supported by the highest crop condition ratings since the 1990’s.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed another little change in overall conditions in Texas, with 88% of the state rated in some degree of drought or abnormal dryness, up slightly from 87% a week ago. The areas in each drought category also remained near unchanged, as did the drought-free areas in East and Southwest Texas. Nationally, the total area experiencing abnormal dryness or some degree of drought also increased by one percentage point to 45% of the contiguous states.

Stock markets closed higher yesterday following favorable comments from the last Federal Reserve meeting and a solid quarterly report from Alcoa. The Fed meeting minutes “smoothed concerns over a potential increase in interest rates.” Alcoa reported better than expected profits and earnings after the close on Tuesday.

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.