Texas Daily Ag Market Summary 7/11/14

Posted 10 years 140 days ago by

Feeder cattle mostly steady to $7 higher; futures down limit.
Fed cattle cash trade $3 lower; futures lower; beef prices higher.
Cotton lower.
Grains and soybeans lower.
Crude oil higher; natural gas lower.
Stock markets lower.

Texas feeder cattle auctions quoted prices mostly steady to $7 higher per cwt, though a few locations had some classes as much as $30 higher compared to two weeks ago, before the July 4 holiday break. However, feeder cattle futures tumbled lower by the daily trading limit after fed cattle cash prices and futures declined. Supply/demand fundamentals remain very supportive. The fed cattle cash trade averaged $155 per cwt on less than 600 head of confirmed sales, down $3 from last week’s average. In Kansas and Nebraska, prices were comparable on a larger volume so it looks like this week’s trade might be set. The price decline is a little surprising, given record-high beef prices, but in this week’s cattle price stare-down, cattle feeders blinked first. Wholesale boxed beef prices advanced to new record highs. Estimated cattle harvest so far this week totals 456,000 head, 8K below last week and 35K below last year. Fed cattle futures closed lower after cash prices declined. In addition, the “Goldman Roll” has started in which the large index investment fund sells its about-to-expire current-month futures contracts and buys into the next contract month. That set off a “chain reaction of sell orders” that pulled cattle futures lower.

Beef export sales for the week totaled 17,900 metric tons (MT), 3 times higher than the previous week and up 58% from the prior four-week average. Japan, Mexico and Hong Kong were the leading buyers. Export shipments of 15,500 MT were up 9% from a week earlier and up 6% from the average. The top destinations were Japan, Mexico and South Korea.

USDA will release its monthly Crop Production report and World Agricultural Supply and Demand Estimates (WASDE) at 11:00 a.m. CDT today. Price movement in the crop sector yesterday were largely in anticipation of those reports. USDA weekly export data released early Thursday also figured into the market action that resulted in lower prices across the sector.

Cotton cash prices and futures were lower on expectations that USDA will raise its projections for 2014/15 production and end-of-year carryover stocks. Wire service reports also noted that crop condition continues to favor a larger crop this year. The 55% of the crop that is rated in good to excellent condition is well above the 10 year average of 49% and 44% at this time last year. The highest rating for the week over the past 10 years was 66% in 2004 and 2010. The lowest rating was 28% in 2011. Export data were supportive. Cotton export sales for the current 2013/14 marketing year totaled 67,600 bales, up 94% from the previous week and 16% higher than the prior four-week average. Turkey, Vietnam and Taiwan were the primary buyers. Sales of new crop cotton for the 2014/15 marketing year of 203,200 bales were more than three times higher than both the previous week and the average. Turkey, El Salvador and Mexico were the top buyers. Export shipments for the week totaling 136,400 bales were down 20% from the previous week and 9% lower than the average, but still higher than the weekly average needed to meet USDA export projections for the marketing year. The leading destinations were China, Turkey and Mexico.

The Valley Morning Star reports (here) that the official first cotton bale of the season was delivered last Thursday, July 3, to the La Feria Co-Op gin the Lower Rio Grande Valley. First-time winners Sam and Josh Ruiz of Mid Valley Ag delivered the bale and will receive a $3,000 bonus from the Harlingen Cotton Committee, which sponsors the annual first bale contest. The bale is then auctioned by the Harlingen Chamber of Commerce to raise funds for scholarships.

Wheat prices were lower again yesterday, mostly due to bearish export sales data. Wheat export sales totaled 338,100 MT, down 40% from the previous week. The Philippines, Saudi Arabia and South Korea were the top buyers. Shipments of 394,700 were up 18% from a week earlier, with the Philippines, Saudi Arabia and Japan the leading destinations.

Corn and grain sorghum prices were lower, in spite of strong export data, as traders expect USDA to leave its production forecast near unchanged, but increase its projected corn ending stocks for both the current and next crop years. Corn old crop export sales of 363,000 MT were up 25% from the previous week and 36% higher than the prior four-week average. South Korea, Japan and Egypt were the primary buyers. New crop sales totaled 381,600 MT, down 20% from a week earlier, but 71% higher than the average. Egypt, unknown destinations and Japan were the leading buyers. Exports of 1,207,100 MT were up 33% from the previous week and up 15% from the average. Japan, Mexico and South Korea were the top destinations. Grain sorghum sales totaled 62,400 MT and shipments were 4,800 MT.

Stock markets closed lower yesterday after a Portuguese bank missed a payment on some of its short term debt. The news, along with reports that industrial output declined in Germany, France, Italy and the Netherlands, raised concerns about the European economy. Those concerns spilled over to U.S. markets and sent stocks lower in spite of generally-favorable U.S. economic reports. The Labor Department reported that new unemployment claims last week fell by 11,000 to 304,000, compared expectations that they would hold steady at 315,000. Wholesale inventories were up 0.5% during May, equaling expectations.

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.