Texas Daily Ag Market Summary 7/17/14

Posted 10 years 134 days ago by

Feeder cattle mostly steady to $7 lower; futures lower.
Fed cattle cash trade mostly inactive; futures lower; Choice beef prices higher, Select lower.
Cotton higher; futures mostly lower.
Grains and soybeans mostly higher, except wheat lower.
Crude oil and natural gas higher.
Stock markets higher.

Texas feeder cattle auctions quoted prices mostly steady to $7 lower, with one location as much as $10 lower and one steady to $5 higher on feeder heifers. Feeder cattle futures were lower for the third session out of the past four. Higher corn futures were a major factor in the decline as they reminded traders that production costs could go up significantly in a short period. The fed cattle cash trade remained inactive in most areas, but a few thousand were sold in Kansas at $155, down less than $1 from last week’s average. There were also some unofficial reports of sales at $156 later in the day. Wholesale boxed beef values were higher for Choice cuts, but lower for Select-grade offerings. Estimated cattle harvest through Wednesday totaled 344,000 head, up 1K from last week, but down 24K from a year ago. Fed cattle futures followed feeder cattle lower.

Cotton cash prices and October futures were higher, but all other futures contract months were lower. Traders were waiting for this morning’s weekly export sales report, hoping for a solid report showing an increase in sales and shipments, but bracing for another set of lackluster data. In regard to world trade, reports said that volume is expected to decline in the 2014/15 marketing year due to lower consumption in China. However, “The U.S. share of world cotton trade is projected near 29%, up from 26% this season and the highest since 2010-11 when it was 40%.” Wire services reported that rain in India is helping relieve what has been a dry monsoon season. That’s good news for Indian farmers, but not so good for prices here.

Wheat prices were lower as burdensome supplies continue to hang over the market. From a technical standpoint, the market seems to be oversold, but there has just not need enough fundamental support to reverse the slide.

Corn and grain sorghum prices were higher mostly due to speculative activity in the underlying futures contract and forecasts for above normal temperatures in parts of the Midwest. Ethanol inventories also declined and there was a report of a 210,000 metric ton corn sale to an unknown destination. However, observers were quick to point out that this does not mean prices have bottomed-out. Conditions still point to a near-record large corn crop this year and that will continue to pressure the market until something major happens on the weather front. The only real threat at this point would be an early frost in the Corn Belt, but even that possibility if a long ways off. The first yield estimates of the season based on farmer surveys and field counts and measurements will be released on August 12.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed very little change in overall conditions in Texas, with 87% of the state rated in some degree of drought or abnormal dryness, down less than one percentage point from a week ago. The percentages in each drought category also shifted slightly and the drought-free areas in East and Southwest Texas remained largely unchanged. Nationally, the total area experiencing abnormal dryness or some degree of drought held steady at 45 percent of the contiguous states.

Stock markets closed higher yesterday with the Dow posting its 15^th record high of the year, after a round of positive economic news and bullish economic reports. Intel posted better than expected quarterly earnings. Apple and IBM gained after announcing “an agreement to create business apps and sell iPhones and iPads to IBM business customers.” Time Warner was up after saying it made an offer to buy 21^st Century Fox. BlackRock reported better than expected profits, but Bank of America declined after offering the Justice Department $13 billion to settle a mortgage securities investigation. The Labor Department reported that producer prices rose by 0.4% during June, topping expectations for a 0.2% increase. In the past 12 months, prices rose 1.9%. The National Association of Home Builders new construction index came in much higher than expected.

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.