Texas Daily Ag Market Summary 7/23/14

Posted 10 years 128 days ago by

Feeder cattle steady to $5 higher; futures limit higher.
Fed cattle cash trade inactive; formula sales $1.50 higher; futures limit higher; beef prices higher.
Cotton cash prices unchanged; futures mostly higher.
Grains lower; soybeans higher.
Crude oil and natural gas lower.
Stock markets higher.

Texas feeder cattle auctions quoted prices steady to $5 higher. Feeder cattle futures were up their allowable $3 per cwt daily trading limit with support from lower corn futures and expectations that cattle supplies will continue to tighten through the summer and fall. The fed cattle cash trade was inactive across all major U.S. cattle feeding regions, with reports that cash asking prices are firming up at around $158, up $3 from last week’s average. No packer bids were reported. TX-OK-NM formula trades were up $1.50 for the day, but still $2 lower than last week’s average. Wholesale boxed beef values were higher. Estimated daily cattle harvest for the week totals 232,000 head, up 4K from last week, but 8K lower than a year ago. Fed cattle futures were higher, with the nearby August contract up its $3 daily trading limit. Tight cattle supplies and continued decent summer demand supported the market.

Cotton cash prices were unchanged, but futures were mostly modestly higher. Wire service reports said that “Hot, dry weather in Texas and a slight decline in U.S. crop conditions for the second week in a row may have been supportive.” Cotton on the Texas Plains has certainly benefited from the rain that has fallen since Memorial Day. However, subsoil moisture is very limited after years of drought so regular rain is needed to sustain the crop, and that is what makes the forecast a little worrisome. And it’s important to keep in mind that not everybody is getting the rain. Lubbock has had nearly 2.5 inches this month and is almost an inch ahead for the year, but only 30 miles south, Tahoka has had only 0.34 inches. The International Cotton Advisory Committee’s updated 2014/15 world cotton balance sheet also supported prices. It showed lower beginning stocks, higher consumption and much lower ending stocks that current USDA projections.

Wheat prices were lower as the advancing winter wheat harvest adds to already-burdensome supplies. Spillover weakness from lower corn prices also spilled over to wheat. There were lingering concerns about the situation in Ukraine and additional, stronger sanctions against Russia could boost U.S. export potential. However, market impacts have been pretty limited so far.

Corn and grain sorghum prices were lower as favorable weather forecasts and steady crop condition ratings continue to pressure the markets. Conditions still favor a large corn crop this year and there are no significant threats on the horizon. There is not much chance of finding new demand somewhere so unless something happens to drastically alter the supply picture, prices will likely continue to trend steady to lower.

Global corn stocks are forecast to rise to the highest level in 15 years by the end of the 2014/15 marketing year, leading to downward pressure on U.S. and global corn prices. Stocks fell to relatively low levels during 2003/04-2006/07, prior to the 2008 spike in world commodity prices, but are now forecast to reach 188.1 million tons in 2014/15, just 3 percent below the recent high of 194.4 million tons in 1999/2000. Since 2008/09, world corn production has exceeded total consumption in 5 out of 7 years. In addition to the United States and China—the two largest global producers and consumers of corn—production and stocks have been generally rising in Brazil, Russia, and Ukraine—countries that are also playing an expanding role as corn exporters. With a second consecutive above trend U.S. corn harvest forecast for 2014/15, the United States is expected to account for most of the 8-percent increase in global corn stocks forecast in 2014/15. With growing inventories, the U.S. season average farm price of corn is expected to decline to $4.00 per bushel, down 10 percent from $4.45 per bushel in 2013/14, and 42 percent from $6.89 per bushel in the U.S. drought year of 2012/13. (USDA ERS)

Stock markets closed higher yesterday following a round of bullish economic data and corporate news. The Labor Department reported that consumer prices rose 0.3% during June, in line with expectations. Core inflation, excluding food and fuel, was only 0.1%, compared to expectations for a 0.2% rise. The numbers eased concerns that rising inflation might prompt the Federal Reserve to start raising interest rates sooner. The National Association of Realtors reported that sales of existing homes rose more than expected during June. On the corporate front, shares of Chipotle and Ingersoll-Rand were higher on better than expected quarterly results. Coca-Cola fell after earnings and revenue came in lower 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.