Texas Daily Ag Market Summary 7/24/14

Posted 10 years 127 days ago by

Feeder cattle mostly steady to $5 higher, few $6 lower; futures higher.
Fed cattle cash trade inactive; formula trades $1 higher; futures mostly lower; Choice beef prices lower, Select higher.
Cotton cash prices lower; futures mostly modestly higher.
Grains and soybeans higher.
Crude oil higher; natural gas lower.
Stock markets mostly modestly higher.

Texas feeder cattle auctions quoted prices mostly steady to $5 higher, though one location was steady to $6 lower. Feeder cattle futures were higher. The fed cattle cash trade was inactive yesterday, amid reports that packer bids of $160 (up $5 from last week) were turned down. Meanwhile formula trades were up $1. Wholesale beef values were mixed, with Choice offerings down from the previous day’s record high, but Select-grade cuts higher. Estimated cattle harvest for the week totals 343,000 head, down 1K from last week and 18K lower than a year ago. Fed cattle futures were mostly lower, with only the two front-month contracts showing modest increases. Supply-demand fundamentals remain very supportive across the cattle sector as prices continue to oscillate around record highs.

Tuesday’s USDA Cold Storage report was mostly bullish for meat prices. Freezer stocks of beef, pork and chicken were all down significantly from this time a year ago and most items were well below 5-year averages. End users have drawn down stocks to help buffer higher prices, but incoming supplies will continue to tighten. With buffer stocks quickly disappearing, those tightening supplies may have a greater impact on retail prices than what we have seen so far. Total beef stocks at the end of June were 26% lower than a year ago and 18% lower than the 5-year average. Chicken holdings in cold storage were down 18% from a year ago. Pork inventories were down 5% from this time last year, but 2% higher than the 5-year average. However, stocks of frozen pork bellies were nearly double what they were last year, which caused hog futures to close limit-down yesterday.

Cotton cash prices and nearby October futures were modestly lower, but other futures contract months were modestly higher. There was no fresh news yesterday so traders were mostly adjusting positions ahead of this morning’s weekly exports report. The National Cotton Council released figures yesterday showing China was again the leading buyer of U.S. during the 2013/14 crop year, followed by Turkey, Mexico and Vietnam. However, Chinese purchases are expected to decline during the coming 2014/15 marketing year. So far, the leading buyers have been Turkey, Mexico, South Korea and China.

Wheat prices were modestly higher as buying interest picked up a little at the current price levels. There were also some reports of possible harvest delays in Europe and traders are keeping an eye on the situation in the Black Sea region. On the downside, participants in a spring wheat tour said that the crop looks very good with first day results in North Dakota “the best we’ve seen in the past five years.” Fundamentals for wheat remain decidedly bearish and it will take a big supply shock or boost in demand for U.S. wheat to have much of an impact.

Corn and grain sorghum prices were also somewhat higher, mostly due to spillover support from soybeans. There were a few concerns about dry conditions in a few areas, but overall crop prospects remain solid. Ethanol production was up 2% last week and stocks are a little lower, which might have also lent a little support.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed an improvement in overall conditions in Texas, with 83% of the state rated in some degree of drought or abnormal dryness, down four percentage points from a week ago. The areas in moderate and extreme drought showed the biggest improvement. The drought-free areas in East and Southwest Texas remained largely unchanged and a new “normal” zone popped-up in the Trans-Pecos. Weekly comparison maps are available at http://droughtmonitor.unl.edu/MapsAndData/WeeklyComparison.aspx. Select Texas in the drop-down menu on the left side of the page. Nationally, the total area experiencing abnormal dryness or some degree of drought increased one point to 46% percent of the contiguous states.

Stock markets closed mostly higher, with only the D-J Industrial Average posting a modest decline and the S&P 500 setting a new record high. “Surprisingly strong corporate earnings” drove markets higher in the absence of fresh economic data. Wire service reports noted that “companies in the S&P 500 are on pace to increase earnings 5.6% from the year before,” compared to expectations for a 4.9% increase.

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.