Texas Daily Ag Market Summary 7/31/14

Posted 10 years 120 days ago by

Feeder cattle mostly $3-$10 higher; futures higher.
Fed cattle cash trade inactive; formula trades higher; futures higher; beef prices new record highs.
Cotton cash prices unchanged; futures lower.
Grains unchanged to higher; soybeans lower.
Crude oil and natural gas lower.
Stock markets mostly modestly higher.

Texas feeder cattle auctions quoted prices mostly $3-$10 higher per cwt, with a few steady and some as much as $15 higher. One location noted a $10-$15 premium for weaned calves versus their unweaned cousins. Feeder cattle futures were higher, with the nearby contracts setting fresh records. However, the contract is still priced at a discount to the cash index. The fed cattle cash trade remained inactive across all major U.S. cattle feeding regions, while the Texas formula trade posted a modest increase. Wholesale beef values set record highs again yesterday for both Choice and Select-grade offerings. Estimated cattle slaughter for the week totals 336,000 head, down 7K from last week and 29K below a year ago. Fed cattle futures were higher. Seems like were setting new records daily in some segment or another of the cattle sector. We will likely see some market fluctuations around these record-high levels, but the cattle price train does not show any signs that it might run off the track any time soon. The big question is, how much higher can beef prices go before demand cracks?

Cargill announced yesterday that is will close a beef plant in Wisconsin because of “inadequate supplies of cattle.” The plant had the capacity to process 1,200 cattle a day.

Cotton cash prices were unchanged, but futures were lower after China said it will hold a special cotton auction next Tuesday and India reported that planting was progressing rapidly. In addition, traders are expecting to see lower export sales in today’s weekly report from USDA.

Wheat prices were higher after USDA announced a 205,500 metric ton sale to Nigeria, their second major purchase of the week. That doesn’t mean that demand has turned a corner, but it sure helps.

Corn and grain sorghum prices were unchanged to higher with no fresh news to move the market much in either direction.

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 conditions in Texas, with 83% of the state rated in some degree of drought or abnormal dryness, up one percentage point from a week ago. The drought map looks like a copy of last week’s with very small changes in the percentages of the state in each drought category. Parts of East and Southwest Texas and the Trans-Pecos remained drought-free. Nationally, the total area experiencing abnormal dryness or some degree of drought increased two points to 48% percent of the contiguous states.

Stock markets closed mostly modestly higher, with only the Dow posting a modest decline. Early in the day, stocks were higher after the Commerce Department reported that U.S. GDP grew by 4% during the second quarter, well above the 3% increase expected. Later, the Federal Reserve said that it would trim its monthly asset purchases to $25 billion, down $10 billion from current levels. However, it left benchmark interest rates near zero and said that they would probably stay there “for a considerable time after the asset purchase program ends.” The lack of specifics on interest rates was a “slight setback for some investors.” In other news, payroll processor ADP reported that the private sector added 218,000 jobs during July, much 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.