Texas Daily Ag Market Summary 8/13/14

Posted 10 years 107 days ago by

Highlights from yesterday’s USDA Crop Production report and World Agricultural Supply and Demand Estimates are incorporated into the commodity comments below. Click here for Texas crop production highlights.

Feeder cattle steady to $10 lower; futures sharply lower.
Fed cattle cash trade inactive; formula trades lower; futures sharply lower; Choice beef prices lower, Select higher.
Cotton lower.
Corn, grain sorghum, rice modestly higher; wheat, soybeans lower.
Crude oil lower; natural gas higher.
Stock markets modestly lower.

Texas feeder cattle auctions quoted prices steady to as much as $10 lower per cwt as tumbling futures market prices also took down the cash trade. Feeder cattle futures were sharply lower for a second straight day as traders remained concerned that beef demand could slide lower. However, feeder cattle remain in tight supply and will be for the foreseeable future, which should continue to support the market at historically-high levels. The fed cattle cash trade was inactive yesterday across all major U.S. cattle feeding regions. Teas formula trades were 50 cents lower. Wholesale beef prices were lower for Choice offerings, but higher for Select-grade cuts. Estimated cattle harvest for the week totals 230,000 head, up 5K from last week, but 7K lower than a year ago. Fed cattle futures were sharply lower with most nearby contracts down the $3 daily trading limit, or very near it. As noted earlier, traders are concerned that beef demand will drop, and it usually does decline seasonally as we move from summer into fall. However, there is nothing in the available data to suggest that we will see a greater than usual decline. Choice beef prices have slipped lower over the past couple days, but Select-grade cuts recovered a little yesterday. Tight cattle supplies will continue to support markets.

Cotton prices declined yesterday after USDA’s production forecast came in at 17.5 million bales, 1 million bales higher than previous projections, up 36% from last year and higher than the range of pre-report expectations. In the WASDE, the increased production was partially offset by an increase in exports, leaving projected U.S. ending stocks 400,000 bales higher than a month ago. The resulting stocks-to-use ratio would be the highest since the 2007/08 crop year. A higher ratio usually translates into lower prices. World stocks were lowered slightly from last month’s projection. In Texas, upland cotton production is expected to total 7.1 million bales, up 70% from a year ago. For both Texas and the U.S., cotton production is expected to be the largest since 2010.

Wheat prices were lower after the WASDE showed a “huge increase” in world wheat production. U.S. all-wheat production was forecast at 2.03 billion bushels, up 2% from July and on the high end of expectations, but down 5% from last year. U.S. and world projected carryover stocks also increased. In addition, Russia said it would increase its wheat exports to Egypt and Ukraine raised its wheat export forecast. Texas winter wheat production is expected to total 57.2 million bushels, up 4% from July, but down 12% from a year ago.

Corn and grain sorghum prices were modestly higher as USDA numbers came in at or below pre-report expectations. U.S. corn production is expected to total a record-high 14.0 billion bushels, up 1% from last month’s projection and 1% higher than a year ago, but on the lower end of pre-report expectations. Projected yield came in lower than expected. Projected U.S. and world corn carryover stocks were also reduced. U.S. grain sorghum production is forecast to increase 10% from a year ago. In Texas, corn production is expected to total 259.2 million bushels, down 6% from last year due to a decline in planted and harvested acres. Texas grain sorghum production was forecast at 152.5 million bushels, up 18% from a year ago.

Stock markets posted a modest decline yesterday with no fresh economic news to move prices much in either direction.

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.