Texas Daily Ag Market Summary 8/21/14

Posted 10 years 99 days ago by

Feeder cattle mostly steady to $4 higher; futures lower.
Fed cattle cash trade inactive; formula trades $1 lower; futures lower; beef prices lower.
Cotton higher.
Grains and soybeans lower.
Crude oil higher; natural gas lower.
Stock markets mostly higher.

Texas feeder cattle auctions quoted prices mostly steady to $4 higher, though a few were as much as $4 lower on a portion of their offerings. Feeder cattle futures dropped $2 yesterday, but the cash feeder cattle index declined less than $1. This widened the futures discount to cash, reflecting the differences in outlook between futures traders focused on demand concerns and the reality of tight supplies/strong demand out in the country. The fed cattle cash trade was inactive in Texas , but a few head sold in Nebraska and Iowa at prices a dollar or two lower than last week’s average. The Texas formula trade was down $1. Wholesale beef values were lower. The estimated cattle harvest through Wednesday totaled 336,000 head, down 9K from last week and 31K lower than a year ago. Fed cattle futures were lower due to the weakness in the cash trade. The decline in hog and pork prices over the last couple weeks has also contributed to the lower fed cattle market as cheaper competing meat prices could siphon off some beef sales. The USDA monthly Cattle on Feed report will be released tomorrow afternoon. Consensus trade estimates are looking for a decline in the number on feed, placements and marketings compared to a year ago.

Cotton cash prices and futures were higher, mostly due to expectations that actual exports to China for the soon-to-end 2013/2014 marketing year will come in higher than current USDA projections. Recent declines caused an uptick in demand, but reports also noted that merchants are still reluctant to sell at current prices and mills are reluctant to buy with the bigger U.S. crop on the horizon. The result is a pretty thin market where a few trades can have an big impact on prices.

Wheat prices were lower as large global supplies and lackluster demand continue to pressure the market. Traders are keeping an eye on harvest delays and quality issues in Europe, as well as the situation in Ukraine. Taiwan issued a tender for 99,400 tons of U.S. milling wheat.

Corn and grain sorghum prices were lower on forecasts for beneficial rains in parts of the Corn Belt and higher results from a Midwest crop tour. Participants in a crop tour through Iowa and Illinois well above a year ago and the 3-year tour average. Wire services noted that rain is still a good thing for much of the Corn Belt, but that will change in a few weeks as the crop matures and starts to dry-down.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed a modest improvement in conditions in Texas with 81% of the state now in some degree of drought or abnormal dryness, down 2 points from a week ago. By drought category, the areas rated abnormally dry and in severe drought declined while the areas in moderate and extreme drought increased. The area in exceptional drought remained near unchanged. Drought-free areas in East and Southwest Texas were stable, but the area in West Texas expanded northeastward. Nationally, the total area experiencing abnormal dryness or some degree of drought increased by one point to 48% percent of the contiguous states.

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.