Texas Daily Ag Market Summary 8/27/14

Posted 10 years 93 days ago by

Feeder cattle mixed; futures higher.
Fed cattle cash trade inactive; formula trades $1 higher; futures higher; beef prices lower.
Cotton higher.
Grains lower; soybeans sharply lower.
Crude oil higher; natural gas lower.
Stock markets higher.

The USDA Economic Research Service released its latest farm income estimates yesterday. The report said “Net farm income is forecast to be $113.2 billion in 2014, down about 14 percent from 2013’s forecast of $131.3 billion. The 2014 forecast would be the lowest since 2010, but would remain $25 billion above the previous 10-year average. Lower cash receipts for crops and, to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income.” State-level data have been delayed until November 24.

Texas feeder cattle auctions quoted prices from $8 lower per cwt to $2 higher. There were a few comments that some feeder cattle buyers may have stepped to the sidelines, hoping to pay lower prices for their winter grazers and feedlot replacements when the usual fall calf run hits in September/October. However, there also indications that sellers may have pulled forward marketings to take advantage of the higher market, which could limit that fall surge in supplies. Feeder cattle futures were higher yesterday. The August feeder cattle futures contract that expires tomorrow and the CME feeder cattle cash index have converged to roughly equal values, as cash prices have slipped lower and futures have risen. The fed cattle cash trade was inactive yesterday with feedlots asking around $156 and packers offering $153-$154, compared to last week’s $152 average. Wholesale boxed beef values were lower. Estimated cattle harvest through Tuesday totaled 232,000 head, up 9Kfrom last week, but down 9K from a year ago. Fed cattle futures were higher

Cotton cash prices and futures continued to advance, posting their fifth consecutive day-to-day increase. The October futures contract closed at its highest price in over a month. There did not appear to be any particular reason for yesterday’s increase as there was no fresh cotton-specific news to impact markets in either direction. There seems to be a general feeling that the market might be oversold and that weather from this point forward probably can’t do much to help the crop, but could hurt it.

Falling soybean prices led the grain/soybean complex lower yesterday. For wheat, ample world supplies and weaker demand continue to pressure the market, in spite of harvest delays, here and in Europe, and subsequent concerns about quality. Corn and grain sorghum were also lower as conditions continue to favor a record-large corn crop this year. Soybeans started the slide in crop prices as the market is still adjusting to prospects for a large than expected crop.

Stock markets were modestly higher yesterday with the S&P 500 closing above 2,000 points for the first time. Economic news was mostly bullish. A major consumer confidence index came in higher than expected and at its highest level since October 2007. A home price index rose less than in previous months, but still beat expectations. The Commerce Department reported that orders for durable goods increased by nearly 23% last month, easily topping expectations for a 5% increase. However, orders excluding transportation came in lower than expected. The Richmond Federal Reserve Bank’s manufacturing index came in higher than expected, partially offsetting lower results from the New York, Philadelphia and Dallas Fed reports.

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.