Texas Daily Ag Market Summary 9/4/14

Posted 10 years 85 days ago by

Feeder cattle steady to $5 higher, few to $10 higher; futures higher.
Fed cattle cash trade inactive; formula trades higher; futures sharply higher; beef prices higher.
Cotton higher.
Grains and soybeans lower to sharply lower.
Crude oil higher; natural gas lower.
Stock markets mostly lower.

Texas feeder cattle auctions quoted prices steady to $5 higher, with a couple locations $5-$10 higher. Feeder cattle futures were higher following a sharp decline in grain futures. The fed cattle cash trade was inactive on Wednesday, but formula trades were modestly higher. There were reports that feedlots turned down packer bids at $154 (down $1 from last week’s average) and were holding firm at $158-$160. Wholesale boxed beef values were higher for both Choice and Select-grade offerings, with Choice cuts posting their first increase since August 7. Estimated cattle harvest through Wednesday totaled 239,000 head, down 107K from last week due to the Monday holiday and 18K lower than a year ago. Fed cattle futures were higher with the front-month October contract up its $3 daily trading limit.

Cotton cash prices and futures were higher in spite of lower grain prices and mostly bearish news. Crop condition rating still support forecasts for a larger U.S. crop this year. The International Cotton Advisory Committee said that “world cotton stocks outside China are expected to reach a record high this season and pressure prices as China continues liquidating its significant stocks.” If the ICAC figures come to pass, this will be the fifth consecutive year that world production will exceed consumption.

Wheat prices dropped sharply due to spillover pressure from other grain crops, speculative selling of the underlying futures contract and ongoing issues with large world wheat supplies. The drop came in spite of easing tensions in Ukraine as it and Russia reportedly reached a tentative agreement on terms for a cease fire.

Corn and grain sorghum prices were also sharply lower. It looked like the drop was the result of a number of smaller factors rather than one big thing. Crop condition ratings came in a little better than a week ago, reinforcing the potential for a record-large U.S. crop this season. Harvest is well underway in Texas and a few other southern states so increasing new crop supplies are adding pressure. There was some speculative selling of the underlying futures contract and the improvements in Ukraine were another factor. Wire service reports said that ethanol demand remained strong, but that did little to stem yesterday’s slide.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed a deterioration in conditions in Texas with 87% of the state now in some degree of drought or abnormal dryness, up 4 points from a week ago. Most of the decline was due to abnormal dryness encroaching on formerly drought-free areas of East Texas. Other drought categories showed little change. Nationally, the total acreage experiencing abnormal dryness or some degree of drought declined slightly to 47% percent of the contiguous states.

Stock markets were mostly lower yesterday. Apple led tech stocks lower after Samsung launched its newest products a week ahead of Apple’s expected release of the iPhone 6. Investment advisors warned that they might downgrade Apple if it’s product launch “does not show significant potential for profits.” Delta Airlines was lower after it said that third quarter fuel costs might limit earnings. On the plus side, the easing tensions in Ukraine should help European stocks, which had been dragged lower by concerns that the conflict will hurt European economies.

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.