Texas Daily Ag Market Summary 9/9/14

Posted 10 years 80 days ago by

Feeder cattle $3-$8 higher; futures higher.
Fed cattle cash trade $6 higher; formula trades higher; futures lower; beef prices higher.
Cotton higher.
Wheat higher; corn and grain sorghum lower; soybeans mostly lower, except nearby Sep futures higher.
Crude oil higher; natural gas lower.
Stock markets mostly lower.

Texas feeder cattle auctions quoted prices $3 to $8 higher per cwt. Feeder cattle futures were higher in response to lower corn futures. The feeder cattle market outlook remains bright as the tight supplies will continue to support prices until the cow herd is rebuilt enough to increase calf numbers. And that will take a while. Drought conditions are limiting opportunities in the western U.S. and the high cattle prices are still making it difficult for ranchers to forego significant current profits in favor of an uncertain future. U.S. beef cow numbers have dropped by 1.9 million head since 2011. We would have to increase our beef replacement heifer retention by 34% to make up for that drop, not counting normal attrition from the cow herd. Last year, beef replacement heifers increased by only 0.8% and in only 5 years since 1920 have they increased by more than 10%. The largest jump was +17% in 1952. So, the rebuilding process will take several years and gross returns to cattle producers should remain relatively high until that happens.

The fed cattle cash trade was inactive yesterday, with early asking prices reported at $165 per cwt, up $3.50 from last week’s average. Formula trades were more than $2 higher. Wholesale beef values continued to increase. Estimated cattle harvest on Monday totaled 115,000 head, compared to only 2K last Monday (holiday) and down 4K from a year ago. Fed cattle futures were lower mostly due to speculative profit-taking and some positioning ahead of Thursday’s USDA Crop Production report.

Cotton cash prices and futures were higher yesterday. USDA’s Corpus Christi cotton classing office “graded 123,717 bales for the week to boost the total for the season to 405,011, up from 138,399 bales a year ago. Cotton tenderable on futures totaled 79% for the week and 78.6% for the season. A year ago, 48.7% classed for the season was tenderable.” After markets closed for the day, USDA NASS reported that 49% of the national cotton crops was rated in good to excellent condition, down one point from a week ago, but still much better than the 45% at this time last year. Bolls are opening on 37% of the acreage compared to 37% on average. Here in Texas, 35% of the cotton crop was rated in good to excellent condition, unchanged from a week ago. Thirteen percent of the acreage has been harvested, compared to 10% on average by this date. Bolls are opening on 34% of the crop, also ahead of normal.

Corn and grain sorghum prices were lower, mostly due to speculative selling of the underlying corn futures contract. Traders were also starting to stake out their positions ahead of Thursday’s USDA Crop Production forecast, with most still looking for a record-large U.S. corn production forecast. There were some ongoing concerns about frost later this week in the northern Corn Belt, but some contend that it will not make much difference, even if it does happen. Weekly export inspections were also supportive at 1.2 million metric tons, up 35% from last week and nearly five times higher than a year ago. USDA NASS reported that 74% of the U.S. corn crop was rated in good to excellent condition, unchanged from a week ago. 15% of the acreage is mature, well behind the normal 26%. Nationally, grain sorghum was rated 57% good to excellent, unchanged from last week and modestly better than a year ago. The Texas corn crop was rated in 67% good to excellent, unchanged from last week and grain sorghum was 58% good to excellent. The Texas corn harvest was 57% complete and grain sorghum is 65% harvested.

Wheat prices were higher yesterday as buying interest picked up following recent declines. Weekly export inspections were bearish, down 31% from last week and 41% below a year ago. Nationally, 3% of the winter wheat crop has been planted compared to 4% on average by this date. The Texas crop is also 3% planted, equal to the average.

Stock markets closed mostly lower yesterday, with only the tech-heavy NASDAQ Composite posting a solid gain, “as investors took a breather following last week's gains and continued to weigh the outlook for interest-rate hikes by the Federal Reserve.”

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.