Texas Daily Ag Market Summary 9/12/14

Posted 10 years 77 days ago by

Feeder cattle mostly $2-$7 higher; futures lower.
Fed cattle cash trade inactive; formula trades $5 higher; futures lower.
Choice beef prices modestly higher; Select-grade lower.
Cotton higher.
Grains and soybeans mostly lower, except rice higher.
Crude oil higher; natural gas lower.
Stock markets mostly modestly higher.

USDA released its monthly Crop Production report and World Agricultural Supply & Demand Estimates (WASDE) yesterday. Highlights have been incorporated into the commodity comments below. The report from the NASS Texas Field Office (here) includes district-level estimates for corn, grain sorghum and cotton.

Texas feeder cattle auctions quoted prices mostly $2-$7 higher per cwt, with a few steady and few as much as $10 higher on a portion of their offerings. Feeder cattle futures were lower. The fed cattle cash trade was inactive yesterday in Texas, but there were some sales reported in IA and NE at even money with a week ago. Most sellers are reportedly holding out for higher prices, while packers are hoping that the lower futures market and stagnating beef prices will soften their resolve somewhat. Texas formula trades were more than $5 per cwt higher. Wholesale boxed beef values were mixed, with Choice offerings slightly higher, but Select-grade cuts lower. Estimated cattle harvest for the week totals 461,000 head, up 103K from last week, but down 23K from a year ago. Fed cattle futures were lower.

From the WASDE, U.S. beef production for 2014 is expected to total 24.4 billion pounds, down 1% from last month’s forecast and down 5% from a year ago. 2015 production is expected to decline another 3% to 23.7 billion pounds. Pork production is expected to decline for 2014, but then rebound in 2015. However , the drop in beef production will result in lower total red meat supplies for both years. Poultry production is forecast to increase in both 2014 and 2014, with broiler output up 2% and 3%, respectively. Resulting total red meat and poultry production is expected to equal 91.7 billion pounds in 2014, down 1% from a year ago.

Beef export sales for the week totaled 14,000 metric tons (MT), up 37% from the previous week and 49% higher than the prior four-week average. Hong Kong, Japan and South Korea were the top buyers. Export shipments of 11,500 MT were down 9% from a week earlier and 15% below the average, with Japan, Mexico and Hong Kong the leading destinations.

Cotton cash prices and futures were higher after USDA cut its production estimate much more than expected and reduced projected ending stocks outside China. However, the gains were limited by higher production forecasts for China and India, record-high projected world ending stocks and soft weekly export data. USDA NASS reported that U.S. cotton production is expected to total 16.5 million bales in 2014, down 6% from last month’s forecast, but up 28% from last year and considerably higher than the range of pre-report expectations. Compared to last month, upland cotton planted and harvested acres were both reduced by 373,000 and yield was cut from 808 pounds per acre to 790.U.S. projected ending stocks for the 2014/2015 marketing year were reduced from last month to 5.2 million bales, down 400,000 bales from last month and smaller than expected, but still more than double last year’s carryout. World projected ending stocks were raised 1.2 million bales from last month to 106.3 million. Stocks outside China were increased by 660,000 bales to 42.7 million. For Texas, upland cotton planted and harvested acres were lowered by 250,000 and yield was cut from 631 pounds last month to 615. Production was forecast at 6.6 million bales, down 7% from last month, but up 58% from a year ago.

Cotton weekly export sales were a net negative 34,200 bales as cancellations by China outweighed new purchases. Export shipments of 86,600 bales were down 20% from the previous week and 17% lower than the prior four-week average. The top destinations were China, Mexico and Turkey.

Corn and grain sorghum prices were lower after USDA increased its corn and soybean production forecasts to new record highs and raised projected ending stocks for both of those benchmark crops. U.S. corn production was forecast at 14.3 billion bushels, up 3% from both last month and from a year ago and on the high side of pre-report expectations. Planted and harvested acres were held unchanged from last month’s forecast. If realized, both total production and yield per acre would set new U.S. record highs. For Texas, corn production was forecast at 264.6 million bushels, up 2% from last month, but down 4% from a year ago because of a 10% cut in corn acres. Projected 2014/15 U.S. corn ending stocks were set at 2.002 billion bushels, up from last month, but on the low side of expectations. World ending corn stocks were estimated at 189.9 million metric tons, up from last month, but somewhat lower than expected. U.S. grain sorghum production was forecast at 430 million bushels, up slightly from last month and up 11% from a year ago. Texas grain sorghum production is expected to total 157.5 million bushels, up from month ago because of a higher forecasted yield, and up 22% from last year.

Corn export sales for the week totaled 563,200 MT for the first week of the marketing year that began September 1, with Mexico, Japan and unknown destinations the leading buyers. A total of 1.3 million MT in sales carried over to the new marketing year. Exports of 507,500 MT brought accumulated shipments for the marketing year to 47.4 million MT, nearly 3 times higher than the previous year. The primary destinations were Japan, Mexico and South Korea. Grain sorghum sales of 208,300 MT were primarily to China and Japan. Shipments of 64,500 MT were all to China.

Wheat prices were followed other grains lower after USDA raised its U.S. and world projected ending stocks. U.S. projected wheat ending stocks totaled 698 million bushels, up from last month and on the high side of pre-report expectations. World stocks are expected to total 196.4 million metric tons, also up from last month and on the high end of expectations. Wheat export sales were four times higher than the previous week and double the prior four-week average. Taiwan, Malaysia and the Philippines were the top buyers. Exports of 559,200 MT were down 25% from the previous week, but less than 1% higher than the average. Mexico, Indonesia and Japan were the leading destinations.

Other Crop Highlights:
U.S. soybean production record high 3.9 billion bushels, up 3% from last month, up 19% from last year and equal to expectations. Texas soybean production forecast at 4 million bushels, up 68% from a year ago. U.S. projected ending stocks at 475 million bushels, up from last month and higher than expected.
U.S. rice production 218 million cwt, lowered 5% from last month, but up 15% from last year. Texas rice production 11.6 million cwt down 3% from last month, but up 4% from last year. U.S. and world projected rice ending stocks both reduced from last month.
U.S. peanut production 4.97 billion pounds, down 2% from last month, but up 19% from last year. Texas peanut production 469.7 million pounds, up 1% from last month and up 9% from a year ago.

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 86% of the state now in some degree of drought or abnormal dryness, down one point from a week ago. The areas rated abnormally dry and in severe drought increased, while areas in moderate, extreme and exceptional drought declined. The drought-free sections of East, West and South Texas remained largely unchanged. Nationally, the total acreage experiencing abnormal dryness or some degree of drought declined slightly to 46% percent of the contiguous states.

Stock markets were mostly modestly higher yesterday, with the DJ Industrial Average the only major index to post a modest decline. Wire service reports noted concerns about the conflicts in Ukraine and the Middle East, along with the announcement of new EU sanctions against Russia. On top of that, weekly unemployment claims came in much higher than expected at 315,000. Analysts noted that the reporting period included the Labor Day holiday, which could have distorted numbers somewhat.

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.