Texas Daily Ag Market Summary 9/15/14

Posted 10 years 74 days ago by

Feeder cattle steady to $8 higher; futures higher.
Fed cattle cash trade steady; formula trades $5 higher; futures lower; beef prices lower.
Cotton lower.
Grains and soybeans mixed.
Crude oil lower; natural gas higher.
Stock markets lower.

Texas feeder cattle auctions quoted prices fully steady at some locations and $3-$8 higher at others, with one up to $10 higher on a few head. Texas direct feeder cattle sales were $4-$12 higher. Feeder cattle futures were higher. The Texas fed cattle cash trade was steady with last week at about $161.50, but it was a very thin market test with only $565 head of USDA-confirmed sales. Formula trades were $5 higher. Wholesale boxed beef values were lower. Estimated cattle harvest for the week totaled 592,000 head, up 74K from the previous week’s holiday-shortened total, but down 23K from a year ago. Fed cattle futures were lower as the softer beef values brought demand concerns back front and center. The stronger dollar is also starting to impact prices to some degree as it makes U.S. goods more expensive to foreign buyers (and makes our imports cheaper.)

Cotton cash prices and futures were lower on Friday as traders were reminded of the burdensome holdings in China “that are going to be around for a while.” A report from the USDA Foreign Ag Service noted that China’s stocks-to-use-ratio (end-of-year stocks divided by usage) is a whopping 180% for the 2013/2014 marketing year that just ended and 170% for 2014/15. They have more than a year and half of usage in hand. In contrast, the U.S. ending stocks for 2013/2014 were only 17.4%, but are expected to double in 2014/2015 to 37.7%. “In an understatement, Chinese officials have said the stocks are abnormally high and should be reduced. To return to ‘normal’ levels, China would have to produce less, consume more, and-or reduce net imports. Production would have to drop by 25% from the current output for six years, consumption to rise by 20% for more than six years, or imports would have to be reduced to the World Trade Organization tariff rate quota level for 16 years.” On the flip side, observers also noted that the 1 million bale reduction in this year’s U.S. production forecast and expectations for continued tight supplies of high-quality fiber should remain supportive. Cool and/or wet weather across the Cotton Belt this weekend was also worrisome and certainly not what the crop needs to mature.

Corn and grain sorghum prices were mixed on Friday, with grain sorghum mostly 3 cents to 5 cents lower per cwt and corn 2 cents lower to 8 cents higher per bushel. The underlying corn futures contract was mostly lower, with the nearby Sept contract higher and deferred contract months lower. Expectations for a record-large 2014 corn crop and increasing harvest-time supplies from southern states continue to keep a lid on the cash market.

Wheat prices were lower as last week’s USDA reports confirmed the large world supplies. Rain on the U.S. Southern Plains is causing some winter wheat planting delays, but it is also recharging moisture supplies. The stronger dollar and good growing conditions in Australia were also bearish for U.S. wheat.

Water: The Texas Water Development Board has approved a low-interest loan to construct a new reservoir on the Colorado River in Wharton County “to capture heavier rains that fall downstream of Lakes Travis and Buchanan and is estimated to provide 90,000 acre-feet of water per year for area rice farmers. The reservoir is expected to completed in 2017.”

Stock markets closed lower on Friday after the Commerce Department reported that retail sales rose by 0.6% during August, slightly behind the 0.7% increase expected. The agency also said that import prices fell during August. Reports also noted that traders were growing increasingly nervous ahead of this week’s Federal Reserve policy meeting and worried that the Fed could raise interest rates soon. Rate sensitive stocks led markets lower.

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.