Texas Daily Ag Market Summary 10/2/14

Posted 10 years 57 days ago by

Feeder cattle mostly $2-$10 higher, few steady; futures sharply higher.
Fed cattle cash trade higher; formula trades $2 lower; futures higher; beef prices higher.
Cotton higher.
Grains and soybeans mostly unchanged to higher.
Crude oil and natural gas lower.
Stock markets sharply lower.

Texas feeder cattle auctions quoted prices mostly $2-$10 higher per cwt, with some locations steady compared to last week’s sale. Feeder cattle futures were sharply higher, with most contract months up the $3 per cwt daily trading limit. Tuesday’s drop in corn futures fueled Wednesday’s increase in feeder cattle futures as it lowers cost-of-gain for cattle feeders and gives Midwest farmer-feeders an incentive to feed their corn to their own cattle rather than sell it outright. That boosts demand for feeder cattle. The fed cattle cash trade remained inactive on Wednesday across all major U.S. cattle feeding regions, with reports that the higher cattle futures have caused feedlots to boost asking prices this week to $165 per cwt, up $6 from the last established cash market two weeks ago. Formula trades were $2 lower. Beef prices were higher and estimated cattle harvest so far this week totals 344,000 head, unchanged from a week ago, but down 19K from last year. Fed cattle futures followed feeders higher as traders focused on the tight cattle numbers with little regard to prospective difficulties moving beef at higher prices.

Cotton cash prices and futures were higher yesterday. Market fundamentals remain bearish – large global supplies, expectations for a large crop here and abroad and unfavorable Chinese cotton policies. However, tight supplies of high-quality cotton available for immediate delivery, decent export sales and optimism that China will import more cotton than currently implied were enough to boost prices somewhat yesterday.

The Office of the U.S. Trade Representative and USDA made it official yesterday – the U.S. and Brazil have reached an agreement ending the longstanding dispute over U.S. cotton support policies. Actual provisions of the agreement look pretty close to those rumored earlier in the week. Brazil will drop its WTO complaint and the U.S. will give them a one-time $300 million payment to boost cotton research. The full press release is here on the USTR web site.

Grain prices inched higher yesterday. Wheat prices got a boost from news that Morocco bought 9,000 metric tons of U.S. wheat. That’s a relatively small purchase, but enough to brighten the mood a little. Corn prices got a bump from weather forecasts calling for rain in parts of the Midwest that might cause some harvest delays. However, expectations for a record-large crop and higher stocks in Tuesday’s report kept a lid on any potential gains.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed continued improvement in conditions in Texas with “only” 71% of the state now in some degree of drought or abnormal dryness, down five percentage points from a week ago. That’s the lowest reading since November 2010. Nationally, the total acreage experiencing abnormal dryness or some degree of drought increased by three points to 48% percent of the contiguous states.

Stock markets were sharply lower yesterday “as investors retreated from riskier corners of the market amid worries about the pace of global growth.” Major indexes were down in the neighborhood of 1.5% with riskier small-cap and tech stocks taking the biggest hit. A prominent U.S. manufacturing index and construction spending came in lower than expected. In addition, German manufacturing output declined unexpectedly, raising concerns about economic recovery in Europe.

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.