Texas Daily Ag Market Summary 10/22/14

Posted 10 years 37 days ago by

Feeder cattle $5 lower to $5 higher; futures lower.
Fed cattle cash trade inactive; formula trades lower; futures lower.
Choice beef prices steady; Select-grade lower.
Cotton cash prices unchanged; futures higher.
Grains and soybeans higher.
Crude oil and natural gas higher.
Stock markets sharply higher.

Texas feeder cattle auctions quoted prices from $5 lower to $5 higher per cwt, with light weight stocker-type calves generally faring better than their heavier counterparts. Feeder cattle futures were lower following a rise in grain futures and drop in fed cattle. The fed cattle cash trade was inactive through Tuesday in all major U.S. cattle feeding regions, but formula trades were nearly $1 lower on a dressed basis. Cash asking prices are still poorly defined, but reports have a few lots at $167-$168, up $3-$4 from last week’s average. Wholesale boxed beef values were steady on Choice offerings, but lower on Select-grade cuts. Estimated cattle harvest so far this week totals 229,000 head, up 1K from last week, but down 19K from a year ago. Fed cattle futures were lower. The increasing volatility in the cattle-beef sector is primarily due to uncertainty about how beef demand will hold up at even higher prices. The recent wide swings on equity markets have not done anything to reassure traders and falling hog prices give consumers a cheaper alternative at the meat counter. The projected break-even price on steers being placed in feedlots now for harvest in March is more than $170 per cwt and that has feedlot buyers very nervous. There is a lot of risk in paying current prices for feeders in hopes of continued record-high prices five months from now.

The USDA Risk Management Agency said yesterday that it will implement farm bill provisions that allow adjustments to Actual Production History (APH) yields for some crops, including cotton, “to offset the devastating impact of severe weather,” including drought. RMA had initially said it did not have time to put those procedures in place in time for the 2015 crop, but was able to pull it off (under pressure from many industry groups). However, winter wheat was not included for 2015 since much of that crop has already been planted. Wheat organizations have indicated that they will continue to press for inclusion.

Cotton cash prices were unchanged, but futures were modestly higher. There was not much in the way of cotton-specific news so traders focused on a report that China’s economy grew more than expected and the gains this week on U.S. stock markets. On Monday, USDA NASS reported that the U.S. cotton crop was 29% harvested, only slight behind the normal 31%, with 47% of the acreage rated in good to excellent condition, unchanged from a week ago and a little better than at this time last year. Texas cotton is 20% harvested, down one point from the average. The crop is in 33% good to excellent condition and 41% was rated fair, both unchanged from last week.

Wheat prices followed corn and soybeans higher. There are some ongoing concerns about planting delays in some areas, but farmers got pretty well caught up last week and the same rains that are causing those delays are also replenishing depleted soil moisture. The U.S. winter wheat crop was 76% planted , down only one point from the average. In Texas, 63% of the acreage has been planted, three points higher than the average. USDA has not started publishing wheat crop condition estimates yet this season.

Corn and grain sorghum prices were higher because of concerns about continued harvest delays in some parts of the Corn Belt. However, reports said that yields are still very good and the increasing supplies of new-crop corn will put added pressure on markets. USDA NASS reported that the U.S. corn crop was 31% harvested by the end of last week, well behind the normal 53% by this date, but not much slower than last year’s 38%. The remaining crop was rated in 74% good to excellent condition, unchanged from a week ago. In Texas, corn is 70% harvested compared to an average of 82%, with 67% of the acreage rated in good to excellent condition, the same as last week. The Texas grain sorghum harvest is 74% complete, ahead of the normal 70% with 58% of the crop rated good to excellent.

Stock markets were sharply higher yesterday with the tech-heavy Nasdaq Composite up 2.4% and the S&P 500 up 2%. Apple reported higher than expected quarterly profits and revenues, largely due to its launch of the iPhone 6. However, it also reported record sales of Mac computers. In addition, investors were encouraged by news that the European Central Bank might start buying corporate bonds. On the down side, both Coca-Cola and McDonald’s failed to meet quarterly earnings and revenue expectations.

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.