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Texas Daily Ag Market Summary 10/28/14

Posted 9 years 174 days ago by

  • Feeder cattle $3 higher to $5 lower; futures higher.
  • Fed cattle cash trade inactive; formula trades lower; futures higher; beef prices higher.
  • Cotton cash prices higher; futures mostly higher.
  • Grains and soybeans higher.
  • Crude oil and natural gas lower.
  • Stock markets mixed, near unchanged.

Texas feeder cattle auctions quoted prices $3 higher to $5 lower per cwt as markets remain volatile and uneven. Demand is still strong for yearling stockers and feeders, but fleshy, bawling, short-weaned calves continue to carry stiff discounts at most locations. Fluctuating futures markets and a dip in beef prices at the end of last week contributed to the uncertainty. Feeder cattle futures were higher yesterday, thanks to last week’s record high fed cattle market. The fed cattle cash trade was inactive on Monday, as it usually is early in the week. Formula trades, mostly from Friday afternoon, were $2 lower. Wholesale boxed beef values were solidly higher. Estimated cattle harvest on Monday totaled 113,000 head, down 1K from last week and 11K lower than a year ago. Fed cattle futures were higher.

Dr. Chris Hurt, livestock economist at Purdue University, posted an article to the Farm Doc Daily blog, “Record Cattle Prices, Again and Again,” that looked at past cattle cycles and when cattle prices peaked within those cycles. His conclusion, “Starting in the spring of 2015, increased supplies of chicken, turkey, and pork will provide consumers with ready alternatives to high priced retail beef and cattle prices may weaken. That weakening of cattle prices in the spring of 2015 is not a collapse, just a failure for cattle prices to keep making new record highs again and again as was the case in 2014. The long-term profit outlook for the beef industry is bright, but the record prices on this cycle may well occur in the next six months. Click on the following link for the full article.

Cotton cash prices were higher and futures were mostly higher, with only the nearby December contract posting a modest decline. Cotton is getting a little spillover support from corn and soybeans, but its own fundamentals remain bearish – large supplies and large crops being harvested versus lackluster demand. USDA AMS said in its weekly cotton review, “In Texas, some gins completed operations in the Rio Grande Valley and the Coastal Bend. Harvesting neared completion in the Upper Coast and Winter Garden and ginning passed the halfway point. Most cotton was off the stalk in Central Texas. Producers were encouraged with yields and fiber quality. Local reports indicated early yields in the West Texas Plains were a bale per acre on dryland and 1-1/2 bales per acre from irrigated fields. Most producers were satisfied with the quality considering the potential for deterioration that had existed from recent rains. USDA NASS reported yesterday that 42% of the U.S. cotton crop has been harvested, one point ahead of the average. The remaining crop was rated in 48% good to excellent condition, up a point from last week. In Texas, 30% of the cotton crop has been harvested, four points behind the average, with 33% of the acreage rated good to excellent, unchanged from last week.

Wheat prices followed corn and soybeans higher, in spite of weak export inspections of only 212,600 metric tons (MT), well less than half of both last week and last year. Weather remains a neutral factor with favorable conditions in the U.S. offsetting dry conditions in Australia and some “cold weather issues in Russia.” U.S. winter wheat seedings are 84% complete, equal to the average. In the first condition report of the season, 59% of the crop was rated in good to excellent condition, compared to 61% at this time last year. In Texas, wheat is 77% planted, one point ahead of the average, with 50% of the acreage rated good to excellent.

Corn and grain sorghum were higher, though market factors remained mostly bearish. U.S. farmers are still expected to harvest a record-large corn crop this year. Weather forecasts indicate more favorable harvesting weather in the Midwest. Falling crude oil prices are cutting into ethanol margins and stronger dollar is making U.S. grains more expensive to foreign buyers. Weekly export inspections came in at the low end of pre-report expectations, totaling 702,900 MT, down 2% from last week, but 3% higher than a year ago. The U.S. corn harvest advanced to 46% complete, still well behind the 65% average for this date. Crop condition ratings were unchanged, with 74% of the acreage rated good to excellent. The Texas corn harvest was 77% complete, compared to 93% on average, with 67% of the crop rated good to excellent, also unchanged from last week. Texas grain sorghum is 76% harvested, slightly ahead of normal, and 58% of the crop is rated good to excellent.

Stock markets were mixed, with the Dow Industrial Average and Nasdaq Composite indexes modestly higher and the S&P 500 and Dow Total Stock Market indexes modestly lower. Traders were looking forward to an announcement from the Federal Reserve policy committee later this week and another round of quarterly corporate reports. The Dallas Federal Reserve Bank general business activity index for September came in higher than expected, while its manufacturing index grew at a slower rate than in past months. The only other economic news for the day was a report from the National Association of Realtors showing a smaller-than-expected increase in existing home sales during September. In the corporate front, Merck reported higher than expected earnings on lower than expected revenues.

USDA said yesterday that it will likely be January before a decision is made whether or not to appeal the WTO ruling against the U.S. country of origin (COOL) requirements.

Click here for the Peterson Brothers’ (and one sister’s) latest pro-ag music parody video.

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.