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Apr
10
2014

TDA Daily Agriculture Market Summary 4/10/14

Posted 3 years 321 days ago ago by Texas Department of Agriculture

  • Feeder cattle mostly steady to $5 higher, few $3-$8 lower; futures higher.
  • Fed cattle cash trade inactive; futures higher; beef prices lower.
  • Cotton lower.
  • Grains lower; soybeans higher.
  • Crude oil and natural gas higher.
  • Stock markets higher.

Texas auctions reported feeder cattle prices were steady to $5 higher per cwt at most auctions, but one location reported feeder steers down $3-$8. As noted previously, feeder cattle supply/demand fundamentals remain very bullish, but occasionally lower prices will pop up due to variations in the types and condition of cattle on offer and adjustments to local supply/demand conditions. Feeder cattle futures were higher in response to lower corn futures. The fed cattle cash trade was quiet yesterday with feedlots still asking $150, versus initial packer bids of $146. Unofficial reports said a few head sold in Kansas at $149, which may be a good indication of where the rest of the market will end up this week. Wholesale boxed beef values were lower, with will also pressure the live cattle market. Estimated cattle slaughter for the week is running slightly ahead of last week’s pace, but behind a year ago. Fed cattle futures were higher.

USDA released its monthly World Agricultural Supply and Demand Estimates (WASDE) at 11:00 a.m. yesterday. The report shows that 2014 U.S. beef production is expected to be down 4.5% from a year ago, but higher than earlier forecasts due to higher feedlot placements during the past few months and higher production during March. Beef imports are expected to increase 3.3% compared to a year ago as the higher prices here attract interest from overseas suppliers. USDA lowered its pork production forecast for this year as higher carcass weights will not be enough to offset losses due to the Porcine Epidemic Diarrhea virus. Total pork output is expected to decline by 1.9% this year. Broiler production is expected to increase by 1.8% from a year ago and egg production is forecast 1.4% higher.

Most of the crop price movements for the day were attributed to the WASDE report.

Cotton cash prices and futures were lower yesterday. U.S. supply/demand numbers in the WASDE were right on pre-report expectations, with lower production and higher exports compared to the previous forecast. The report noted that the expected 2013/14 carryout will be the lowest since the 1990/91 crop year and the stocks-to-use ratio will be the lowest since the 2010/11 season. As a result, USDA raised it projected season average price by a penny. Projected world carryover stocks were adjusted slightly higher, but were in line with expectations. So why did prices drop? One analysis said that some traders were surprised that the import projection for China was increased by  1 million bales, but all of that was filled by higher exports from Australia and India, with no increase in the U.S. export forecast.  

Wheat prices were lower after world projected ending stocks came in higher than a month ago and higher than pre-report expectations. U.S. carryover of 583 million bushels was also higher than last month’s forecast, but equal to expectations. Overall, the report confirmed the large world supplies, which will continue to pressure the market. However, traders are still concerned about how the drought on the U.S. Plains will impact this year’s production and the situation in Ukraine still has the potential to increase world demand for U.S. wheat.

Corn and grain sorghum prices were also lower in spite of a bullish supply/demand report. U.S. projected ending stocks came in much lower than expected and export projections were higher, while world projected carryover was very near expectations. However, world supplies remain large and concerns about planting delays appeared to fade. In addition, the Energy Department said that ethanol production declined last week, but that stocks were higher.

Stock markets were higher yesterday after Alcoa’s adjusted earnings beat expectations and minutes from the last Federal Reserve Open Market Committee meeting indicated that it will not raise interest rates in the near futures. A while back, markets got excited when Fed Chairwoman Janet Yellen said that the central bank could start raising rates within six months of ending its bond purchases. However, it looks like the program won’t be ending any time soon.

This week’s U.S. Drought Monitor (click here for the Texas map or here for the U.S. map and summary) showed some improvement in overall conditions in Texas, with the total area of the state rated as abnormally dry or in drought, down two percentage points to 83 percent and a larger drought-free area in East Texas. However, the Panhandle, Northwest Texas and a wide band from Uvalde and Del Rio northeast to Ft. Worth remain in extreme to exceptional drought. More than 40 percent of the state is in severe drought condition or worse. Meanwhile, parts of West, South and East Texas remain drought-free. Nationally, conditions improves somewhat with 50 percent the contiguous states reported in some degree of abnormal dryness or drought, down three percentage points from a week ago.


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.