The Office of the Chief Economist released the October WASDE yesterday. The markets were up Friday morning on the possibility of a mini-deal between China and the U.S.
WASDE
Poor exports reported in the October WASDE caused declines in both corn and wheat yesterday. CME JULY KCW closed down $0.08 yesterday, and CME DEC Corn closed down $0.12. Both are rebounding today, carried by overall market optimism regarding a meeting between President Trump and Vice Premier Liu He on a possible mini-deal with China.
USDA revised corn ending stocks down by almost 12%, below the 2 billion bushel threshold. Lower beginning stocks and an increase in feed and residual use drove the decline. Area planted and harvested was revised downward, and yield per acre was revised upward, indicating the acres removed from production were likely low-performing acres. Overall, the ending stocks information was bullish, however the price fell on the poor export revision. It will be interesting to watch the November WASDE just before the DEC contract expiration. The biggest fundamental price changer on the horizon is the poor maturation progress accompanied by the upcoming winter storms. If the market continues to view the DEC contract undervalued and the storms knock out production across much of the western production sector, we could see a sharp incline in price.
The increase on feed and residual in corn drove a large decline in feed and residual use in wheat. As the price of corn has fallen it has become a more attractive feed source. As a result, wheat use in rations is expected to decline, decreasing the demand for wheat as a feedstuff. The decline in feed use led to an overall increase in wheat ending stocks and a decline in season average farm price from $4.80 to $4.70.
October World Agricultural Supply and Demand Estimates
Cattle
Combined Texas auction activity was up significantly over the previous week, with AMS surveyed auctions reporting 5,261 head sold over the previous week’s volume of 2,228. Price held firm throughout the state with 6-7 weight calves brining approximately $137/cwt. Feeder cattle accounted for 85% sold, slaughter cattle for 11%, and replacement cattle for 5%. Feeder steers and heifers heavier than 600 lbs. accounted for 63% of all head sold. Expect similar volume and price in the upcoming week.
Texas Weekly AMS Reported Auctions (10/7/19-10/11/19)
#1 Medium & Large Feeder Steers
In the News:
Bloomberg – World’s Biggest Pork Producer Warns of Bacon Shortage
Bloomberg – China Open to Small Trade Deal if Trump Eases Tariff Threats
Feedstuffs – Fight over state ‘fake meat’ labeling laws continues
Upcoming Dates:
October 15 – Crop Progress
October 25 – Cattle on Feed, NASS
November 7 – Texas A&M AgriLife Extension Southwest Dairy Days (Register Here)
January 5-11 – The Executive Program for Agricultural Producers (Register Here)