High Plains Ag Week 9/13/2019 - Ag Economics on the Plains

First time for the price change table to show green in all the agriculture contracts we follow in a while. We’ll discuss the WASDE’s impact and some of the High Plains cattle auction numbers this week, and try to survive this spooky full moon, Friday the 13th thing. It may be too late for me though…. I already spilled my coffee.

WASDE & Crops

The September WASDE was released at 11 am CT yesterday, and it was a mixed bag for crops here on the Texas High Plains.

There were no adjustments to wheat in the domestic tables other than a 4% decline in season average farm price. Price projections declined from $5/bu in August to $4.8/bu in September, based on higher global ending stocks and greater exportable supply from major U.S. competitors this year. KC July ’20 wheat continued to trade around the 20-day moving average and at time of writing had settled in at $4.35/bu, which is above our estimated break even for irrigated wheat in the High Plains, but not by much. The annual index has room for improvement on this price.

Much of the excitement surrounding this months WASDE was drive by corn and beans. Soybeans saw a break out of the technical barriers passing the 40 and 100-day moving average, but the news was not as bullish for corn. While corn yield was revised down, it was not enough to drive a fundamental run-up and Dec ’19 corn closed at the 20-day moving average. At time of writing the price has settled at about $3.66, still in line with the 20-day, indicating we are still locked in technical patters inside the channel. It seems as though the market needs a larger revision downward or another fundamental signal to move prices significantly in either direction.

Cotton and sorghum saw the most change in this month’s report. Cotton area planted, area harvested, and yield was revised down 1%, 1%, and 2%, respectively. These downward production revisions were accompanied by downward use projections to leave ending stocks unchanged. However, the production losses in conjunction with positive news regarding tariffs out of China, were enough to send cotton up in one of the larger moves in the last few months. Yesterday (9/12/2019) opened at $0.59/lb and at time of writing the price was climbing at $0.63/lb. That price does not put us quite above break even prices based on last year’s numbers, but it is moving in the right direction.

Cattle

Total volume in the AMS monitored auctions on the High Plains was up slightly this week. The average price received in all weight classes was in line with the previous week, except in the heaviest calves. The average price for calves 8 cwt and above increased from approximately $110/cwt to approximately $130/cwt week-over-week. Price per cwt is relatively flat from the 500-600 lb class up to the 800+ pound class. The flattening of that ‘price received’ curve means that if you have the pasture or feed to put a bit more weight on you’ll gain some on total revenue by continuing to feed and waiting on a sale, at least for now.

Speaking of pasture, the drought monitor shows that the southern region is beginning to dry, and in some places it is happening quickly. If pasture conditions continue to deteriorate, many cattlemen will be forced to pull their calves off grazing. This will mean a supply influx in the near term, but in the medium-term, if you have grass and can continue to feed out cows and calves through the winter, you’ll likely see increased prices in the late winter/early spring from depleted supplies.

United States Drought Monitor (9/12/2019)

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