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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 06/01/2007 -------------------------------------------------------------------------- http://www.arfb.com Improved export activity is stimulating Cotton gains. “Better late than never” may apply to China’s increased buying here. Long anticipated, that buying has risen. However, it probably will not be enough to reach the USDA’s oft-revised export projection. So that means further adjustments in the growing stocks projection, currently 9.5 million bales. With most of the crop planted, the question is how much went into the ground. In Arkansas, reduction apparently was significant from Crittenden County south; at the same time, decreases in the Northeast were much less. Overall, we anticipate something fewer than 900,000 acres. U.S. plantings may be 11.5 million or less. Given these numbers, the recent December Contract move to 56.2 cents may be all we can expect without major weather problems. The next upside “retracement” objective for December is just under 57 cents. The Rice market is quiet, kept so by a lack of fresh business over the past 30–60 days and with no indication of immediate change. Mills are operating well below capacity, and substantial new sales are needed to get everything active again. The smaller crop anticipated this year has done little to spur the market, as evidenced by recent futures activity. The November Contract spiked sharply upward in early May and has essentially worked toward $10.80 support since. Resistance ranges from $11.25 to $11.40. Upside potential is limited until the international market is more active. Soybeans’ rally is near the “brink.” A last-minute push to get corn planted has ensured bean acreage will be sharply less. This brought funds back to the table. Coupled with a weak dollar, a strong Brazilian real and excellent Chinese demand propelled beans higher. Old-crop July is within a dime of the contract high, while new-crop November closed just 1½ cents below the $8.43 late-February high. This will either be a double top in the market or where another leg up begins. With a huge U.S. carryover expected and a record South American crop, it looks to be impossible for the market to continue rallying. However, smaller South American plantings may follow a much smaller ’07 U.S. acreage, given the current monetary situation. As always, weather will be key — and early projections of a possible La Niña drought situation has the market nervous. Technically, soybeans are in a very overbought condition and ripe for a sell off. So, don’t be surprised if the market makes a short term correction before it advances any farther. The next long-term chart points are $8.56 and $9.03. The Wheat market is still volatile. Since the Easter freeze, July wheat has gained $1, lost 60 cents, then gained 40 cents and now stands just above $5. A good hard-red crop will partially offset a poor soft-red crop, although heavy rains in Kansas has raised concerns about crop deterioration. The market may remain volatile through harvest. Wheat by itself probably can’t generate much more upside potential. With corn and soybeans leading the way, though, anything is possible. We expect good support at $4.60–$4.70 while $5 may be the top of the market, at least for now. The Corn crop is off to a good start and through late May is doing very well. The most recent crop ratings put 78 percent in the good-to-excellent category. Although that suggests better- than- trend line yield, it’s early, and a lot can happen. For now, September Futures are locked in a fairly narrow trading range, $3.95–$3.57, that has contained the market for eight weeks. A close outside this likely will indicate a strong move that direction. Weather remains a key here, as well, as does demand for old crop. Basis levels are strong, as exporters and other end-users are having a hard time getting hold of sufficient corn. A lot of acres have been planted, and they’re in good shape. However, to paraphrase that old Yogi Berra adage, “the crop ain’t made ’til it’s made.” Cattle Futures have been under pressure due to less expected demand for beef after Memorial Day. Ever-increasing gas prices are affecting consumers’ disposable income, and that means less to spend on beef. Lower wholesale prices and weak packer operating margins are a result. High corn prices result in lower cattle weights, and that’s keeping production totals down. The next level of support for August is just above $90. Hogs have been under pressure from a weakness in cash prices, despite the significant marketing slowdown. Demand has not been strong enough to support cash prices, so packers have shut down rather than bid higher to bring hogs to market. Technically, August charted a bullish key reversal Tuesday and has overhead resistance at $74.40. In the Dairy sector, June Class III trades are higher than $20. Aggressive bidding on barrels has pushed the spot price up 7 cents, to $1.80, and it has rallied Class III Futures again. June Class IIIs traded as high as $20.04 before settling at $19.68 for the day. The close of schools for summer recess is upon us, and Class I sales have slowed. This makes more milk available for manufacturing. Production and component levels are declining in the Southeast, Southwest and most of California. However, the annual peak is still a couple weeks away in the upper Midwest, Northeast and Northwest. For details, visit the website www.dailydairyreport.com. ---------------------------------------- HOW TO UNSUBSCRIBE You are receiving this newsletter because you requested that your e-mail address be added to the Arkansas Farm Bureau Market Report. To unsubscribe or change your subscription information, go to http://www.arfb.com/commodity/daily_rpt_email.asp ---------------------------------------- QUESTIONS OR COMMENTS? If you have any comments or questions about this e-newsletter please e-mail us at mktrpt@arfb.com Arkansas Farm Bureau Copyright 2007  |
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