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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 07-27-2007 -------------------------------------------------------------------------- http://www.arfb.com The Soybean price decline has accelerated, with technical selling pushing sharply lower to start the week. The last two weeks’ slide has formed a bear flag, and trade has a $7.76 downside objective. That’s not far above the April low of $7.52. However, strong support is near the 62-percent “retracement” objective (62 percent of April–July gains) at $8.27. The market dipped to there in June, while the same area was resistance in early April. Weather remains a factor, with milder temperatures and rain pushing the crop toward maturity. The next 3 to 4 weeks are always critical, as much of the crop reaches the pod-filling stage. For now, yield potential appears excellent. However, Asian rust is creeping north, with the first discovery in Arkansas this past weekend in Little River County. Rust was previously found in Florida, Georgia, Alabama, Mississippi, Louisiana and Texas. Any rebound will find resistance at $8.93. The Corn yield is likely to exceed the 151 bushels-an-acre trend-line average. Areas of stress — early, dry or drought conditions — exist in the eastern Corn Belt and the Southeast and are developing in the northeastern part of the Corn Belt. However, the rest of the crop is in excellent condition. Many analysts suggest that good yields will more than offset potential losses in the poor areas. A lot of the average-yield projections are in the mid $150 range or higher, putting production at more than 13 billion bushels. Handling and transportation facilities will be taxed to move this crop in a timely manner. Basis will remain under pressure as harvest nears. September Futures’ next support is $2.72½, where the big move began early last fall. Rebound resistance is the $3.27 July 3 low. Wheat Futures, both old- and new-crop, are testing a key reversal-top and consolidating in a wide range just below late June’s key reversal. A key reversal generally indicates a major top, but this market’s been reluctant to move lower because of the tightest world supplies ever. Demand for U.S. wheat is good, but freight and barge availability are keeping the cash basis wide. Upside potential, though seemingly limited, can explode if we exceed the $6.50 September ’07 and $5.87 July ’08 contract highs. Producers, be aware that a poor basis and topping futures suggest use of hedge-to-arrive contracts, selling futures, or buying “put options” to price your crop. Cotton has broken the up trend. After nine straight weeks of higher prices, cotton hit a brick wall and tumbled. Four days of sharp slides carried December through trend-line support and to within 100 points of a 50-percent retracement of the better-than-17-cents gain. Pushed to the recent highs by fund buying, the market lost momentum when speculators took profits. This break may be buying opportunity for them. If not, it may be an extended correction, with 60.7–58.8-cent downside objectives in the December Contract. Long term, a smaller crop suggests the ’07 market should trade in the 60–65-cent range. The ’08 crop likely will be a different matter with stocks expected to tighten. The market probably will have to move into the upper 70s to attract acres from corn and beans. November Rice Futures had tested trend-line resistance as this is written, but failed both times. That left the market in position to retest support at $10.47. Failure there will bring back into play the $10.02 contract low.The ’07 U.S. crop seems on track for good yields, with recent weather a big factor. Thus, fewer long-grain acres will be partly offset in terms of production. However, world use is again expected to outstrip production, which sets the stage for stronger market potential later this year. Vietnam export sales have again exceeded their stated quota, leaving an opportunity for others, including the U.S. Cattle Futures got a boost from the recent Cattle-on-Feed and Inventory reports. Total on-feed inventory was 1 percent smaller than a year earlier. The Inventory Report showed a 6-percent drop in beef replacements and little-to-no expansion in other categories. However, packer margins are currently in the red, and another sharp dip in cutout values last week didn’t help. August Live Cattle have resistance just above $94. Hog Futures are showing strength in reaction to gains in product prices. There’s no shortage of hogs coming to market, but the possibility that China will buy U.S. pork aggressively has kept bids from falling. Fall production will probably be 2–3 percent higher than last year, but futures are holding their own. This market can break hard, though, since cash prices usually bottom out in the fourth quarter. August has resistance at the recent high just below $76 and support starting at just under $70. As for Poultry, the Georgia FOB dock-quoted price on broilers/fryers is 81¼ cents as this is being written, based on truckload lots of ice pack USDA Grade A-sized 2½–3-pound birds. Eighty percent (926) of the loads offered are confirmed within 78–83 cents, with an 81.04-cents preliminary weighted average, FOB dock or equivalent. The market continues steady, and the live supply is adequate for normal demand. Average weights are desirable. Current estimated slaughter is more than 4.6 million head, compared to 5 million-plus head a few days earlier. Contact: • Gene Martin (501) 228-1330, gene.martin@arfb.com . • Brandy Carroll (501) 228-1268, brandy.carroll@arfb.com . • Bruce Tencleve (501) 228-1856, bruce.tencleve@arfb.com . • Matt King (501) 228-1297, matt.king@arfb.com . -------------------------------------------------------------------------- We promised you your own bank, and here it is - www.farmbureaubank.com Created by members who understand your financial needs like no other bank can. Backed by the strength, stability and leadership of Farm Bureau. Go ahead. See what better banking is all about. Call 1-800-492-FARM Personal Bankers are available Monday - Friday, 7am to 7pm CST -------------------------------------------------------------------------- QUESTIONS OR COMMENTS? If you have any comments or questions about this e-newsletter please e-mail us at: mktrpt@arfb.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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