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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 08-10-2007 -------------------------------------------------------------------------- http://www.arfb.com Early Corn crop estimates vary widely and cover a wide range, heading into the August 10 Crop Report. The USDA’s first objective survey should give everyone a better idea of just how much corn we'll produce. Pre-report estimates are 148–153.3 bushels an acre, or a crop of 12.6–13.1 billion bushels. With use projected at 12.5 billion bushels, we’ll need something in the 151 bushels-an-acre range to pressure the market. Concern about potential drought damage remains at both ends of the Midwest. At the same time, possibilities in the central Midwest appear excellent. Demand for ethanol continues to grow, and any signs of weaker production will boost price potential. September Futures are currently trading between $3.27 and $3.08. A breakout to either side means farther movement in that direction. Long-term support is around $2.75, with the next resistance just above $3.55. Soybeans are testing support. Into this week’s important Supply-Demand Report, beans have worked their way up a shallow trend line, with current support around $8.50. Pre-report estimates are fairly consistent, with yields of 42–43 bushels an acre and 2.56 billion–2.68 billion-bushel production. With just 64 million acres planted, weather in the next 2–3 weeks is critical. Projected use is 2.99 billion bushels, and even the largest production will see a substantial reduction in stocks. The stage is set for a strong battle for acres in ’08, and that limits potential downside. However, the market can still slide lower as we head into harvest. November will have support at quarter intervals from $8.50–$7.50. A close above $8.67 will allow a retest of old resistance at $8.93. Basis levels remain extremely wide, and that’s likely the case until after harvest. Fuel costs, barge availability, river problems and questions about handling this year’s crop all play into the basis. The tightest stocks on record boost Wheat Futures. Every time you pick up a news article about wheat, it concerns yields or crop conditions in another part of the world. Record-small world stocks have importers scrambling to cover needs, and U.S. export reports indicate current price levels haven’t rationed meager supplies. Nearby September has made new-contract highs on consecutive days. The only point higher on the charts was the $7.50 high in ‘96. We might be headed there again. At this point, July ’08 has firm resistance at $5.87 and has tested support at $5.50. Downside is limited until the market sees new crop acreage building. Cotton Futures have consolidated ahead of the report as December quickly completed a 38-percent “retracement” of the spring gains. Now, the market is consolidating at 62–65 cents and awaiting the USDA’s ’07 Production Estimate. Early estimates range from 17.2 million bales to 18.5 million, with 21.4 million bales expected use. Crop conditions as a whole are good, but drought has taken its toll in parts of the Southeast. The big question is Texas — yield and abandoned acres. An 18 million-bales-or-less crop will be supportive and may help push December back toward the 68.8-cent contract high. A concern will be China’s production and imports. Weather potentially is a problem for part of that nation’s crop. However, current estimates remain at 32.5 million bales, with imports projected at 16.5 million. Rice is showing volatility. While U.S. milled rice exports remain slow, futures have been exceptionally active in the past two weeks. That suggests something is happening. We expect fresh sales to Cuba or the Dominican Republic — and Iraq recently floated a tender. For now, mills are operating well below capacity. Technically, November has established a shallow trend upward, which starts from support at the recent $10.47 mid-July low. Current resistance is a fresh spike $11.05 high. October Live Cattle have charted a bearish reversal, but only after testing the water above $100. The market expects reduced fall production after the USDA reported significantly smaller placements. Questionable demand and weak packer margins are keeping a lid on prices, however. October has support above $96. November Feeders are testing support around $116. Hogs seem to have topped for October. After setting new-contract highs three times in four days, the market has posted sharp losses on profit taking and technical selling. As this is written, the market's overbought and is due a correction. A plentiful supply of market-ready hogs and weak wholesale pork prices are also pressuring futures. October has fallen through the steep up trend, and now has $72.26, then $70.58, retracement objectives. Dairy Fluid Milk production, up until last week, is steady in most of the nation. Now, heat stress across the entire U.S. is pressuring bottling plants as they seek milk. Higher producer prices and a less stressful summer, in most areas, have kept milk intakes higher than normally expected for much of the season. Schools throughout the country reopen for the fall in the next couple of weeks. Class I interest is sluggish and heavy volumes continue to be available to manufacturers. Class and component prices for August under the Federal Milk Order Pricing System (compared to July) are: Class I — $24.86. Class II — $22 (estimated July). Class III — $21.38 (+$1.21). Class IV — $21.64 (+[CONTENT].88). 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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