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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 05-02-2008 -------------------------------------------------------------------------- http://www.arfb.com Is the rice market topping? Old-crop May Futures left a one-day island reversal recently, which may be the first sign the fire in the market is running out of oxygen. An island reversal is one or more days of trading separated by gaps on the upside and downside, both. In this case, May f utures gapped higher on April 23. The next day, the market gapped lower, leaving a one-day island. Typically, this is a reliable technical signal. In today’s highly charged index fund-fueled market, however, it becomes a question mark. Markets tend to do strange things when heavy investment capital generally ignores both fundamentals and technicals. In this case, rice is following a path very similar to spring wheat’s, which topped above $24 — and is now trading about $11 without a single bushel of new wheat harvested. Rice market fundamentals exhibit tight world and U.S. supplies, but they’re sufficient to meet normal demand. Hoarding and panic-buying are something else. Nevertheless, producers should take advantage whenever possible of the excellent profit potential the futures market currently offers. The market may go higher, but it also certainly will drop at some point. Cotton supplies will keep a cap on price. After a brief, almost inexplicable stratospheric move, cotton has settled into a wide price range likely to contain trading for much of the year. December Futures recently made another one-day move to 89.49 cents before settling and moving toward lower support at 77 cents. Planting delays in parts of the Mid-South might shift more acreage, but that will likely be limited. Drier weather over the next two weeks will allow timely planting of much of the crop. With almost 10 million bales of carryover projected, the smaller the acreage in ’08, the better. Corn planting delays may boost the market. This most recent Crop Progress Report puts planting at just 10 percent compared to an average of 35 percent. Illinois at 6 percent and Iowa, 3 percent, are well below their five-year averages of 55 and 33, respectively. The delay suggests potential switching from beans to corn will be limited, and every day’s delay impacts potential yield. Producing 13 billion bushels of corn in this year may be a problem, so the market may compensate by moving to new record levels. At this writing, December futures are poised just below the $6.31¾ contract high. A move above that will make $6.50, or perhaps $7, the next upside objective. An improving dollar, which appears to have bottomed and is now ready to rebound, might limit the upside. Soybeans are continuing to trend lower. They’ve established a down trend, and delays in corn planting are adding pressure. November has tested overhead trend-line resistance twice in recent weeks only to fail. As this is written, November has fallen below $12 and may be ready to make a run at the $10.60 April 1 low. Argentina’s striking farmers have kept business coming to the U.S. If the strike is settled and the dollar rebounds, though, exports will slide. We should view any move above $12 that November Futures make as a pricing opportunity. The wheat decline has broken its long-term upward trend. As anticipated, fundamentals are driving the market lower. Australia is expected to produce more wheat this year than in the past two years combined. Canada’s wheat acreage is up 16.2 percent from last year. All this has combined to drive July Futures lower. Current support is being tested near $8 — and with harvest less than six weeks away, pressure will increase even more. Chart support at $7.63 and $6.97 may come into play. We should view rebounds from current levels — to resistance at $8.75 and $9 — as pricing opportunities. In Poultry, the Georgia f.o.b. dock-quoted price on broilers and fryers for the latest trading is 82 cents, based on full truckload lots of ice pack USDA grade A-sized, 2½–3-pound birds. Eighty percent (905 loads) offered are confirmed at 79½–84 cents, with a preliminary weighted average of 81.07cents f.o.b. dock or equivalent. The market continues moderate, and the live supply adequate for mostly normal demand. Average weights range desirable to occasionally heavy. Estimated slaughter is 4.9 million birds, or some 25.2 million a week. This compares with more than 4.8 million birds April 25. Cattle futures have been strong in recent weeks and are trending higher, in fact. Live Futures are supported by higher beef values and the resulting higher cash prices. Seasonal factors — grilling season has started — gives the product market a boost. June has moved above resistance at $93.15, the top of the recent trading range, and now has resistance at $95.50. Feeders are following Live Futures higher, but the upside is still limited with Corn Futures higher than $6. Hog futures broke out of their short-term up trend drawn off the April low. June failed at resistance at $77.10, and experienced higher selling pressure recently. Cut-out values climbed significantly in April, thanks to strong exports and domestic demand. However, weekly kills are still running 5–10 percent above last year’s totals — and pork stocks are burdensome. June’s downside objective is $72. 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_marketing/email/ ---------------------------------------- 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 2008  |
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