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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 05-16-08 -------------------------------------------------------------------------- http://www.arfb.com Cotton stocks continue to grow. The latest USDA report pushes ending stocks up another 200,000 bales to 9.9 million. World stocks are expected to be excessive at 61.6 million bales. Weakening economic factors probably will reduce domestic use and hold exports to just 14.2 million bales. This year’s 9.4 million acres of fewer U.S. plantings will help, but the USDA still projects 2008–09 ending stocks to be 5.6 million bales. This will keep pressure on prices for the foreseeable future. December support starts at 77 cents, with resistance at 89.45 cents. Overall trading is expected to stay in the lower two-thirds of this range. Rice is still very volatile. The latest USDA reports verify tight U.S. and world stocks and, at the same time, indicate a slight improvement in ’08–09 world numbers. Simultaneously, March planting intentions and trend-line yield numbers project further tightening of U.S. stocks, even with reduced exports for the next year. What the numbers do not show is the potential rise in U.S. plantings due to higher price levels and weather. Some acres are moving to rice, but not enough to relieve the tight situation that has developed. Internationally, we’ve seen little indication of change, and offers from Thailand are limited. Current milled-rice values are quoted at levels higher than $1,000 a metric ton. Futures are quite volatile, with November trading in a $4 range between the $22.25 contract high and the recent $18.23 low. Currently, trade is in the bottom half of that range. Long term, this market has additional upside potential. The Soybean Report is bullish news. Beans are reacting positively to the USDA’s tightening stocks number. The USDA reduced projected 2007–08 ending stocks 15 million bushels because of expanded exports. The U.S. has benefited from recent farmer strikes in Argentina. Weather is tempering upside potential, since some corn acres might yet move to beans. But in the meantime, the tight stocks number coupled with late planting suggest the market may be in a real squeeze by late summer. Initial reaction to the report has sent November to resistance at the recent $13.15¾ high. The next resistance is $13.48; then the early March high of $14.66. The USDA places the average ’08–09 price at $10.50–$12. This indicates the market likely is overpriced. Index funds may think differently, and weather will be a major factor! Corn plantings are progressing. This week’s report puts planting nationwide at 51 percent, compared to 71 percent a year ago and the 77-percent five-year average. Minnesota and Missouri are way behind normal, while Illinois and Iowa both recently have made progress. Concern remains, however, over how this year’s weather has affected actual acreage and potential yield. In its initial supply/demand offering, the USDA has lowered ’08–09 feed usage by 850 million bushels. Even so, that lower number projects a very tight stock situation with just 763 million bushels indicated at the end of the marketing year. The battle for acreage will begin anew. After pushing above $6.50, December corn is under pressure and may test $6–$6.05 if trend-line support just higher than that doesn’t hold. If planting is delayed any further, downside pressure will be limited. Wheat is consolidating around the $8 level. With harvest just weeks away, the market is anticipating improved stocks for 2008–09. The USDA has projected carryover rising from 110 million metric tons to 124 million. At the same time, U.S. numbers expect to improve, with production rising almost 16 percent. Export demand is also expected to drop about one-quarter. That much improved balance of supply and demand has the USDA looking at an average price of $6.60–$8.10. Thus, July Futures are at the upper end of that range and may decline further. Next support is $7.67, with resistance at the recent high of $8.44. Live Cattle Futures have moved sharply higher over the past week or so. Improved product values and higher packer bids have added to the strength — which we expect to wane as this is written, however, because retailers reportedly already have met their Memorial Day needs. Feeders are under pressure from continued strength in corn futures. June has overhead resistance in around $95.50. August feeders’ resistance is at the recent high of $111. Hog Futures are continuing to blaze a trail higher after confirming a bottom in early April. Strong export demand and a seasonal decrease in marketings are moving cash prices higher. As a result, futures are being pulled higher. This is all in spite of the fact that production is moving at a record-breaking pace. June support starts at $76 as a steep up-trend line and chart gap. We see resistance at $79.50 and at the $81.10 contract high. 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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