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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 06-13-2008 -------------------------------------------------------------------------- http://www.arfb.com Driven by renewed weather concerns, corn has made a strong move higher. Already beset by bad weather, planting has been slow, some acres unplanted and emergence well behind normal. Flooding rains in the Midwest simply have made things worse. This has pushed some new-crop contracts above $7, and December is on the brink. Then comes the most recent Supply-Demand Report with its good news/bad news. You decide which. The USDA has reduced ’07–08 use and raised projected ending stocks 50 million bushels, to 1.43 billion. However, those weather concerns have moved the USDA to an unheard-of major adjustment in projected ’08 yield numbers: a 5-bushel-an-acre drop. Applied to 86 million acres in projected plantings, the resulting 148.9 bushels an acre will produce 11.74 billion bushels, 390 million less than May’s estimate. Trimming ’08–09 use lessened expected ending stocks to 673 million bushels, 90 million fewer than a month earlier — and was expected to boost the market again, probably to $7-plus. Look for this to play out over the next two–three weeks, with the market likely topping by early July. Soybeans have moved in concert with corn, with November challenging the $14.66 mid-March contract high. Unlike corn, however, the USDA made only one adjustment in bean supply-demand numbers: it raised exports 20 million bushels due to further China buys. The USDA did not adjust acreage or yield, and the net result lowered ’07–08 ending stocks to 175 million bushels. With the strike in Argentina ending again, the market will turn to weather. Current conditions suggest yield impact, for which subsequent reports will account. A new-contract high for November is possible. A close above the $14.66 high will signal a move to $15 or more. Like corn, the move might be over by early July. The USDA adjusted several wheat supply-demand numbers. First, it raised ’07–08 ending stocks 15 million bushels to 254 million. New-crop changes included a .7 bushel-per-acre yield increase, to 43.2. That raised production 40 million bushels, much accounted for in higher feed use. The net result was projected ending stocks of 487 million bushels, not enough to make any real difference in a market suffering from historically wide basis levels. Gulf basis remains at $1.50–$1.75 under July Futures. In Memphis, that translates to $1.90–$1.95 under; in the country, basis is as much as $2.30 under July. A close higher than $8.40 brings resistance at $9 back into play. Basis problems likely will persist. Cotton stocks are growing, and the USDA has offered little relief as ’07–08 exports have shrunk another 300,000 bales. Add that to projected ending stocks, and you have a whopping 10.2 million bales to be handled. The USDA did raise ’08–09 exports 500,000, to an optimistic 15 million bales. Perhaps not optimistic, since expected world production is 1.6 million less than a month earlier. Nevertheless, cotton will need some help in working those stocks lower. Current resistance is 77–78 cents, with support starting at the recent 71.65-cent low. A close outside this range will suggest further movement in the direction of the breakout. Rice adjustments have been minor. A 1-million-hundredweight increase in projected exports have offset a half-million hundredweight rise in imports and ending stocks in the ’08–09 balance sheets. That has left projected ’08–09 ending stocks a meager 17.1 million hundredweight. Of that, 10.2 million is long grain. We expect world production of 431.4 million metric tons to exceed use and raise ’08–09 stocks to 81.5 million; all in all, not much real market fodder. Recent developments have relieved the supply situation somewhat. Japan has released some stocks; Vietnam is to lift its export ban July 1; India has lifted its ban for some specific markets in West Africa. These have allowed a quieter situation to develop and price levels to settle in at $850–$900. Quiet for now, though, doesn’t mean no more fireworks, because the overall supply situation will still take time to resolve. For now, look for futures to find support at $18, with initial resistance near $19. August live cattle seem to be confirming a top for now. Lower cash prices surprised futures, since beef values are holding better than expected. Further delays in reopening South Korea are also weighing on the market. Feeders are under pressure from higher corn prices, but the notion those higher prices will lead to fewer cattle on feed is supporting deferred Live Contracts. August Live Cattle have gapped lower and have initial support at $98.55. August Feeders have broken the steep upward trend. Little technical support exists until near $107.30. Hog futures are seeing weakness due to weaker pork demand. Cutout values have dropped $3 a hundredweight in a week, but slower marketings are a plus. Kills are still at record-highs for this time of year. The ideas that higher feed costs will result in herd liquidation are supporting deferred contracts. Initial August support is at $74. 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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