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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 8-01-2008 -------------------------------------------------------------------------- http://www.arfb.com COTTON continues to tread water looking for a firm bottom. Big stocks still are hanging over the market, but a much smaller ’08 crop should offset them. Long term, what index funds do may influence cotton; further liquidation might pressure it through current support at 71 cents. For now, trade is sideways between that support and resistance at 75 cents. Looking ahead, cotton will likely be in the mix for ’09 acres. However, it will take a sharp price increase to draw significant producer interest. RICE is following grains lower. A weak undertone in the international market looks to be stabilizing, with recent quotes from Thailand holding firm. Thailand’s intervention program is supporting price levels in the $700–$750 range. Vietnam’s market is much more variable, with little near-term improvement expected. Overall, the U.S. market is quiet as the transition to new crop occurs. Harvest is near in Texas and Louisiana, while the Midsouth crop is going to be 2–3 weeks later than normal. Both September and November futures have support at $16.25. The SOYBEAN decline has hit 50-percent retracement. To date, that downturn has been far less traumatic than corn. The November Contract appears more stable at the 50-percent level, near $13.50. While high prices ($8 corn; $16-plus beans) cut demand, the current decline is bringing customers back into the market. We expect ethanol plants, livestock and poultry feeders to be back in the market in a big way. Stocks will still be tight, and beans will battle corn for acres in 2009. Although the market is oversold, it will still be influenced by what happens to crude oil and the dollar. Further decreases in crude and a strengthening dollar might push the market toward support at $12.80 or $11.90. Resistance at $14.80 will be tough to penetrate. World-record production is pressuring WHEAT. How quickly the “worm turns,” from tight stocks to ample supplies almost overnight. The domestic winter wheat harvest is complete, and this was a bumper crop. There has been much talk about the condition of the Australian crop after two years of virtual crop failure there. However, much-needed rains fell last week and provided moisture at a key point, which boosted Australia’s yield prediction. Wheat will need outside interest and strong corn and beans to move higher, or perhaps to just hold the line. The September Contract’s recent move to $9.71 is likely to be a high-water mark for some time. On the downside, $7.47 support seems vulnerable. That leaves support at $6.60–$6.70 as the next likely downside target. How has the meltdown in CORN ended? We knew two weeks ago that corn had made its top. The extent of the potential selloff was in question — and today, we wonder if it has been overdone or if there are further declines to come. Improving growing conditions quickly pushed expected yields higher, from less than 150 bushels an acre to perhaps the mid-150s. Combined with the index funds’ shedding of oil contracts, an already hot market overheated and sent price through a number of technical support points. December penetrated support near $6.50 and $6, with a move to $5.63 representing the to-date low. That leaves support at $5.20–$5.25 as the next possible downside point. A 50-percent retracement on the long-term charts is $5.35, and September has been within a dime of that. So, downside from here looks limited. Trade will likely be sideways between $5.35 and $6.44 until the market has a very definitive production figure. Longer term, expect competition for acres in 2009 to keep the market extremely volatile. CATTLE Futures are attempting to consolidate and are trading mostly sideways. Weak fed-cattle prices and sagging beef cut-out values are weighing on futures. The monthly Cattle-on-Feed Report shows a 9-percent reduction in placements during June, and that should be bullish for prices. The total isn’t a surprise. The market has been reacting somewhat negatively to the report because marketings were slower than expected. October has support at the recent low of $103.80. HOG Futures are being pressured by the suspicion that pork prices are topping. The brisk pace of exports has really been supporting this market. Recent strengthening of the dollar, however, will shortly make U.S. pork less affordable. A stronger dollar also has been pushing prices lower. Declining corn prices have kept deferred contracts under the gun somewhat. High feed prices had spurred the possibility of herd liquidation, but the recent slide in corn had resulted in a pullback in Hog Futures, as well. October has violated the short-term upward trend that can be drawn off the July low. At this point, a retest of support at $68.42 looks likely. 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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