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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 08-22-2008 -------------------------------------------------------------------------- http://www.arfb.com A negative corn report has brought a positive market reaction. In this month’s Supply-Demand Report, the USDA for the second time this year adjusted projected corn yields a surprising amount. Based on field surveys, it bumped yield 6.6 bushels an acre. The market, initially under pressure, declined, but quickly turned higher and left a key-reversal bottoming signal. This suggested the market had already accounted for this potential yield and now is wondering if the crop will mature to this level. While the surveys show this much corn, the crop is still later than normal and subject to weather prior to harvest. Parameters are set, with this likely to be the largest crop estimate of the year. Ending stocks of 1.13 billion bushels won’t be tight, but not much wiggle room remains as we look to ’09. That’s when more ethanol plants are to come on line. December’s $5.05 low the day of the report appears to be solid support. A close above $5.80 will provide the market a $6.22–$6.50-or-higher upside objective. Cotton has slipped, despite the report. The USDA has lowered ’08 production to 13.77 million bales, raised usage by 500,000 and cut projected ending stocks to 4.6 million. However, the market has reversed early gains and dropped below key support since, at 68.2 cents. No doubt, traders are looking at 10.2 million bales in ’08 stocks and recent slow exports. Turning the train will take a while, but eventually, cotton will have to get in the ’09 acreage mix. Otherwise, those stocks get even tighter. Meantime, don’t be surprised to see December work toward 63–65 cents before things improve. If corn and soybeans stay at current levels or higher, cotton will have to make big gains to hold acreage, much less increase it. Rice is still following grains. Light trade is dominating futures, with the two nearby contracts receiving the most attention. The market remains very sporadic, with a recent downward bias in the past several months that shows initial signs of stability. The USDA’s Crop Production Estimate is drawing some criticism, since the general feeling is that this year’s crop’s late start will trim yields. Even with current projections, stocks will stay tight. September Futures have held above support near $16 and are working sideways. Resistance is $17.06–$17.35. A close above that, or below $16, will suggest more movement in the direction of the breakout. Soybeans are hitting balance. The USDA indicates this year’s crop will match use and leave ending stocks at a meager 135 million bushels. So, 11.2 million acres more plantings this year than last simply creates equilibrium and means ’09 will need more acres. Thus, another battle for acreage seems to be looming. With harvest only about a month away, a summer bottom may be in place. Volatility remains the watchword. A Midwest crop tour’s initial reports signal a potential problem in Ohio, where pod counts are some 10 percent below historic levels. Ongoing events in Argentina also have boosted the market. The next upside objective for November futures is a gap at $13.50 that coincides with a 50-percent retracement of the June–July decline. Support starts at the recent $11.74 low. Wheat has bounced off December’s major support near $7.80. Strong export demand and developing crop problems in Australia and Argentina have provided the backdrop for upward momentum. A December close above $9 resistance will offer the market an opportunity to test resistance at June’s $9.92 high. Cattle futures have seen weakness in recent days. Wholesale beef prices are following pork higher, and exports remain strong. However, live cattle futures currently hold a big premium to cash prices in anticipation of lighter supplies in the fall. The reason? Placements were down significantly in late spring and early summer. December has initial support at $105.80–$106.15. Renewed corn-price strength is pressuring feeders. Hog futures are continuing to show strength created by booming exports. Production totals still are coming in at record-setting highs, but export demand is offsetting them. The dollar’s weakness is, of course, making American pork more attractive to foreign buyers. October must close above $76 to suggest the possibility of further gains. 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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