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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 09-05-2008 -------------------------------------------------------------------------- http://www.arfb.com Even Gustav’s heavy rains can’t motivate Cotton. At this stage, it appears much of the Delta crop will be inundated with rain and that’s probably not what most farmers want. The potential for crop losses is substantial, considering some of these areas received heavy rain just two weeks ago. The market can see a big carryover, though, and little pressure in terms of a smaller crop. So, cotton continues to hold in a 4-cent trading range, with support at 66.79 cents and resistance at 71.18. A close to either side of this range will suggest further movement in that direction. Downside, 63.1 cents is the next support and 75 cents the next resistance. The Rice recovery is continuing. After losing $6 from late April to mid-August, futures have recouped $2.79 in just two weeks. November is just short of the 50-percent retracement objective of $19.22. Gustav’s rain and wind are presenting problems for a harvest-ready crop. We anticipate some loss, and harvest will be complicated if the forecasts of rain and wind for the next three–four days hold true. Tight U.S. stocks may become tighter. However, a rapidly strengthening dollar will affect potential exports, with U.S. quotes now exceeding those from Thailand and Vietnam by well over $100. Soybeans are being hit by weaker oil. Gustav’s less-than-anticipated damage to oil and natural gas facilities in the Gulf has prompted big oil futures losses. Oil is now at five-month lows and, with the dollar’s 11-month high, is testing the funds’ “stayability.” This can prompt another strong sell off that’ll test support at the recent $11.74 November low. Rains across the Delta may hurt crops there, but we expect rain in the Midwest to help drought areas — a potential net gain in terms of overall production. A bigger crop plus potentially smaller exports likely means lower price as harvest nears. Long term, the bidding war for acreage still looms large. Wheat is taking a pounding. It has an additional negative beyond factors affecting beans and corn: a huge world crop. Recent projections estimate world production higher, and U.S. exports remain in doubt. Technically, December wheat has gapped below key support at $7.68–$7.75. On weekly charts, it might be headed to the next support, $7.49–$7.31. No doubt, this will cement planting plans for the ’09 crop. Many producers were opting out of planting wheat this year, a result of a wide basis and high input costs. A higher dollar and weaker oil prompt Corn’s liquidation. Like other grains, it has taken a hit over the last two weeks. A $1.20 rally off the recent $5.05 low has seen a quick 70-cent retracement and put December within 4–5 cents of the $5.51 62-percent objective. This might be a re-entry point for funds. If so, a potential head-and-shoulder bottom will still be intact. The problem is immediate demand. Rain will further delay the southern harvest and might help turn the market back positive. The recent $5.05 low stands as strong support. Live Cattle prices are still trending lower. On the other hand, feeders have charted a reversal now and are working to break out of their down-trending channel. Lower crude oil prices are supportive — and sharply lower corn prices are particularly supportive for feeders. However, the strengthening dollar can limit exports. October Live Cattle are still finding support near $103. Given the continued tightening of supplies, prices may have a hard time dropping much below support levels. The downward trend in Hog Futures has accelerated in recent days. October has left big gaps on the way down, and attempts to rebound have stopped short of resistance at $70.50. The composite value of a pork carcass has dropped more than $13 in about a week. News that Russia is moving to curtail pork imports is also negative. Continuing improvement in the dollar’s value has made U.S. pork less competitive globally just when production may become burdensome. Plants are operating near capacity, with weekly kills topping 2.2 million head for the past two weeks. Support begins at $68.50. If prices break here, the next support will be the $64.20 contract low. In Dairy, the September Class I price is $21.45, down 82 cents from August and $3.56 from a year ago. Class II skim price, announced at $11.59, is down 15 cents from August and $5.87 from a year earlier. Class I utilization remains at 68 percent. United States dairy export values in the first half of ’08 totals $2.1 million-plus, up 75 percent from the same period last year and a record for the second year running. The driving factor for this increase is higher world dairy-product prices. In contrast, the value of U.S. dairy imports rose only 13 percent, to almost $1.5 million. Our nearest trading partners, Mexico at $501.5 million and Canada at $183.6 million, account for the largest share of U.S. dairy export value, 23.8 percent and 8.7 percent, respectively. Other nations, with 5 percent or more of our total dairy export value include the Philippines, Indonesia, Japan and China. 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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