Click here to view this report online.
  |
| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 10-17-2008 -------------------------------------------------------------------------- http://www.arfb.com Typically, poor economic conditions mean depressed price levels for cotton. As consumable income is used for more immediate needs, clothing purchases can be pushed to a later date. Combine that depressed demand with increased world production and it becomes a disaster for U.S. producers. The October USDA report indicated a larger-than-expected Chinese crop, which means they’ll have less need for imports. Working through the system, this means a 1.5 million-bale reduction in projected exports for the United States. Likewise, there was a big increase in projected ending stocks for 2008-09. While futures may have bottomed, upside potential seems limited until U.S. and world economic conditions stabilize. In the meantime, the loan is favored for unpriced cotton. LDPs appear to be widening with the current projection for the week of Oct. 17-23 at 7.04 cents. USDA surprised the soybean market. As expected, yield was lowered; however, projected production was up 2.2 million acres for a total of 2.98 billion bushels. This additional acreage sent soybeans sharply lower. However, the early-week rebound in oil and financial markets later boosted the market. These two actions left a potential one-day island reversal on charts, which is typically a reliable bottoming signal. In these turbulent economic times it was meaning less. The market reversed and dropped below $9 for the first time in 13 months. This leaves the next major chart support at $7.90. The market is oversold and due a seasonal low as well as a technical rebound. Underlying fundamentals, while damaged by the extra production in this week’s report, have a long term upward bias. Projected corn yields continue to yo-yo up and down. Last month, USDA lowered yields. This month, they raised the projection 1.7 bushels to 154 bushels per acre, in turn, raising projected ending stocks to 1.15 billion bushels, a fairly comfortable level. Corn has shown a little more stability the last few days than soybeans, but it is doubtful one can move very far without the other. While recent increases in stocks and production make things more comfortable, there will still be a drive for acres in ’09. Initial upside objectives for December corn range from $4.50 to $5.05. Wheat has been relegated to a follower. While there’s a big world crop, the market is in retreat mode, at the mercy of the financial market. As financial concerns continue to spread worldwide, demand is expected to lag, leaving the United States to compete with a myriad of exporters. The Gulf basis, while improved, is still 80 cents to $1 below Chicago futures. In addition, while futures appear to be turning, cash bids remain abysmal. The rice supply-demand report has lowered U.S. production, a trend that is likely to continue in subsequent reports. On the contrary, world numbers were raised slightly. U.S. milled values remain at a wide premium to other offerings, though. Vietnam is moving a lot of rice, but at substantially lower values. The market appears to be steady, with 5 percent quoted around $470. Thai prices have softened — with demand noted as “thin” — because quotes of $625 or slightly higher are at a wide premium to Vietnam. U.S. offers at near $770 appear to be out of the ball park and the cause of recent weakness. Amid the recent financial crisis, November futures gapped around $16.20, below previous support. That could bring the monthly chart’s 50 percent retracement value of $15.29 into play. In poultry, commercial hatcheries in the 19-State weekly program set 189 million eggs in incubators. This number is down 11 percent from the corresponding week a year earlier. Average hatchability for chicks hatched during the week was 84 percent. Average hatchability is calculated by dividing the number of chicks hatched during the week by the number of eggs set three weeks earlier. Broiler growers in the 19-State weekly program placed 163 million chicks for production, down three percent. Cumulative placements from Dec. 30, 2007 through Oct. 11, 2008 were 7.03 billion, down slightly from the same period a year earlier. Cattle futures certainly haven’t been immune to the recent turmoil in the world economy. Weekly exports were the lowest in months, seeming to confirm worries that demand, both domestic and export, will suffer due to economic woes. By forcing index funds to liquidate long positions, sharp losses in crude oil have carried over as well. Economic woes have also carried over into the hog pit. Cutout values have fallen off sharply in recent weeks, and sales, both domestic and export, have slowed as well. This market has large supplies to work through. Sharp losses in corn have potentially curbed plans for herd liquidation, adding to the supply crunch. December has key support at $58.70, but that could be shaky unless the economy stabilizes soon. 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  |
No comments:
Post a Comment