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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 10/31/2008 http://www.arfb.com The turning point for soybeans could be close. With all the turmoil in the financial markets and the continuing selloff of crude oil, it is difficult to make any type of rational statement regarding market direction. However, USDA’s revision of October production numbers was positive for the market. Just three weeks after adding 2.2 million acres to the soybean crop, they have taken exactly half of that back, reducing plantings to 75.9 million acres and harvest to 74.4 million acres. Production was reduced 45 million bushels, and exports were pared 30 million bushels despite a current-year sales pace that is more than nine percent ahead of last year. The current export projection is now 140 million bushels below 2007-08. This could be the point where fundamentals once again becoming the driving force in the market. Index funds still hold long positions, which will need to be liquidated if crude oil continues lower. A January Futures close above $9.45 would be the first sign of a probable turn in the market. A close above $10.06 would signal additional upside potential. Support is the recent low of $8.38. Like soybeans, corn plantings and projected harvest went through a late-month revision, with USDA lowering the crop by one million acres. Projected production declined 167 million bushels in this revised report, which also featured 50-million-bushel reductions in both exports and feed use. The overall net: projected ending stocks of 1.09 billion bushels, a 66-million-bushel reduction from the Oct. 10 report. Overnight gains of 24 cents were quickly pared in the regular-day session. December filled last week’s gap, but it needs to close above $4.20 to suggest the market low has been made. A close above $4.67 is needed for confirmation. Current support is this week’s low of $3.68 3/4. Improving basis levels and strong buying by commercial interests are a positive for both soybeans and corn. Wheat continues to decline. Despite futures dropping to $5.25, the United States is finding it difficult to compete in the world market. A rapid rise in the U.S. dollar and a substantial increase in global supplies are keeping pressure on the market. The next long term chart support points are $5.05 and $4.50. A shaky world economy and declining export needs don’t bode well for cotton, whose outlook remains bleak. Stock markets and crude oil remain under heavy pressure, so every upturn is short lived. In hard economic times, cotton tends to suffer more than food crops, as spending on clothing is one of the first things people clamp down on. Currently, the December low of 45.35 cents is testing support at the ’06 low of 45 cents. The next support is the ’03 lows of 42 and 42.5 cents. December needs to close above 54.77 cents, the high of just two weeks ago, to suggest a market low. The rice market continues to be hit by world economic turmoil. International offerings have quickly moved lower, with recent quotes from Vietnam coming in at around $425 per tonne. Thailand, with little demand coming their way, lowered their intervention purchase price by 15 percent, and their milled rice quotes are now below $600. Recent U.S. quotes around $700 are drawing little interest and suggest mills may have a lot of open time in the near future. Rough rice shipments to Central America and Mexico are continuing. Support for January futures is the recent low of $14.40, and the market will have stiff resistance at old support, just under $16.50. The size of the U.S. dairy herd likely crested in the summer quarter. An adjustment process has been set in motion, and the number of cows is expected to decline each quarter in 2009. Lower-than-expected prices for dairy products are already affecting 2008 milk prices and will continue to do so in 2009. The November Class I price will be $17.33, according to the USDA’s announcement of advanced prices and pricing factors. That price is $1.80 more than the October Class I price of $15.53. However, it is $4.12 less than a year ago when the Class I price was $21.45. Cattle futures continue to trend lower. The supply of fed cattle is relatively tight, and that is supporting cash prices. Product values continue to slide lower, however, as economic concerns are apparently hurting demand for beef. Export demand is also at risk thanks to global economic concerns and the rapid improvement of the U.S. dollar. Live cattle futures are now trading at a discount to cash, so that could limit the downside. Hogs are trending lower as well, but December has apparently found support for now, on the recent low of $55.90. The next resistance is the small chart gap between $60 and $60.20. Futures have been supported by the fact they are trading at a discount to cash prices. That gap is narrowing quickly, however, so the upside beyond $60 will be limited. The supply of market-ready hogs has tightened slightly, but plants are still being operated near capacity. 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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