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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 12-12-2008 -------------------------------------------------------------------------- http://www.arfb.com Soybeans, like other commodities, remain in the grip of crude oil and therefore index funds. While January beans made a one day island reversal, typically a very reliable bottoming signal, it is questionable whether the market will follow through and move higher. Index funds still hold sizeable positions, and they tend to liquidate other commodities when oil drops. Overall fundamentals suggest soybeans are underpriced and due a rebound. Initial resistance is previous support near $8.40. Trendline resistance lies in the same area. It will take a close above $9.81 to confirm a low. Current support is the recent low of $7.77. Corn is still headed down. A drop below $3 was reversed in Dec. 7 trade. However, the market needs to follow through on that, or corn could drop to the next support, around $2.60. Slow demand is a problem, as global financial concerns are restricting import purchases. At this point, exports trail year-ago levels by almost 40 percent. In addition, lower gasoline price levels are threatening the ethanol bubble. The next Supply/Demand report will likely have several adjustments in projected use. Nevertheless, the market is oversold and due a rebound. Initial resistance is $3.60. Rebound objectives start at $3.98. Wheat’s decline is accelerating. March wheat penetrated support at $5.25 last week and quickly fell to $4.71. Further declines are possible if export demand doesn’t increase. Weekly chart support at $4.12 could become a target. Potential sales to China could boost upside potential, but there is strong competition from Eastern Europe. Cotton appears to have posted a double bottom. However, like with other commodities, technical signals have been poor indicators of current standing. If this one proves correct, March Futures will need to close above 48 cents to confirm the low. Economic concerns continue to slow cotton. The International Cotton Advisory Committee now projects global consumption for ’08–’09 at 114 million bales, down more than five million bales from last year. USDA estimates due soon are likely to reflect a similar pattern. On the positive side, the current U.S. production projection of 13.53 million bales will likely be reduced. Bad late-summer weather and gulf hurricanes significantly reduced yields across the lower Mid-South. Further reduction in ’09 planted acreage should eventually push cotton higher. Rice is running counter to other commodities. As the market anticipates a lower U.S. production number, rice has strung together four consecutive days of gains. It is widely believed that USDA yield projections are off the mark to the high side, but official numbers won’t be released until the January report. Like cotton, weather played havoc with this year’s harvest. Also positive are rumors that the incoming Obama administration might be willing to trade with Cuba, even though it could be some time before that happens. International trade remains weak. A recent Iraqi tender went to lower-valued rice in Vietnam and Pakistan. The price of U.S. milled rice remains at a wide premium to Thailand, which is well above Vietnam. Exports of milled rice are slow, and some mills are facing reduced operating hours. However, rough rice exports to Mexico, and Central and South America remain strong. The initial upside retracement objective for January Futures is $15.82, which seems unlikely given the current situation. Milk prices are trending much lower than they were a year ago, the result of lower cheese, dry whey and nonfat dry milk prices. The October Class III price was $17.06, declining to around $15.55 for November, nearly $3.70 lower than a year ago. The Class IV price in October was $13.62, declining to around $13.50 for November, about $6.90 lower than a year ago. These prices are not likely to improve any time soon, and could go even lower. For 2009, Class III futures are below $15 through May. Class IV futures are at or below $13 through May. Cattle futures are struggling to find a bottom. Last week was a rough one as feedlots sold lots of cattle at surprisingly low prices, down $3–4 from the week before. Technically though, the market has held above the Dec.4 one day island reversal low. This could signal a major low, if we see follow-through gains over the next several days. Some carryover strength from stronger stocks has helped so far this week. Hog futures are chopping along sideways. This strength in the market has been a bit surprising considering plants are still operating near full capacity. Futures are carrying a large premium to cash prices, and that will limit upside potential. February has initial support at the recent low of $63. 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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