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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 04-17-2009 -------------------------------------------------------------------------- http://www.arfb.com Keyed by smaller-than-expected quarterly stocks, USDA lowered projected ending stocks for soybeans. Positive fundamentals, including a smaller crop in Argentina and projected U.S. ending stocks of only 165 million bushels, have pushed beans higher relative to corn. The price ratio (November beans to December corn), which fell below 2-to-1 several weeks ago, is now around 2.25-to-1. This will likely pull additional acres over to soybeans — perhaps as many as 2–3 million acres, which would bring the total number to 78–79 million acres. This is in line with the private estimates that came out before last month’s planting intentions report. While new crop contracts have moved higher, the strongest move is in the old crop contracts, which may test resistance between $10.50 and $10.70. November is struggling toward resistance at $9.60. Above that is the early-January high of $10.38. Keep in mind that the higher the market goes now, the harder the fall will be later. Note: Spring rallies like this are a good pricing opportunity. Corn values have slipped. The U.S. ending stocks projection has improved, but that may be just a drop in the bucket. World stocks are estimated at 143.3 million metric tons, 14.1 million tonnes higher than last year and 34.6 million tonnes higher than two years ago. With declines in poultry, pork and beef production, feed use is projected to be 10 percent below last year. In addition, a smaller-than-expected cut in this year’s domestic corn plantings suggests supplies will be ample again this year. The fly in the ointment is wet weather, which could bring with it another late-planted crop. If that bears out, September corn could move toward recent resistance at $4.25, or perhaps, the early January high of $4.57¾. Timely planting progress will push the market toward support near $3.65, or even $3.38. Wheat’s response to drought conditions in the plains and recent freezes has been limited, mainly because world stocks are huge — up from 122.4 million metric tons to 158.1 million tonnes this year. In addition, these large stocks (with help from a very competitive marketplace) are leading to poor export movement. July may test support between $5.15–$4.98. As harvest approaches, yields could verify weather damage and boost the market toward resistance at $5.80. Cotton has bottomed. While the market remains well below the loan, it did appear to take heed of a third-consecutive decline in U.S. plantings. Despite the fact March intentions were above expectations, the market’s in a position to make a good adjustment in ending stocks. Also, in this month’s Supply/Demand Report, USDA gave the market hope by raising potential U.S. exports by 500,000 bales. A slight adjustment in ’08 production numbers lowered ending stocks to 6.7 million bales. That’s a move in the right direction and gives hope that, a year from now, stocks will be headed lower and prices higher. With milled rice exports struggling, the near-term outlook was dimming. However, in this month’s Supply/Demand Report, USDA increased domestic usage (of all rice) a whopping 8 million cwt. This reduced projected ending stocks to a tight 22.2 million cwt. All of the adjustment was in the struggling long grain sector, where projected endings stocks might be as low as 12.3 million cwt. Old crop futures penetrated resistance above $13 and could move toward potential objectives at $14.15–$14.98. New crop September has resistance at $12.85 and $14.03, with support at the recent low of $11.40. Cattle bids have increased in anticipation of summer grilling season. Feedlot numbers are down 5 percent, but average weights are about 35 pounds heavier than last year. Outside markets, including Wall Street, seem to be on the upswing. This suggests improved consumer confidence, and with it, beef demand. May feeders are testing resistance at $100 and could move to the early November high of $102. June live cattle must move above $86 to bring resistance at $89 into play. Support near $80 seems firm. Based on USDA’s March report, hog slaughter is on track and should decline in the week’s ahead. Numbers don’t appear to be the major problem, but in order to move product, merchandisers have had to lower their prices. Like with beef, grilling season is expected to bring greater demand for pork. June futures penetrated trendline resistance just before Easter, and that should bring the next levels at $77–$79 into play. Support at $70 seems firm. Milk production forecasts and cow numbers were lowered from last month as producers are expected to liquidate herds in response to poor returns. Milk-per-cow growth has also slowed Import forecasts are unchanged, but commercial exports are lower due to reduced butter exports. USDA’s Commodity Credit Corporation net removals were reduced in anticipation of lower sales of dairy products to the CCC. Milk price estimates for 2009 were raised, and the reduction in supply is expected to support higher product prices. This month’s all milk price $11.85 –$12.35 per cwt. 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 2009  |
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