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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 07-10-2009 -------------------------------------------------------------------------- http://www.arfb.com The free fall in the corn market was accelerated by the recent USDA plantings report. Traders were anticipating a decline in acreage, so it was a definite surprise when the report put ’09 plantings at 87.04 million acres — more than 3 million acres higher than March intentions and pre-report estimates. Those unexpected numbers sent December futures below support, right under $3.50. Technically, the market is oversold and due a rebound, but it will have to do so in the face of bullish news. Good weather has brought excellent crop progress, particularly in the Western Corn Belt, where Nebraska and Iowa planted a million acres more than reported intentions. The remainder of the crop is improving and appears to be in good shape, which suggests that yields may exceed the current trendline yield projection of 153.4 bushels per acre. Coupled with the larger-than-expected stocks, the scenario is bearish. If good weather continues, December could fall to the next support at $2.93. Soybeans are being a little more resilient than corn, helped in part by smaller-than-expected plantings. While 2008–09 stocks are tight, the recent USDA report revealed large quarterly stocks, which could bring an upward adjustment in the upcoming Supply/Demand Report. Excellent crush margins and another large Chinese purchase are also helping the bean market. However, that doesn’t mean there’s no downside potential; rather, it’s likely that traders are reluctant to vacate intentions. Crude oil prices are also a factor. If they continue lower, it will be difficult for soybeans to move higher. November’s ability to hold above $10 brings into play downside objectives at $9.34 and $8.98. Current resistance is the recent high of $10.28. Wheat prices plummeted because of poor demand and weak outside markets. It appears to be under priced relative to corn and soybeans, but it will take new export interest to rally the market. July futures fell below key support at $5, and September is attempting to hold above the early-December low of $5.22 ¾. Inability to hold here will suggest a potential move to $5. The report placed cotton plantings at 9.05 million acres, which is down from last year, but above March intentions and pre-report expectations. The important question is: How much will be harvested? Drought is plaguing large areas of Texas, and plantings were late in the Mid-South. Texas will likely abandon up to 2 million acres of its crop, and the Mid-South need a good fall, or yields could be questionable. Smaller supplies suggest an upward movement some time in the future. In the meantime, however, demand remains questionable as the global economic recovery is dragging. December has resistance in the form of a trend line, drawn off the May 12 high of 63.25 cents. It will take a close above 61 cents to break that trend. Solid support has developed at 55 cents. Rice plantings were up slightly from last year, but down from March intentions. The biggest market impact was reduced long-grain acreage, which was expected to increase, but ended up 119,000 acres lower than in 2008. Medium-grain plantings rose 152,000 acres. The reduced long-grain acreage translated into a reversal in futures, locking September into a trading range between $11.91 and $12.95. The latter is near strong resistance. In poultry, USDA forecast U.S. broiler output at 15.9 million metric tons, down four percent from last year. Global exports are also expected to slump, primarily because of Russian cutbacks. Japan is also expected to import significantly less broiler meat than last year. In addition, the report predicted a decline in turkey meat production in the United States and the European Union. At an anticipated 5.14 million metric tons, output will be similar to 2007. As of last week, the estimated slaughter of broilers and fryers was 22,525,100 head, up 905, 500 head from the same week last year. Feeder cattle have gotten a boost from increased demand. The extra-large corn crop prediction lowered feed cost estimates and, in turn, sparked buying interest from feedlots. However, live futures are having a hard time building upward momentum. Supplies are down, but demand is weak. Packer margins are no better than break-even. August failed to break out of the $86 resistance that has held the market since February. October is struggling with resistance around $90. Hog futures are showing signs that the market has found a bottom, and the chart picture is beginning to look more positive. August is building support on last month’s contract low of $57.40. However, with pork prices down 30 percent from last year, the fundamental situation is tough. Lower feed cost estimates have given the market something positive to focus on this week. 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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