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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 07-24-2009 -------------------------------------------------------------------------- http://www.arfb.com For corn, the July USDA reports have been negative, to say the least. Quarterly stocks exceeded expectations; usage slowed. The market was surprised earlier this month when the Supply/Demand Report placed ’09 plantings at 87.04 million acres — more than 3 million acres higher than March intentions and pre-report estimates. That same report, however, left yield at the trend line projection of 153.4 bushels per acre. The situation appears to be changing. Reports are now suggesting the Western Corn belt is a “garden spot,” and concerns about planting problems have evaporated. At this point, the crop is still behind normal development, but that probably won’t be the case for long. Many reports are suggesting it may be a record yield, more than 160 bushels per acre. That would add more than 500 million bushels to this year’s projected production of 12.3 billion bushels. Of course, all of this is good news for production, bad news for price. Over the past two weeks, December futures have consistently made new contract lows. Various chart features suggests market objectives between $2.10-$2.90; long-term charts indicate support in those same areas. December would have to close above $3.50 to confirm a bottom. Soybeans have been a little more stable than corn, with November futures consolidating above support at $8.81. Crop prospects have improved, but there are a lot of late beans this year, particularly in the Mid-South. Like other commodities, soybeans continue to respond to outside markets such as the dollar, equities and crude oil. However, we now face the possibility of the Commodity Futures Trading Commission imposing more stringent position limits on index funds. This has reduced buying enthusiasm for beans, and could put them on the other side of the market. Upside potential is limited, unless there is some unforeseen weather event, like early frost. If support at $8.80 is penetrated, the initial downside objective would be the March low of $7.84. Current resistance is this week’s high of $9.40. The wheat rally has little upside potential. Over the past two weeks, September futures made a small upward retracement that failed on several occasions to move above the $5.50 level. Big world stocks and slow export demand suggest the best this market can do is slide sideways. If corn and soybeans make another down leg then wheat could easily drop below the recent September futures low of $5.12. That could bring the December ’08 low of $4.55 into play. Recent cotton gains have stalled as the market found little fundamental support. December futures moved above the May high of 63.75 cents, but came to a halt as the market topped, just below 65 cents. The Texas drought is still the major fundamental factor. By now, though, the market’s taken the dry weather into account. Trading will likely be confined to a range between 55-65 cents. Long-term, a smaller U.S. and world crop would give the market greater upside potential, but world economic conditions would also need to improve. Rice futures continue to climb as the market looks at substantially smaller production prospects for long grain. The July Supply/Demand Report had long-grain production at 151 million hundredweight, down almost 12 percent from last month. Ending stocks are projected at a very meager 11.8 million hundredweight. While that still looks somewhat positive, it’s based on solid exports of 73 million hundredweight, and movement this year has been challenging. Technically, September and November futures have moved to new recent highs and are in position to test resistance at the late-December high of $14.03. Thanks to tanking corn prices, cattle futures – especially for feeder cattle – have gained strength the past two weeks. In addition, placements have dropped sharply over the past few months, so supplies are expected to tighten soon. Stronger stocks and a weaker dollar have also been supportive. August is having a tough time staying above the $56 resistance that’s held the market since February. Hog futures have also been climbing recently. This week, cutout values rallied from a six-year low, but also saw a bit of a setback. Futures are trading at a premium to cash prices, and this week’s pullback suggests the market thinks the premium is too much. August has support at the recent contract low of $57.40. In dairy, the uniform price was $12.83 per hundredweight of milk at 3.5 percent butterfat for the month of June. That’s 38 cents lower than last month and $7.97 less than a year ago. Class I utilization was 61.19 percent, an increase of 4.01 percent from the previous month and a decrease of 9.06 percent from last June. Prices won’t show much improvement until milk production falls below year-ago levels. The normal seasonal decline in production, coupled with the strong autumn sales of dairy products will strengthen milk prices in the months ahead. But, production may need to fall 2-3 percent below year-ago levels to get the price high enough to stop the financial stress now being experienced by dairy producers. The National Milk Producers Federation recently completed the seventh round of herd liquidation, removing 101,000 cows. Also, the group recently closed bids for an eighth round, which will help to further reduce cow numbers and slow milk production. 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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