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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 08-21-2009 -------------------------------------------------------------------------- http://www.arfb.com After making a new recent high, soybeans made a major daily reversal that signaled a temporary top. The market continued lower over the next several sessions, then moved into a consolidation phase, with support starting near $9.40. A shallow uptrend is offering additional support and is coming into play between $9.15–$9.20. For now conflicting fundamentals — a huge and still-growing 2009 crop versus strong Chinese demand — could keep the market in a sideways pattern. However, this current Chinese demand could mean less buying down the road, as they appear to be front-end loading their needs. Outside markets remain a major influence, so watch the equities, the dollar and crude oil. Corn bounced off a new recent low, suggesting the market is stabilizing. In recent days, corn has been less volatile than soybeans, despite facing a near-record crop that could get larger as we approach harvest. The market has spiked under $3.20 on several occasions, but has yet to close below that level. Should that happen, corn could head toward long-term chart support at $2.90. USDA estimates 4.2 billion bushels will be used for ethanol, and 5.3 billion bushels will be used for feed. Both of these are suspect. That ethanol figure would be an increase of 550 million bushels over this year’s usage. The feed number is a 50-million-bushel increase over last year, and all segments of the livestock industry are currently contracting. Compared to soybeans, corn is still a major discount. Wheat remains in a strong downtrend. After a brief period of consolidation, December wheat has continued lower. Conservative closes below $5 suggest support at $4.55 or lower may come into play. High expectations for spring wheat yield are simply adding to the supply dilemma, keeping U.S. exports just over half of what they were last year. After a brief push above 65 cents, cotton failed. Right now, cotton isn’t trading fundamentals; it’s being influenced strongly by crude oil and the equity markets. Investment funds helped push December above 65 cents, but the market turned and fell quickly, primarily on the expectation that annual exports will do good to reach 10 million bales. Economic conditions are still hurting demand. Likewise, domestic mill use will be just 3.5 million bales. Rice gapped lower following this month’s Supply/Demand Report. November futures quickly retraced a portion of the June–August gains, hitting the 38-percent retracement objective of $13.38. While the market has stabilized, further drops to retracement objectives at $13.11 and $12.85 are possible. With the Texas and Louisiana harvest underway, the market could come under renewed pressure. In addition, fresh demand is almost non-existent, as buyers are in a “wait-and-see” mode. In dairy: cheese prices recently increased two cents on both blocks and barrels, but futures were mixed ahead of July’s Milk Production Report. Butter fell back to $1.20, and butter futures continued to decline. Nonfat dry milk and whey futures were mostly steady. Contrary to preliminary reports, U.S. milk production still hasn’t slipped into negative territory. A recent USDA report raised June production by 34 million pounds, pushing it from -.18 percent to +.03 percent. In addition, while the market was expecting declines in July output, USDA reported an estimated production of 16 billion pounds last month, up .03 percent from a year ago. That means production has shown positive year-over-year growth every month since June 2004. Producers are still culling cows. Last month, U.S. cow numbers declined by 37,000, to 9.190 million head. However, that’s being offset by gains in productivity. Production per cow was 56.2 pounds per day last month, up .9 pounds (+1.6 percent) from a year ago. Cattle futures are trying to recoup a portion of recent losses. A tight supply situation — one that will get even tighter this fall — is providing support for packer bids and futures. Currently, feedlot utilization is estimated to be 58 percent of capacity. Beef prices, however, are being kept in check by weakness in the pork market. October has found support at $87.50 for the time being. A close below that would open a dollar or two additional downside risk. Hogs continue to struggle under the weight of negative fundamentals. Pork values are at their lowest level in six years, and exports are down more than 20 percent from a year ago. Average weights are running high, suggesting that a backlog of market-ready hogs is building — bad news considering marketings always increase seasonally in the fall. Futures are oversold, however, so a technical correction is likely. Resistance begins at the chart gap to $47.30 for October. 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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