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| ARKANSAS FARM BUREAU ELECTRONIC NEWSLETTER Bi-Weekly Market Briefings for 12-11-2009 -------------------------------------------------------------------------- http://www.arfb.com Soybeans remain firm and in position to test resistance at $10.78, perhaps even the June double top at $11.05. While outside markets and a weaker dollar are factors, China's almost insatiable appetite for soybeans is the primary cause. The marketing year is only 3-months-old, and China has already purchased about half of their needs for the year (almost 19 million metric tons). The Chinese government is now subsidizing domestic soybeans to help slow imports. The pertinent questions are when and where the buying will stop. Will it be 60-90 days from now, when a big South American crop is available? Or sooner? Keep in mind, many market experts think soybeans could be $8 or lower next year. Weekly chart trendline resistance starts around $11.50. Outside markets could push toward that level; however, downside risk seems more probable. For January, the early-October low of $8.90 will be key support; for weekly charts, $8.80. Despite continued harvest delays, corn is still under more pressure than soybeans. Twelve percent of the crop is still in the fields. Exports have been disappointing, but ethanol margins are pulling idled plants back in to production. Right now, the USDA projection of 4.2 billion bushels for ethanol appears to be attainable. Key March support just below $3.80 will be tested. Below that are the March retracement objectives of $3.70 and $3.57. New crop wheat hit stiff resistance at $6.20. The weather-delayed harvest cut into soft red plantings for 2010, giving an unexpected boost to the market. However, disappointing exports and ample U.S. and world supplies will temper upside potential. March futures closed below $5.50 this week, giving the market an even more negative picture. A push toward support – just above $5 for old crop and $5.30 for July – is possible. Cotton is consolidating in a sideways pattern. Old crop March is hanging just below 75 cents, and new crop December is steady just below 78 cents. The bottom end of the consolidation, which is current support, is about 300 points lower. Because the lower mid-South took major yield and quality hits in October, USDA will likely make further downward adjustments in the ’09 production numbers. That should further tighten projected stocks and give cotton another boost as producers sort out 2010 planting options. Firm soybean prices suggest higher cotton futures are needed to entice acreage in that direction. A move to the premature ’08 rally high, just above 91 cents, could be necessary to grow next year’s crop. The rice rally slowed just below $16. A smaller U.S. long-grain crop and weather-reduced crops in India and the Philippines provided the basis for the recent upturn in futures. In trade, the Philippines have dropped several large tenders in the hopper, while India is taking a more subtle approach to potential imports. Conventional wisdom suggests Thai reserves and the upcoming Asian harvest would be sufficient to cap market expectations. However, the Philippines' urgent desire to make big purchases has the market on edge. U.S. millers are struggling to find buyers to support the current market level. Cattle futures have taken on a decidedly bearish appearance. January feeders broke out of a bear flag formation that points to a downside objective around $88.60. February live cattle are testing support at $82. A close below that level would likely bring about a retest of the $80 mark. The only positive fundamental factor in the market is weather. Show lists are increasing and beef cutout values continue to decline along with packer margins. Futures are technically oversold, though, so a corrective bounce is not out of the question. Hog futures are trading near six-month highs, but appear technically weak. February has established resistance in the $66.15 area. A close below $64.35 would suggest further declines. Cash hogs are “steady” to “higher” based on good packer margins and concern about the current weather outlook. Recent improvement in cutout values is also supportive. In dairy, blocks slipped back to $1.70 recently, while barrels held unchanged, leaving the spread at 24 cents. Milk futures were mostly lower. Non-dairy milk futures increased in the front eight months, including limit-up moves in April and July. As of late October, manufacturers’ stocks of NDM were at 90.1 million pounds, which is down 46.7 percent from a year ago and more than 50 percent down from just four months ago. Non-dairy milk/skimmed-milk powder production in October was 101.7 million pounds, down 26.6 percent from last year. Total cheese production declined in October, but remained slightly above year-ago levels. Output was 861.2 million pounds, up 1.3 percent from a year ago. Year-to-date production is up 2.2 percent over last year. Cheddar cheese output was 261.0 million pounds, up 2.2 percent, and mozzarella production was 279.9 million pounds, up 5.2 percent. However, production of all other varieties was 320.3 million pounds, down 2.6 percent. Butter production continues to lag. October output was 111.9 million pounds, down 14.3 percent. Class I fluid milk rose to over $18, but the mailbox price is hovering around $14 per hundredweight. 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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