2013 Bi-Weekly Market Briefings
Corn has settled into a trading range this month after making gains of about 60 cents in October. Now, it appears reluctant to break out of the $3.90–$4.10 range for March ’08 and the $4.20–$4.35 range for the following December. We registered strong gains due to good export demand. With little feed wheat available, high prices have not deterred foreign buyers much. That demand should continue, at least near term.
Producers are discussing ’08 plantings. Although it’s suggested that soybeans will pull acreage, corn will still be very tempting for most Midwest farmers.
The need to rebalance their plantings because of agronomics may be the biggest reason acres move to beans.
Soybeans are staying in an upward trend. Despite a toppy chart and post-Thanksgiving weakness, beans are holding above support. The market is running out of bullish fundamentals, but the weather in South America and strong Chinese buying are still factors. This will probably limit downside risk.
Current trend-line support is $10.70 for January and $10.05 for November. Should that support be penetrated, the next support is $10.30 and $9.80 for January and November, respectively. On the other hand, the market is at 34-year highs — and as long as outside support from index funds and higher crude oil don’t plunge and the weak dollar doesn’t make a major reversal, upside potential is still possible.
Wheat keeps climbing. Bolstered by reaction to the recent freeze in Argentina, new-crop wheat made gains of 75 cents in the past two weeks. Concerns about dry conditions in the Midwest, and the upside potential for a La Niña event this year, are also driving the market. Current support is the old resistance level near $7. The upside is open, although the recent $7.74 contract high may offer some resistance. Tight world supplies will correct, but not overnight. Therefore, the potential for higher price still exists.
Cotton’s technical picture has weakened. Last week, March Futures had fallen below trend-line support. Failure to hold at 63 cents may push the market toward 60-cent support. Funds have reduced holdings and can go either way. Export sales are improving, as the latest report shows. However, suggestions are that the USDA may have to make further upward adjustments in Texas’ crop. That probably means stocks will rise, as well.
Producers are planning for ’08, and plantings no doubt will decline, probably to less than 10 million acres. New-crop December has continued to decline, which supports that idea and suggests higher prices later in 2008.
Rice has retraced a portion of its gains. After three weeks of strong advances, rice gave back a portion of the upturn. January Futures hit a contract high of $13.34 the day before Thanksgiving, having gained $1.27 since the end of October. Good U.S. exports and limited world supplies contributed to the upturn. The weaker dollar helped offset a portion of higher rice costs.
On the international side, Thailand remains the major supplier as export bans are still in force in Vietnam and India. Although Thailand has an intervention program in place for this year’s crop, it’s in name only. Farmers are taking advantage of the strong cash market. Further gains are possible before the Vietnam harvest.
Beef movement is keying the Cattle market. Near-term price direction, both cash and futures, will depend on beef’s overall movement. Since Thanksgiving, a lot of cheap pork has confronted consumers, which has led to rather sluggish beef sales. In turn, packer margins remain tight — and we expect packers to be somewhat reluctant to raise bids without significant gains in sales.
February Live Cattle Futures are testing old support just higher than $95. January Feeders continue to react to Live Cattle prices and might penetrate support at $107, then drop to the next level at $104.50.
Big supplies have tempered the Hog rebound. After losing $15, February Futures attempted a slight comeback. However, big supplies quickly overcame the impact of potential exports to China. We expect huge supplies to continue through the end of the year, so rebounds will be short lived.
February may retest support at the recent $58.15 low. Support at $54, and $51, may eventually come into play.
On the Poultry scene, the Georgia f.o.b. dock-quoted price for broilers and fryers for the week’s trading is 77¼ cents, based on full truckload lots of ice pack USDA Grade A-sized 2½–3-pound birds.
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Ninety-six percent (1,110) of the loads offered are confirmed in a 61–80-cent range, with a final weighted average of 76.43 cents f.o.b. dock or equivalent.
The market is weak-to-steady, and the live supply is adequate for light-to-normal demand. Average weights are ranging mostly desirable.
Estimated U.S. slaughter at this writing is 170.7 million birds, or 8.9 million more than thought available. For the week Dec. 8, 162.1 million birds are estimated available.