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2013 Bi-Weekly Market Briefings


March soybean futures zipped through resistance at $15 and appeared to be headed to $15.50, when just as quickly the market reversed. The resultant key reversal set the stage for further losses and marks another top in the market. Dry conditions in Argentina and strong demand from China contributed to the rally, which, to a lesser degree, was seen in new crop contracts as well. November is now struggling to hold key support at $12.55, with a potential to move toward the June 1, 2012 low of $11.40. If USDA’s Outlook Forum projection of 77.5 million planted acres and production of 3.405 billion bushels is realized, the bottom could be lower.


The corn market is seeking support. While beans rallied last week, corn sunk even lower. Old crop leveled out at $6.90 and is trying to work higher from that point. Demand remains the key with ethanol use slipping and exports almost non-existent. How quickly they will recover will be the question. USDA projects a record crop of 14.53 billion bushels on 96.5 million acres. That’s where we were last year when the drought intervened. Those numbers have pushed December futures to $5.50, and the market is struggling to hold there. Support around $5.10 becomes a likely target.


Wheat continues to trend lower with recent snow events providing much-needed moisture across most of the drought-stricken plains. Coupled with increased production in other areas of the world, it has pushed July futures sharply lower. July is bumping $7.00 and may move toward $6.85 or $6.70, which is where this contract turned higher eight months ago. The market is technically oversold and due a rebound, with resistance expected around the recent high of $7.54.


Cotton’s upward impetus has ground to a halt with both old and new crop encountering major resistance around 84 to 85 cents. USDA projects U.S. plantings of 10 million acres, while the National Cotton Council survey put 2013 at just over 9 million acres. The key to price will be China, where stocks are projected to be more than 42 million bales. China will likely import substantially less cotton, but that remains to be seen.


Rice has plummeted over the last two weeks, with May futures topping at $16.68 on February 8 and then dropping as low as $15.62. Good export demand, with steady shipments, provided the upward impetus. However, while demand has been good, it appears Iran is now looking toward Thailand where major intervention stocks could be a drawing card. Those huge stocks continue to hang over the market, providing a potentially soft undertone as we move forward. Soybeans and corn are expected to pull some U.S. acreage from rice in 2013.


The upside for cattle futures remains limited by an uncertain fundamental situation. The UDA Cattle on Feed report showed the total on feed inventory is 6.2 percent below last year’s total. However, negative cutout margins and demand concerns remain a negative. The dollar continues to strengthen against other currencies, which will likely result in weakened export demand for U.S. beef. Winter weather has provided some support this week as it both hampers performance and limits marketing's. June live cattle futures have support at the recent spike low of $123.47, while feeders have moved to a life of contract lows.


Hog futures are in a sharp down-trend. The market is oversold and due a rebound. However, weakness in stock markets and strength in the dollar are negative and will likely limit the upside potential on a rebound. Cash fundamentals also are offering little help, as packer margins remain weak. April hogs are testing support near $81.


Commercial hatcheries in the 19-state weekly program set 199 million eggs in incubators last week. This was up 2 percent from the eggs set the corresponding week a year earlier. Average hatchability for chicks hatched during the week was 84 percent. Broiler growers in the 19-state weekly program placed 164 million chicks for meat production last week. Placements were up 1 percent from the comparable week a year earlier. Cumulative placements from December 30, 2012 through last week for the 19-state total were 1.14 billion, up 1 percent from the same period a year earlier.

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