2013 Bi-Weekly Market Briefings
Corn continues its yo-yo movement as dictated by weather or weather forecasts. Planting delays have pushed December as high as $5.70 in the last two weeks. Now, with indications planters are moving at high speed in some areas, the market is on a downward spiral with old support at $5.25 and the late April dip to $5.17 becoming a near-term target. Old crop July could never close the March stocks report gap that stretches to $6.76, reaching a peak of $6.69 before retracing to the downside toward recent support at$6.10. For now, recent highs and lows mark the trading range, but that could change with the weather. Sustained good conditions push the market lower, while delays give higher pricing opportunities.
Soybeans remain a “tale of two markets.” Old crop is moving sideward in a dollar range, with bottom side support between $13.40 and $13.25 and resistance at the recent spike high of $14.25. That is likely to remain the pattern until this year’s U.S. crop is well established, as producers remain tight holders and reluctant sellers. However, the change of importing South American beans increases every day, and that tips the scale lower. On the other hand, new crop November is on a long-term downtrend stretching from the early February high of $13.51 to the recent dip to $11.87. The longer the weather delays corn planting, the larger the soybean acreage will be and the greater the chance of challenging support at $11.40 or even lower. Trendline resistance is at $12.25 and sliding lower each day. Any rebound toward $12.50 should be viewed as a pricing opportunity.
Wheat broke a long-term downtrend the last week of April. Typically, that would be followed by a significant rebound, but in this case, July futures have been stymied around $7.36 or just short of the previous high of $7.40. Now the market appears to be range bound between $7.40 and the recent low of $6.65. A close above this range and old support at $7.52 would essentially signal additional upside opportunity. Improving export demand, if sustained, could tip this market that direction.
Cotton planting continues to lag behind the five-year average. Just 17 percent of the crop was planted by May 5, compared to 27 percent normally. Texas, with most the acreage, is just 16 percent planted. Arkansas, at five percent, lags way behind the five-year average of 35 percent and a whopping 73 percent last year. All that said, corn planting delays in the Mid-South and Southeast likely pushed some acreage back to cotton. December futures broke a short-term downtrend this week with a move above 86 cents. Consecutive closes above the trendline are needed to suggest the market will retest resistance just above 89 cents.
Rice trading is a “mixed” bag. The U.S. market remains firm with good export business, including TRQ trade to Columbia, sales to Iran and continued steady movement to Haiti. South America is actively selling to Iraq and Iran. The other side of the globe is a different story. Thai intervention stocks appear to be swelling, and storage is being overextended with second crop harvest near. Quoted price levels are well above those of Vietnam, India and Pakistan. Supplies in that part of the world are extensive. U.S. stocks are dwindling, with mills in Texas and Louisiana looking elsewhere for supplies. Meantime, U.S. planting is behind normal with Arkansas at 48 percent planted on May 5 compared to 72 percent for the five-year average. Mississippi, at 14 percent compared to 80 percent, is even farther behind. Louisiana and Texas are near completion, while Missouri and California are ahead of their five-year average. Another interesting year, no doubt.
Live cattle futures charts have taken on a negative appearance over the past week or so. Live cattle are under pressure from weak beef prices and large market-ready supplies. A huge gap was left on the monthly chart when June became the lead contract. On the daily chart, June could be headed for a retest of support below $119.50. Feeders have turned lower again on weak cash feeder prices and profit taking after recent gains. August feeders have support at the recent low of $144.50.
Hog futures have been supported this week by improving cash hog prices and higher cutout values. Tight hog supplies are also supportive, but futures’ premium to cash could limit the upside potential of the market. June futures are building support at $91.17 ½, and will have resistance at $92.37 ½.
Milk production in the Southeast increased this week as mild weather improved cow-comfort levels. Class I demand continues to decline as universities are completing their spring terms. Recent rains have improved some pastures and forage regrowth, but more is needed. Producers continue to be faced with high hay prices and fairly tight feed rations. Milk production increases combined with lower Class I demand caused 130 spot loads to be exported this week. Milk supplies are nearly in balance with demand in the Southeast region. Manufacturing milk supplies are approaching contract minimums. Class I demand showed some marginal increases this week as some plants added on a few loads. Demand for cream has fallen flat as ice cream production is yet to be in full swing. Demand from cream cheese remains steady at best. Current supplies quickly exceed demand with many loads having trouble finding a home, requiring out-of-region discount sales. Cream multiples for all classes moved lower and ranged $1.10-$1.28 with out-of-region shipments at the low end of the range.
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