Soybean markets appear to have accounted for
a big South American crop, at least for the near-term. Beans
have been trading sideways to higher, but further upside gains
may be difficult without U.S. planting problems. Export sales
have dwindled in recent weeks, but the good news is shipments
remain strong. That suggests potential cancellations of recent
sales will be minimal. For now, the market appears to be in
sideways mode, with May futures above $9.60. Resistance starts
at last week's high of $9.85, with additional pressure at $10.
November has been unable to move above $9.50, but should that
happen, additional resistance starts at $9.75.
Corn futures continue to trend upward on strong
domestic demand. The March stocks report is expected to show
stronger-than-expected domestic usage. Last month, USDA pushed those
numbers higher by projecting ethanol use at 4.3 billion bushels. In
addition, quality problems are apparently creating additional feed
demand. Further problems are anticipated, because much of the crop
was cut under high-moisture conditions. Longer-term, 2010 planted
acreage is expected to increase if weather conditions are favorable.
Because of this winter's big snowfall, it's possible we could have a
late-planted crop for the third year in a row. May futures are
approaching the January crop report gaps that start around $3.95. A
move to $4 or above should be considered a pricing opportunity for
old crop. Likewise for new crop September at $4.10 or higher.
Huge ending stocks for wheat are projected
in the United States, as export demand remains slow. USDA is
currently projecting 981 million bushels of carryover. This will
limit upside potential, despite the fact that this year's crop
is 14 percent smaller. July above $5.25 should be considered a
pricing opportunity. Wheat continues to be influenced by outside
market requirements, as investment funds tend to buy on breaks.
How long that will last is a real question.
Rice futures remain in a downtrend that began in
mid-December. The international market remains weak after India
indicated they would use their own stocks instead of importing rice.
Vietnam is finally curtailing sales after pushing milled values down
near $400 per ton. Thailand has substantial intervention stocks
available but has been unwilling to sell at lower values. Prospects
of increased 2010 U.S. plantings are adding additional pressure.
Growers have indicated a potential increase of as much as 10% in
some areas. Current support is around $13.25 for both old and new
crop futures.
Old crop cotton continues to rocket
higher. May futures have moved above 84 cents as domestic
and global stocks tighten. China added to concerns last week
when they lowered their production estimate from 32 million
bales to 29 million bales. In the February report, U.S.
ending stocks were projected to be 3.3 million bales, and
that may decline further in subsequent reports. Old-crop
cotton at $1 is now being mentioned in some circles.
New-crop December is following, but at a very slow pace. The
recent high of $78.25 might be strong resistance. However,
any perceived planting problems could send the market
higher.
Strong
demand is providing support for cattle futures. The choice
cutout is trading above $150 per hundredweight for the first
time in six months. This suggests two things: demand is
strong and supplies are relatively tight. Fewer cattle were
put on feed this winter, and bad weather has hurt
performance in many areas. After a brief correction the last
week of February, May feeders have set a new contract high.
The April live contract is also bouncing back from a brief
technical correction. The recent high of $93.52 ½ is the
first level of resistance.
Hog futures are also being supported by strong demand.
Product values are nearly 30 percent higher than a year ago,
and frozen stocks are being pulled to help meet demand. This
strong demand has slowed the liquidation of the breeding
herd, however, so supplies will increase this spring and
summer in response to the higher prices. April has
resistance at the recent high of $74.25.
In dairy: For the week ending Feb. 27, block cheese prices
fell 7.25 cents with 31 loads traded. Barrels fell 8.75
cents with 16 loads traded. Butter increased 4.5 cents with
13 loads changing hands. January milk and feed prices were
revised substantially, decreasing profitability. The January
all-milk price was revised 40 cents lower; corn price was
revised 21 cents higher; soybean price was revised 30 cents
higher. The February income-over-feed costs (the all-milk
price minus the cost of feed) is $9.22, a slight increase
over January. In their monthly Livestock Slaughter Report,
USDA indicated dairy farmers sent 232,000 cows to slaughter
in January. This is up 1,000 head from December, but 49,000
head less than a year ago.
