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Market Analysis: Mar 09, 2007: Sue Martin

posted on March 9, 2007


Spring is just around the corner so there are a couple of major market factors everybody is watching – the weather and the acreage report coming out at the end of the month.

For the week, March wheat gained 6 cents, while the nearby corn contract lost nearly 3 cents.

In soybeans, the nearby contract gained 7 1/2 and the March meal contract gained 90 cents per ton.

In the fiber market, after several weeks of upward movement – March cotton posted a loss of $1.35.

In livestock, the April live cattle contract was up $3.80. Nearby feeders gained $1.25. And the April lean hog contract also moved upward – gaining $1.60 over last week.

In the financials, Comex gold gained $7.90 per ounce. Nearby crude oil prices fell $1.40 per barrel.

The Euro lost 71 basis points against the dollar. And the CRB Index lost 1 1/2 points to close at 311.75

Here now to lend us her insight on these and other trends is one of our longtime market analysts, Sue Martin. Sue, welcome back.

Market Analysis: Mar 09, 2007: Sue Martin

Martin: THANK YOU, DEAN. Borg: ON THIS FRIDAY

THERE WAS A MARKET REPORT OUT, WASN'T THERE? Martin:

YES, THERE WAS, DEAN. IT WAS A SUPPLY AND DEMAND REPORT,

AND EVERYBODY WAS KIND OF EXPECTING IT TO BE BEARISH ON

SOYBEANS BUT IT PLEASANTLY WAS NOT. IT WAS MAYBE TERMED

AS NEUTRAL FOR CORN, SOYBEANS, AND WHEAT. BUT THE BIG

KICKER WAS THAT IN THE BEANS, EVEN THOUGH BRAZILIAN

PRODUCTION INCREASED BY A MILLION METRIC TONS AND ARGENTINA

PRODUCTION LEFT THE SAME, WHAT WE NOTED WAS IN WORLD

PRODUCTION WAS THAT DEMAND WENT UP OR USAGE INCREASED TO

WHERE THE WORLD CARRYOUT STOCKS INCREASED BY EVER, EVER,

EVER SO LITTLE AND THEN THE U.S. STOCKS STAYED THE SAME.

SO THAT WAS A PLUS FOR THE MARKET AND KIND OF WAS A

DISAPPOINTMENT FOR THE BEAR. BUT THE BEAN MARKET HAS, AS

YOU NOTED, DID GAIN THIS WEEK, MADE A TURNAROUND AFTER LAST

WEEK'S LOWER PRICES. AND, OF COURSE, WE'RE REAL EXCITED

ABOUT THE BEAN MARKET. Borg: ARE THE SAME THINGS

AFFECTING ALL OF THE MARKETS RIGHT NOW, SUCH AS IS WEATHER

A FACTOR OR ARE THEY BEING AFFECTED BY SEPARATE THINGS?

Martin: I THINK CORN AND SOYBEANS ARE AFFECTED BY THE

SAME THINGS, BUT I THINK WHEAT IS SOMEWHAT AFFECTED BY

WHAT'S BUGGING THE CORN AND WHEAT -- OR CORN AND SOYBEANS.

Borg: WHEAT GAINED THIS WEEK. Martin: YES, IT

DID. WHEAT INCREASED IN CHICAGO WHEAT. KC WAS A

LITTLE BIT OF A LAGGER. BUT I THINK WHAT WE'VE GOT GOING

-- YOU KNOW, WE'RE IN MARCH NOW AND WE'RE ALMOST

MIDMONTH, AND WHEAT IS COMING OUT OF DORMANCY OR VERY CLOSE

TO IT. AND AS THIS SOFT RED WHEAT COMES OUT OF DORMANCY,

WE'RE GOING TO FIND THAT WAS A CROP THAT WENT IN POORLY LAST

FALL, WENT INTO WET CONDITIONS, WAS UNDER WATER IN MANY

AREAS. WE'RE GOING TO FIND THAT THAT WHEAT DOES NOT LOOK

SO HEALTHY COMING OUT OF DORMANCY. AND I SUSPECT THERE'S

WHERE WE'RE GOING TO PICK UP SOME ACRES, THAT FARMERS WILL

ELECT TO ROUND UP OR PLOW UP THOSE FIELDS IF THE WEATHER IS

CONDUCIVE SO THEY CAN GET IT DONE, AND THEN THEY'LL PLANT

CORN IN PLACE OF WHEAT. Borg: WELL, CORN WASN'T SO

STRONG THIS WEEK. Martin: NO, IT WASN'T. BUT I

THINK WHAT WE HAVE TO REMEMBER IS I BELIEVE THAT CORN CAN

VERY POSSIBLY PUT A FIVE IN FRONT OF IT. I BELIEVE IF

THERE WAS EVER A YEAR THAT YOU WILL HAVE CORN PRICES

RALLYING INTO POLLINATION, IT OUGHT TO BE THIS YEAR BECAUSE

90 PERCENT OF YOUR CROP IS MADE AT POLLINATION. SO SINCE

THIS IS SUCH AN IMPORTANT YEAR, WE HAVE TO HAVE THE CROP

BECAUSE WE HAVE SUCH A BIG GROWING DEMAND. YOU KNOW,

EVERY MONTH WE HAVE MORE ETHANOL PLANTS COMING ON LINE.

EXPORTS HAVE NOT SLOWED DOWN. YOU KNOW, THE POULTRY

SECTORS AT HIGH LEVELS. HOGS ARE AT HIGH LEVELS.

CATTLE AT NEW ALL-TIME HIGHS FOR THE APRIL AND THE JUNE

CONTRACTS. AND THEN, OF COURSE, NOT FAR -- WITHIN

STRIKING DISTANCE OF THE ALL-TIME HIGH ON THE FAT MARKET, I

THINK WHAT YOU'VE GOT GOING HERE IS THE FACT THAT THE DEMAND

IS GOOD BUT THE CORN MARKET ITSELF, IF I'M RIGHT THAT THE

ULTIMATE HIGH ON JULY CORN FUTURES HITS US IN JULY THIS

YEAR, THEN WE'RE MOVING TOO FAST TOO SOON. AND I THINK

THE MARKET IS TRYING TO TAKE A BREATH HERE AND STEP BACK A

LITTLE BIT. BUT MAKE NO MISTAKE, AS WE GET CLOSER TO

THIS GOVERNMENT REPORT ON MARCH 30, THE BEAR IS GOING TO BE

THE ONE ON GUARD. Borg: WOULD YOU SAY THAT THE CORN

MARKET IS VERY, VERY VOLATILE AND CAN BE AFFECTED BY JUST

ANY LITTLE THING BECAUSE SUPPLIES ARE SO TIGHT?

Martin: WELL, SUPPLIES ARE TIGHT BUT SUPPLIES ARE EXPECTED

TO GET EVEN TIGHTER AS WE GET INTO THE SUMMER, AND MAINLY

BECAUSE WE'RE BELIEVING THAT OVER 80 PERCENT OF THE CROP IS

OUT OF THE FARMERS' HANDS. NOW, WHEN YOU LOOK AT THE

CORN MARKET, TECHNICALLY WE CLOSED -- MAY CORN CLOSED AND

JULY CLOSED DOWN THEIR TREND LINES THAT HAS HELD THE LOWS

EVER SINCE THE FALL, AND WHEN WE STARTED THIS WHOLE UP MOVE,

WE CLOSED FRIDAY RIGHT ON THAT TREND LINE. NOW, WE MIGHT

TRY TO PENETRATE IT. HOW MUCH OF A BREAK CAN WE ENDURE

IN MAY AND JULY CORN? WELL, YOU MIGHT TAKE MAY CORN BACK

TO 4.06, MAYBE 4.10, 4.15, SOMETHING LIKE THAT, BUT THAT

WOULD BE ABOUT THE EXTREME. I THINK $4 CORN IS NOT

RATIONING CORN. WHAT WE'RE FINDING IS, BECAUSE IF YOU

LOOK AT POULTRY AND PORK AND BEEF PRICES SO HIGH, IT SEEMS

LIKE EVERYBODY -- AND WE NOTICED THE SAME THING IN GASOLINE

PRICES WHEN WE HAD SUCH HIGH CRUDE PRICES THIS PAST YEAR,

NOBODY SLOWED DOWN DRIVING. EVERYBODY KEPT GOING.

YOU'D DRIVE DOWN THE ROAD AND YOU'D SEE ONE PERSON IN EACH

VEHICLE. I'M NOTICING THAT SAME KIND OF ATMOSPHERE,

COMPLACENCY AMONG THE CORN MARKET, SO I THINK WE'RE NOT

SEEING A RATIONING YET AT $4. Borg: I WANT TO SLIP

OVER TO SOYBEANS. YOU ALLUDED TO THAT EARLIER AND WE SAW

SOME GAINS THIS WEEK. Martin: WELL, THE SOYBEAN

MARKET, I BELIEVE THAT, FIRST OFF, WE HAVE TO REMEMBER

WHAT'S BUGGING THE SOYBEAN MARKET RIGHT NOW. Borg:

WHAT IS IT? Martin: IT'S THE FACT THAT YOU HAVE A

GROWING SOUTH AMERICAN CROP AND IT'S IN HARVEST. AND

BECAUSE OF THAT, THAT KEEPS HEDGE PRESSURE COMING AT US.

BUT WE BELIEVE THAT THE LOSSES IN MATO GROSSO MAY HAVE BEEN

BIGGER THAN WHAT THEY'RE REALLY TOUTING AT THIS TIME.

THAT WILL COME OUT IN TIME. BUT WHEN YOU LOOK AT THE

BEAN MARKET, WE'VE HAD A BREAK FROM \E 8.07 1/2 DOWN TO

7.39 1/4. THAT'S A NICE HEALTHY BREAK, AND IT CAME BACK

50 PERCENT FROM THE JANUARY LOWS TO THE FEBRUARY HIGH.

NOW, THE MARKET IS KIND OF KILLING SOME TIME AND IT'S TRYING

TO CORRECT. BUT I BELIEVE NOT ONLY -- THIS NEXT WEEK ON

WEDNESDAY WE HAVE THE MARCH CONTRACTS IN BEANS, CORN, AND

WHEAT ALL EXPIRING. WHEN THOSE EXPIRE OFF THE BOARD IN

THE SAME WEEK, YOUR MAY CONTRACTS WILL BECOME SPOT MONTH IN

THE WEEKLY CHARTS -- NOW, JUST A SECOND -- ON THE

WEEKLY CHARTS. WHAT'S REAL IMPORTANT ABOUT THIS IS THAT

ALL OF A SUDDEN, TECHNICALLY THOSE MAY CONTRACTS WILL

RATCHET YOU UP THROUGH RESISTANCE AND THAT COULD START TO

PROPEL US HIGHER INTO THE GOVERNMENT REPORT. Borg:

LET'S MOVE OVER TO LIVESTOCK AND CATTLE. HOW ARE YOU

VIEWING THAT? Martin: WELL, I THINK THAT THE CATTLE

MARKET, WOW, IT'S BEEN A FABULOUS WEEK FOR THE CATTLE

PRODUCER. YOU'VE PROBABLY GOT A CASH MARKET THAT'S

AROUND 98, 99 CENTS. AND I SUSPECT THIS NEXT WEEK THAT

THE FEED LOTS ARE GOING TO BE ASKING A DOLLAR. THE

CUTOUT PRICES HAVE HELD REALLY WELL, AND WHILE THE CUTOUT

PRICES ARE STRONG, THEY'RE NOT AS HIGH AS THEY WERE IN APRIL

AND MAY OF 2004 AND 2005 AND ARE CERTAINLY A FAR CRY OFF --

I THINK IT WAS 192 OR SOMETHING LIKE THAT, 196 THAT THEY GOT

TO IN OCTOBER OF 2003. SO WE HAVE A WAYS TO GO IN THE

PRODUCT. BUT WE CAME THROUGH FEBRUARY THINKING THAT OUR

TIGHTEST -- OUR LARGEST SUPPLY MIGHT BE PAST US AND THAT

WITH THE GROWING DEMAND AND ALSO THE WEATHER LOSSES THAT WE

HAD THAT THIS MARKET WOULD PROBABLY GO TO A DOLLAR AND WE'VE

SEEN THAT. NOW THIS WEEK WE NOTED THAT SOUTH KOREA

DROPPED THEIR BAN ON IMPORTS OF U.S. BEEF, AND THAT WAS A

BIG PLUS PSYCHOLOGICALLY AND, OF COURSE, JUST AIDED THE

FUNDS IN BUYING MORE. WE ALSO NOTE THAT THERE'S BEEN A

LARGE TRADE -- SPECULATIVE TRADE ON THE SHORT SIDE OF APRIL

CATTLE, BECAUSE THEY THOUGHT THE GOLDMAN ROLL WOULD HELP

THEM OUT WHEN THE LONG STARTED TO ROLL OUT OF APRIL CATTLE

AND GO LONG INTO JUNE, AND SO THEY TRIED TO ALIGN FOR THAT.

AND SO FAR THIS IS NOT WORKING AT ALL FOR THEM. I

WONDER WHEN THE GOLDMAN ROLL IS OVER THIS TUESDAY,

WEDNESDAY, I'M WONDERING WHAT WILL THESE SHORTS DO. NOW

SEASONALLY APRIL CATTLE HAVE A TENDENCY TO PUT A HIGH IN

RIGHT AROUND THE THIRD WEEK OF MARCH, DIP DOWN INTO EARLY

APRIL, AND THEN THEY CAN TURN BACK STRONG. Borg: WHAT

ARE THE WEIGHTS DOING, MARKET WEIGHTS? Martin: MARKET

WEIGHTS, CARCASS WEIGHTS ARE DOWN. CARCASS WEIGHTS ARE

ABOUT 10 POUNDS UNDER A YEAR AGO, AND THIS IS THE FIRST TIME

THAT CARCASS WEIGHTS HAVE BEEN DOWN SINCE OCTOBER OF '05, I

THINK, SOMETHING LIKE THAT. DON'T HOLD ME TO THAT, BUT

SOMETHING LIKE THAT. SO THE WEIGHTS ARE DROPPING, BUT

DEMAND IS TREMENDOUS. I PONDER -- I KIND OF WONDER IF

WHAT'S HELPING US OUT THIS YEAR TO SEE HIGH PRICED CORN AND

TO SEE MEAT PRICES GOING UP, I'M WONDERING IF IT ISN'T

BECAUSE, ONE, THE ECONOMY IS FEELING A LITTLE BIT BETTER AND

YOU'VE DROPPED GASOLINE PRICES BACK A LITTLE BIT SO PEOPLE

FEEL LIKE THEY HAVE MORE MONEY TO SPEND SOMEWHERE ELSE.

AND ALSO I'M WONDERING IF THE EXPORT MARKET, BECAUSE OF GOOD

GROWING ECONOMIES ELSEWHERE, ISN'T HELPING THE CAUSE TO HOLD

THIS. Borg: THE CORN PRICE DOESN'T SEEM TO BE

NEGATIVELY AFFECTING THE FEEDER CATTLE MARKET, DOES IT?

Martin: NO, NOT AT ALL. AND I THINK IT'S BECAUSE WHEN

A PRODUCER LOOKS OVER AND NEEDS TO BE BUYING FEEDERS OR

YEARLINGS AND LOOKS OVER AND SEES WHAT THE CASH PRICE FOR

FATS IS, HE'S THINKING, BOY, THERE ISN'T A WHOLE LOT OF

DIFFERENCE IN PRICE, AND THAT'S ENHANCING HIM TO GO AHEAD

AND BUY FEEDER CATTLE. BUT AT THE PRESENT TIME, AS WHEAT

COMES OUT OF DORMANCY, YOU'LL START TO SEE MORE FEEDERS

MOVING OUT OF WHEAT PASTURE. Borg: WE'VE HAD SOME

REAL ROUGH WEATHER. HOW DID THAT AFFECT THE HOG PRICES?

WAS IT A FACTOR AT ALL? LIGHTER WEIGHTS OR ANYTHING

LIKE THAT OR HEAVIER WEIGHTS? Martin: WELL, I THINK

THAT WE'RE NOTING THAT HOG SLAUGHTER IS BEING REVISED

DOWNWARD OFF AND ON THROUGHOUT THE WEEK. I WONDER IF WE

DON'T HAVE -- ONE, I KNOW WE HAVE A VERY GOOD DEMAND

UNDER THE PORK MARKET. AND BEFORE LONG, YOU KNOW, YOU

HAVE AN EASTER THAT COMES AROUND THE 8TH OF APRIL, SOMETHING

LIKE THAT. SO WE'RE NOT SUPER FAR AWAY WHERE DEMAND IS

GOING TO START TO -- AND YOU KNOW, THAT'S A HAM TIME.

BUT ONCE WE GET PAST THAT, THE DEMAND IS GOING TO PICK BACK

UP. JAPAN REMAINS A PRETTY GOOD BUYER OF PORK. ASIA

ALL IN ALL IS A GOOD BUYER OF PORK, MEXICO. I WONDER IF

THAT ISN'T PROBABLY WHAT'S HELPING THE CAUSE HERE. HOG

NUMBERS SHOULD BE FAIRLY DECENT, AND YET SUPPLY SEEMS TO BE

APPEARING TIGHT BECAUSE OF OUR SLAUGHTER. Borg: WHAT

DO YOU PROJECT FOR HOGS? Martin: I THINK THE HOG

MARKET IS STILL GOING TO MOVE HIGHER AS WE GO INTO APRIL AND

POSSIBLY TOWARDS JUNE. Borg: GOOD. THANKS, SUE.

AS ALWAYS, NICE TO HAVE YOU BACK. Martin: THANK

YOU. Borg: WELL, THAT WRAPS UP THIS EDITION OF

"MARKET TO MARKET." BUT IF YOU WOULD LIKE SOME MORE

MARKET INFORMATION FROM SUE, VISIT "MARKET PLUS." THAT'S

OUR PAGE AT OUR "MARKET TO MARKET" WEB SITE. AND WE'LL

ALSO TAKE THIS OPPORTUNITY TO LET YOU KNOW THAT "MARKET TO

MARKET" MAY BE AIRING IN SOME DIFFERENT TIME SLOTS

TEMPORARILY ON STATIONS BECAUSE OF PBS FUND-RAISING EFFORTS.

NOW, IF YOU VALUE PROGRAMS LIKE "MARKET TO MARKET" --

I THINK YOU DO -- PLEASE CONSIDER PHONING IN YOUR PLEDGE

AND DO IT RIGHT NOW. AND THEN BE SURE TO JOIN US AGAIN

NEXT WEEK. WE'LL BE TAKING A LOOK AT THAT TIME ON HOW

THE RAID TO ARREST UNDOCUMENTED WORKERS AT ONE MIDWEST

MEATPACKING PLANT IS AFFECTING THE ENTIRE TOWN AND THE U.S.

IMMIGRATION POLICY. UNTIL THEN, THANKS FOR WATCHING.

I'M DEAN BORG. HAVE A GREAT WEEK.


Tags: agriculture commodity prices markets news