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Market Analysis: May 30, 2003

posted on May 30, 2003


The grain markets finished the week mixed on limited news. For the week, wheat prices were down more than a penny. Corn prices were fractionally higher. Soybean futures were three to four cents lower. Soybean meal finished $1.40 lower per ton. Cotton futures were down $2.33.

In livestock, fed cattle gained $2.17. Feeder cattle gained $1.45. the lean hog contract finished the week $1.43 higher.

In the financials, COMEX gold closed the week $4.30 lower per ounce. The euro posted a 10-basis point decline against the dollar. The CRB index finished the week nearly four-and-a-half points lower to close at 234.75.

Here now to lend us her insight is one of our regular market analysts, Sue Martin. Welcome back.

Market Analysis: May 30, 2003

Martin: THANK YOU.

Pearson: WELL, LET'S TALK, FIRST OF ALL, AGAIN WE'RE MOVING CLOSER TO HARVESTTIME FOR WHEAT. THE WHEAT MARKET NOT REALLY DOING A WHOLE LOT, AT LEAST ON THE BOARD THIS WEEK. WHAT'S AHEAD FOR WHEATPRICES?

Martin: WELL, I THINK, MARK, WE'VE HAD A NICE LITTLE BOUNCE.IT'S NOT AS NICE AS WHAT EVERYBODY WOULD LIKE TO SEE, BUT WE'VE HAD A NICE LITTLE REACTION IN THE MARKET THAT CAME LATER THAN NORMAL IN THE LAST HALF OF MAY. AS LONG AS WE'VE GOT CORN AND SOYBEANS HAVING STRUGGLE PROBLEMS HERE FROM GOING HIGHER, I THINK THE WHEAT IS GOING TO EBB LOWER INTO HARVEST.

Pearson: CORN MARKET, YOU MENTIONED FRACTIONALLY HIGHER THIS WEEK. REALLY KIND OF A HOLDING PATTERN. THE VERDICT IS OUT ON THIS 2003 CROP, WHAT WE'RE GOING TO SEE. THERE'S BEEN A LOT OF FORECASTS NOW THAT ARE CAUSING SOME CONCERN, VOLATILE WEATHER AND SO FORTH, PERHAPS DRY WEATHER IN PARTS OF THE CORN BELT. WHAT DO WE DO FOR PRICING ON THIS CORN?

Martin: WELL,I THINK THAT WHEN WE LOOK AT THE NEW CROP CORN, CERTAINLY I THINK AROUND THE 250 TO 260 LEVEL, I WOULD BE STARTING TO DO SOME PRICING. WE'VE HAD CHANCE ONCE HERE SO FAR THIS YEAR. I THINK WE'LL GET ANOTHER ONE. CERTAINLY THE WEATHER SCARE, THAT TYPE OF THING WILL COME. BUT I THINK THAT IF YOU WANT TO BE BULLISH BEANS -- OR CORN, YOU HAVE TO BE BULLISH BEANS OR PRAY THAT THE BEAN MARKET HAS GOT MORE LIFE IN IT LEFT. THE DEMAND DOMESTICALLY FOR CORN IS GOOD, AND THAT CONTINUES TO BE HELPFUL. AND ETHANOL DEMAND SEEMS TO BE PRETTY GOOD. BUT ON THE EXPORT SIDE OF THE PICTURE, IT'S PRETTY LACKLUSTER YET.

Pearson: AND IF WE'RE LOOKING AT PRICING CORN, SAY 250 OR BETTER, AND CLEAN OUT OLD CROP ON SOME OF THESE RALLIES?

Martin: I CERTAINLY WOULD. I THINK THAT AS WE START TO GET BOUNCES IN THIS MARKET, I WOULD START CLEANING OUT THE OLD CROP. THE PRODUCER WAS LUCKY LAST YEAR ON A WEATHER SCARE THAT IT TOOK THE CORN PRICE HIGHER WITH THE WHEAT MARKET. BUT I'M NOT SURE WE GET ALL OF THAT THIS YEAR, UNLESS WE DO GET A BONA FIDE WEATHER SCARE. NOW, AS FAR AS ACRES GO, IT APPEARS CORN IS PRETTY WELL GETTING PLANTED. AND DO WE LOSE MORE ACRES OUT OF CORN TO BEANS? I DON'T THINK SO. I THINK THAT WE'RE PAST THAT. I WOULD SEE THAT THE DELTA AREA, BECAUSE OF SLOW HARVESTING IN WHEAT AND, OF COURSE, TOO MUCH MOISTURE FOR OTHER CROPS LIKE CORN, COTTON, OTHER THINGS, WE MAY PICK UP SOME BEAN ACRES THERE. BUT THE CORN MARKET, I THINK, AS WE START TO GET TO THAT 250, 260 LEVEL, THERE IS STRUGGLING THERE. 270 -- IF YOU CAN GET SOME MORE MOVE UP INTO THE 270 LEVEL, MOVE SOME MORE CORN.

Pearson: LET'S TALK ABOUT SOYBEANS, SUE. YOU'VE BEEN VERY FRIENDLY TO THE BEAN MARKET. WE'VE MOVED DRAMATICALLY HIGHER. DO WE HAVE SOME MORE UPSIDE TO GO?

Martin: WELL, YOU KNOW, I WAS LOOKING BACK AT THE MARKET BECAUSE, AS YOU KNOW, I'M VERY FRIENDLY TO THE BEAN MARKET. AND I FELT LIKE THERE WAS REALLY OUR BULL MARKET FOR THIS YEAR, NOT ANY OTHER GRAIN MARKET. AND WHEN I LOOK AT THE BEANS, OF COURSE, I'M A LITTLE DISAPPOINTED AS A BULL BECAUSE THEY HAVE NOT PERFORMED AS I WOULD HAVE EXPECTED AS WE'VE GONE THROUGH TIME. THE TIME THAT I'VE LOOKED AT HAS BEEN IN AN UPWARD BIAS, BUT THE PRICE HASN'T BEEN AS VIBRANT AS IT SHOULD BE. WHEN YOU LOOK AT THE OATS MARKET AND THE BULL MARKET WE HAD INTO 2002-- EARLY 2002, WE HAD MOVED OATS BASICALLY, GOSH, I WANT TO SAY $1.60, $170, SOMETHING LIKE THAT, FROM THE LOWEST LEVEL. IT HAD GOTTEN. AND WHEN YOU LOOK AT THE WHEAT MARKET, YOU LOOK AT A 228 LOW LEVEL THAT WE HUNG AT FOR QUITE A WHILE IN THE CHICAGO FUTURES AND THEN YOU GET UP TO, WHAT, 449. SO YOU HAD OVER A $2.20 RALLY UP THERE. AND THEN YOU LOOK AT BEANS AND YOU GO FROM 658 TO THE 401.5 LOW,AND YOU'VE ONLY MOVED $2.56. THAT'S NOTHING IF YOU'RE COMPARING BEANS TO WHEAT AND OATS. SO THIS MARKET HAS DONE NOTHING. IT'S NOT HAD THE LIFTOFF. IT'S NOT HAD THE VIBRANCY THAT IT NEEDS. AND UNFORTUNATELY THROUGH THIS, I USE TIME INDICATORS. AND THOSE TIME INDICATORS, AS YOU PASS EACH DAY OFF THAT CALENDAR, IT'S DECAYING. MY LONG-TERM TIME INDICATORS ARE SITTING AT 98.4 PERCENT. THAT IS WOUND UP PRETTY HIGH. ONLY TWICE IN THE LAST THIRTY-FOUR YEARS HAVE WE BEEN AT 98.4 PERCENT OR JUST OVER 97 PERCENT, SO THIS IS A HIGH LEVEL. NOW, SINCE IT'S MONTHLY DATA, THAT SAYS YOU HAVE TO GO THROUGH THE END OF JUNE TO PROVE WHETHER IT'S GOING TO ROLL ITSELF OVER. ONCE IT STARTS TO CRACK OR SLOPE ITSELF DOWN, THEN THIS MARKET IS DONE. AND THAT'S ALWAYS WHY I FELT THE HIGHS WOULD BE IN JUNE RATHER THAN IN JULY. NOW, OF COURSE, THESE WEATHER MARKETS CAN MOVE IN FAIRLY QUICK. AND WHEN I LOOK AT THE MARKETS THIS PAST WEEK, WELL, EVERY OTHER DAY WAS A REVERSAL. WHEN YOU LOOK AT SOUTH AMERICAN PRICES, WE HAD IBGE COME OUT TODAY BEFORE THE MARKET OPENED AND INCREASE THEIR PRODUCTION OF BRAZILIAN ESTIMATE FROM 49.5 MILLION METRIC TONS TO 50.5. SO THAT WAS JUST A HAIR OVER THE BRAZILIAN GOVERNMENT AND, OF COURSE, JUST ABOUT A HALF MILLION METRIC TONS UNDER THE USDA. EVERYBODY WAS EXPECTING THE OTHER WAY, ONE MILLION METRIC TONS GOING SOUTH, AND IT DIDN'T HAPPEN THAT WAY, SO IT HELPED BREAK THE MARKET TODAY.

Pearson: ALL RIGHT. SO AGAIN, KEEP WATCHING THE BEAN MARKET. IT MAY NOT BE OVER YET.

Martin: WELL, I DON'T THINK OUR TOP IS IN YET, BUT I THINK WE'RE GOING TO GO DOWN AND TEST THE 616 TO 610 AREA AGAIN, AND THEN WE MAYBE TURN UP FROM THERE. WHEN WE DO START TO TURN IT, THE MOVE WILL BE VERY FAST AND VERY QUICK.

Pearson: LET'S TALK ABOUT COTTON. THAT HAS BEEN HEADING SOUTH, THE COTTON TRADE.

Martin: IT SURE HAS. COTTON HAS JUST -- YOU KNOW, WE GOT OVER 60 CENTS, MAYBE 61, 62. AND OF COURSE, THAT WAS KIND OF AN AREA WHERE PROBABLY HEDGES -- WE WERE PUSHING FOR HEDGES FROM 57 TO THAT AREA. THE 45-, 46-CENT AREA IS AN OBJECTIVE ON THE CHARTS, UNFORTUNATELY, FOR THE JULY CONTRACT. 50 CENTS -- IF YOU GET A BOUNCE UP TO 52, -2.5, 53 AND YOU NEED TO MAKE SOME SALES, GO AHEAD AND DO SO BECAUSE I THINK WE'RE STILL HEADED LOWER.

Pearson: LET'S TALK ABOUT LIVESTOCK QUICKLY. FED CATTLE MARKET, WHAT'S YOUR OUTLOOK?

Martin: WELL, THERE'S THE BRIGHT LIGHT OF EVERYTHING. YOU KNOW, THE CATTLE MARKET HAS BEEN AWESOME THIS YEAR. AND THE MAY CONTRACT WAS AN INTERESTING ONE. NEW CONTRACT ON THE BOARD AND IT MANAGED TO EXCEED THE APRIL CONTRACT HIGHS. AND THIS IS A FIRST TIME EVER IN THE LAST THIRTY-FOUR YEARS THAT WE'VE SEEN A CONTRACT EXCEED APRIL CONTRACT HIGHS WHEN THE APRIL WASN'T ABLE TO GET OVER THE FEBRUARIES, AND THAT HAPPENED. HOWEVER, THE MAY CONTRACT WENT OFF THE BOARD ON FRIDAY AT 82 CENTS, JUST SHY OF TAKING OUT THE FEBRUARY CONTRACT HIGHS. I THINK YOUR TOP IS IN. BUT THE JUNES COULD STILL MAYBE MOVE AHEAD A LITTLE BIT MORE, BUT I'D BE REAL CAREFUL. THERE'S ESTIMATES THAT THE CANADIAN BAN GETS LIFTED AROUND JUNE 8 TO THE 10TH.

Pearson: AND THAT COULD SOFTEN THINGS UP A LITTLE BIT. REAL QUICK ON THE HOGS, SUE, WHAT DO YOU SEE?

Martin: WELL, I THINK THE HOG MARKET STILL HAS A LITTLE MORE LIFT. OF COURSE, ALL THIS DEMAND, THE BAN ON CANADIAN BEEF COMING IN, ABOUT 4 PERCENT OF CONSUMPTION IS CANADIAN BEEF IN THE U.S. AND SO THAT HAS TO BE PICKED UP SOMEWHERE WELL, AND THE PORK WAS THE MARKET TO GO TO. BEEF PRICES ARE EXTREMELY HIGH ON THE WHOLESALE LEVEL. AND I THINK THE RETAILER HAS KEPT HIS PRICES REASONABLE COMPARED TO A YEAR AGO, AND THAT'S BEEN HELPFUL. THEREFORE, I THINK PORK HAS NOT BEEN ABLE TO COMPETE AS GOOD, BUT PRICES SHOULD MAYBE EBB A LITTLE BIT HIGHER.

Pearson: OKAY. VERY GOOD. SUE MARTIN THANK YOU SO MUCH. THAT WILL WRAP UP THIS EDITION OF "MARKET TO MARKET." NOW, IF YOU'D LIKE TO HEAR MORE OF SUE'S THOUGHTS, CLICK ON THE "MARKET PLUS" ICON ON THE "MARKET TO MARKET" WEB SITE. UNTIL NEXT WEEK, I'M MARK PEARSON. THANKS FOR WATCHING. HAVE A GREAT WEEK. CAPTIONS BY: MIDWEST CAPTIONING DES MOINES,

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