Iowa Public Television

 

Market Analysis: Apr 11, 2003

posted on April 11, 2003


THE GRAIN MARKETS FINISHED THE WEEK FRACTIONALLY MIXED AS THE TRADE CONTINUES TO STEW AND FESTER OVER PROSPECTS FOR 2003. FOR THE WEEK, WHEAT PRICES WERE DOWN A FRACTION, WHILE CORN PRICES WERE UNCHANGED TO A FRACTION HIGHER.

SOYBEAN FUTURES CONTINUE TO WORK HIGHER, GAINING MORE THAN NINE CENTS ON BOTH OLD AND NEW CROP. SOYBEAN MEAL GAINED $3.70 PER TON. COTTON FUTURES WERE $1.38 HIGHER.

IN LIVESTOCK, FED CATTLE FUTURES $1.35 HIGHER. FEEDER CATTLE GAINED 15-CENTS. THE LEAN HOG CONTRACT CLOSED THE WEEK SIXTY CENTS LOWER.

IN THE FINANCIALS, COMEX GOLD GAINED $2.60 PER OUNCE. THE EURO GAINED 58 BASIS POINTS AGAINST THE DOLLAR. THE CRB INDEX FINISHED THE WEEK TWO THIRDS OF A POINT HIGHER TO CLOSE AT 230.46.

 

Market Analysis: Apr 11, 2003

HERE NOW TO LEND US HIS INSIGHT IS ONE OF OUR REGULAR MARKET ANALYSTS, TOMM PFITZENMAIER. WELCOME BACK.

PFITZENMAIER: THANKS, MARK.

PEARSON: LET'S TALK ABOUT THE WEEK THAT WAS. AGAIN, YOU KNOW, MORE INFORMATION CONTINUES TO COME OUT REGARDING PRODUCTION AND EXPORT, AND TRADE CONTINUES TO DIGEST IT. KIND OF A FLAT WEEK AS FAR AS THE GRAIN WAS -- THE GRAIN TRADE WAS CONCERNED. WHEAT, AGAIN CORN, REALLY NOT MUCH MOVEMENT.

PFITZENMAIER: THE WHEAT MARKET IS KIND OF SITTING HERE WAITING TO SEE HOW WEATHER DEVELOPS OVER THE LAST OF NEXT WEEK OR SO. WE HAD EXPORT NUMBERS OUT, AGAIN VERY DISAPPOINTING. WE LAG WAY BEHIND ON NOT ONLY VERSUS A YEAR AGO BUT VERSUS WHAT THE USDA WAS PROJECTING. SO THAT WHEAT MARKET CONTINUES TO STRUGGLE. I MEAN YOU FOUND A LITTLE AREA BASIS THE MAY CONTRACT OF CONSOLIDATION HERE AT 280. IF YOU BREAK DOWN UNDER 280, THOUGH, IT LOOKS LIKE IT'S GOT ANOTHER LEG DOWN IN THERE, SO THAT'S ONE TO WATCH REALLY CLOSELY. THE UPSIDE POTENTIAL, NOW IT LOOKS LIKE YOU GET UP TOWARD $3, AND THAT MARKET IS GOING TO STRUGGLE PROBABLY.

PEARSON: SO TRADING RANGE, MAKE SOME NEW CROP SALES YET?

PFITZENMAIER: I THINK SO. ANYTIME THE WHEAT MARKET RALLIES, I THINK YOU CAN STEP IN THERE AND MAKE SOME SALES.

PEARSON: LET'S TALK ABOUT THE CORN MARKET. AS WE LOOK AHEAD -- AS WE LOOK AT WHAT YOU LIKE TO SEE FOR TARGETS, AT LEAST ON NEW CROP SALES, WE'RE GETTING CLOSE AGAIN. GETTING TO 240 AND 242 AND OVER.

PFITZENMAIER: YEAH, WE HIT THEM WITH THAT LAST WEEK, AND THAT 244 TO 245 AREA IS KIND OF WHAT I'VE BEEN KEEPING AN EYE ON. THE DECEMBER 250 PUTS, AROUND 22 TO 23 CENTS. THAT OPPORTUNITY PRESENTED ITSELF THIS WEEK. I STILL THINK THAT'S A GOOD WAY TO GO TO GET YOURSELF A PRETTY SOLID FLOOR. LEAVE A LITTLE UPSIDE POTENTIAL IN CASE YOU DO HAVE SOME KIND OF A WEATHER CONCERN. BUT ULTIMATELY, I THINK YOU NEED TO BE AN AGGRESSIVE SELLER OF OLD AND NEW CROP CORN. OLD CROP CORN HAS GOT VERY TIGHT BASIS. YOU KNOW, THE BIG FEAR I HAVE AS YOU GO INTO THE SUMMER, EVERYBODY SITS ON THEIR CORN, YOU GET THE CROP PLANTED, EMERGED UP AND COMING, AND THEN YOU LOOK AROUND AND SAY, "GEE, I'VE GOT A BIN FULL OF OLD CORN. WHAT AM I GONNA DO WITH THAT TO MAKE ROOM FOR THIS NEW CROP?" AND THEN ALL OF A SUDDEN, NOT ONLY DOES THE MARKET GET A LITTLE SOFT, BUT YOUR BASIS STARTS TO FALL APART ON YOU. SO I REALLY THINK BEING AGGRESSIVE UP HERE, THERE WAS SOME BASIS BIDS THIS WEEK THAT WERE PRETTY HOT. YOU KEEP YOUR EYE OPEN AND THERE'S OPPORTUNITIES HERE, ESPECIALLY AS YOU GO INTO PLANTING. I MEAN, YOU KNOW, CALL SOMEBODY ELSE TO HAUL IT FOR YOU WHILE YOU'RE PLANTING OR WHATEVER, BUT I THINK THIS IS A TIME TO BE FAIRLY AGGRESSIVE ON OLD CROP CORN AND, YOU KNOW, 20, 25 PERCENT, MAYBE 30 PERCENT ON ANY RALLIES ON NEW CROP CORN.

PEARSON: WE'VE BEEN TALKING ABOUT GETTING OLD CROP CORN SOLD HERE FOR A WHILE, AND YET IT STILL SEEMS AS THOUGH THERE'S A LOT OF CORN OUT THERE IN THE COUNTRY.

PFITZENMAIER: THAT'S ONE OF THE PROBLEMS THE CORN MARKET HAS IS EVERYBODY KNOWS YOU'VE GOT THIS BIG CHUNK OF CORN IN FARMERS' HANDS SITTING OVER THE MARKET, AND AT SOME POINT THAT BECOMES A BARRIER TO THE MARKET GOING. THEY'RE GOING TO RALLY IT ENOUGH TO SATISFY THEIR SHORT TERM NEEDS, BUT WHEN YOU KNOW IT'S SITTING OUT THERE, WHY PAY UP ALL THE TIME.

PEARSON: ESPECIALLY, LIKE I SAY, ONCE EMERGENCE HAPPENS AND IT LOOKS LIKE THINGS ARE HOLDING ON PRETTY GOOD.

PFITZENMAIER: EXACTLY.

PEARSON: ALL RIGHT. LET'S TALK ABOUT THE SOYBEAN MARKET, UP OVER $6. YOU TALKED ABOUT THAT AS A SELLING POINT TOO, SO TIME TO DEFINITELY CLEAN OUT THE OLD CROP.

PFITZENMAIER: YEAH, I GUESS SO. YOU KNOW, AS LONG AS WE KEEP MAKING THESE SALES TO -- IN LIEU OF SOUTH AMERICA, I DON'T KNOW, THAT BEAN MARKET COULD CONTINUE TO STAY HIGH. YOU KNOW, YOU'VE GOT THE CARRYOUT DROPPED DOWN TO 145. THAT'S FAIRLY LOW CARRYOUT, YET A GOOD EXPORT NUMBER AGAIN THIS WEEK. TALK THAT CHINA IS GOING TO MAYBE SWITCH SOME ORIGIN BEANS BACK UP TO THE U.S. SO I DON'T KNOW THAT I'D GET IN A BIG TOOT ABOUT SELLING ANY BEANS. I CERTAINLY WOULDN'T GET IN A BIG HURRY TO SELL ANY NEW CROP BEANS. CERTAINLY FEEDING SOME INTO THE MARKET AT THESE KIND OF LEVELS IS A PRUDENT THING TO DO BUT, YOU KNOW, WHEN YOU'RE MAKING NEW HIGHS EVERY FEW DAYS, THERE'S CERTAINLY NOTHING BEARISH ABOUT THAT. THE THING TO BE CONCERNED ABOUT, I THINK, IS YOU'VE GOT THE FUNDS HAVE A HUGE, HUGE, LONG POSITION, AND IF SOME SOMETHING SCARES THEM AND CAUSES THEM TO BAIL OUT OF THOSE, THEN THERE'S GOOD DOWNSIDE. THE MARKET TECHNICALLY IS VERY OVERBOUGHT. THAT'S CERTAINLY AN AREA OF CONCERN AND COULD CAUSE A PULLBACK TOO. BUT IF THOSE SALES KEEP BEING MADE TO EXPORT SALES, THIS BEAN MARKET IS PROBABLY PRETTY SOLID.

PEARSON: AGAIN, NO NEW CROP, ALTHOUGH WE DID RALLY THE NEW CROP FINALLY. THE NEW CROP DID COME UP A LITTLE BIT.

PFITZENMAIER: YEAH, IT NEEDED TO. IT WAS KIND OF LAGGING AND SITTING THERE AND SITTING THERE, AND FINALLY THIS WEEK IT TOOK OFF AND HAD A NICE RALLY BACK UP IN THAT 34 -- 33, 34 RANGE. IF IT CAN TAKE OUT THAT 35, 535 RANGE, IT'S PROBABLY GOT A NICE UP, MAYBE UP INTO THE 550, 560 RANGE.

PEARSON: OKAY. BUT TECHNICALLY ON THIS OLD CROP, MAYBE LET THE GOOD TIMES ROLL FOR A LITTLE BIT.

PFITZENMAIER: YEAH. I MEAN IF YOU'VE BEEN A FAIRLY AGGRESSIVE SELLER AND YOU'VE GOT SOME LEFT, IT WOULD BE TEMPTING TO SIT ON THOSE FOR A LITTLE BIT AND JUST, YOU KNOW, SEE HOW THIS PLAYS OUT.

PEARSON: THE COTTON MARKET HAD A NICE GAIN THIS WEEK. WE'VE SEEN JUST A NICE RALLY THERE. YOU WERE TALKING GET UP OVER 60 CENTS ON THAT NEW CROP AND MAYBE WE COULD SEE 80 CENTS?

PFITZENMAIER: YEAH, 60 TO 62 IS GOING TO BE DIFFICULT. BUT YOU'RE RIGHT; WE'VE BEEN IN A NICE, SOLID UPTREND EVER SINCE LAST, YOU KNOW, SEPTEMBER, OCTOBER AND THAT. AND ANY DIPS THAT CAME ALONG WERE BUYING OPPORTUNITIES. SO, YOU KNOW, WE BUMPED UP OVER 60 HERE IN THE LAST FEW DAYS. DROPPED DOWN BELOW THAT NOW, SO WE'LL SEE IF WE MAYBE BUILD A LITTLE BASE AND CAN WORK ON HIGHER. BUT, YEAH, THERE'S CERTAINLY UPSIDE POTENTIAL IN THE COTTON, NO QUESTION.

PEARSON: ALL RIGHT. LET'S MOVE OVER TO LIVESTOCK. FED CATTLE NUMBERS SEEM TO BE CURRENT, SEEMS TO BE ROLLING ALONG. WHAT'S YOUR NEAR-TERM OUTLOOK?

PFITZENMAIER: HOW CAN A MARKET BE STRUCTURED BETTER? YOU'VE GOT THE CASH MARKET ABOVE THE FUTURES; A GOOD SIGN. YOU'VE GOT WEIGHTS REASONABLE, NOT GROWING; GOOD SIGN. YOU'VE GOT THE DEFERRED CONTRACTS LOWER THAN THE NEARBY; ANOTHER GOOD SIGN. THE EFFECT THAT HAS IS TO KEEP THE LIVESTOCK GUY KIND OF SCARED, KIND OF CURRENT. AND THOSE ARE ALMOST ALWAYS GOOD SITUATIONS. NOW, MAYBE THE RETAIL LEVEL, BEEF IS GETTING A LITTLE PRICEY. BUT AGAIN, IT SEEMS TO BE MOVING FAIRLY WELL. I THINK THERE'S UPSIDE POTENTIAL. NOW, THE QUESTION IS, YOU KNOW, YOU'VE GOT THE JUNE AT 7150 TO 72. THE CASH MARKET UP AT 78 TO 80, DEPENDING ON WHERE YOU'RE AT. YOU KNOW, HOW ARE THOSE TWO GOING TO MEET. AND EVEN IF THEY MEET IN THE MIDDLE, THAT'S A COUPLE, $3 RALLY ON THE JUNE CONTRACT, SO I THINK THERE'S NICE UPSIDE. AND WE'VE GOT THE WAR SORT OF BEHIND US, SO THAT'S -- THAT NEGATIVE -- NEGATIVITY FROM THAT THAT'S HANGING OVER THE MARKET IS STARTING TO EVAPORATE. SO I GUESS I'M SOMEWHAT OPTIMISTIC ABOUT THAT CATTLE MARKET.

PEARSON: LET'S TAKE IT FORWARD AND SPIN THROUGH, SAY, THIRD AND FOURTH QUARTER OF THIS YEAR. IS THAT WHAT'S HOLDING THE FUTURES BACK? I MEAN IT IS A POSITIVE IN TERMS OF KEEPING CATTLE MOVED. NOBODY HAS GOT A REASON TO OVERFEED AT THIS STAGE OF THE GAME. CORN IS NOT CHEAP. YOU TALKED ABOUT BASIS. AS LOOK FORWARD TO THE FOURTH QUARTER, FUTURES REALLY AREN'T GIVING AS MUCH OF A POSITIVE SIGNAL.

PFITZENMAIER: NO, ALTHOUGH -- THERE'S NOT A POSITIVE SIGNAL THERE, BUT I THINK THERE ARE OPPORTUNITIES THERE BECAUSE YOU'VE GOT THE FEEDER MARKET CHEAP ENOUGH THAT I THINK YOU CAN LAY THOSE FEEDERS IN AND STILL SELL THOSE FUTURES OUT THERE A WAYS AND MAKE YOURSELF SOME MONEY. SO I GUESS I'M NOT TOO CONCERNED ABOUT THOSE. IF THE DEMAND CONTINUES TO BE STRONG AND GUYS STAY CURRENT, I THINK YOU'LL START TO SEE THOSE DEFERREDS START TO PULL UP A LITTLE BIT TOO.

PEARSON: OKAY. THE OTHER INTERESTING SITUATION WE HAVE IN THE LIVESTOCK BUSINESS IS WHAT'S GOING ON IN THE HOG MARKET. WE LOOKED AT THESE 30-CENT CASH HOGS. WE LOOKED AT 40S OR BETTER ON FUTURES. SORT THINGS OUT FOR THE PORK PRODUCER AT THIS STAGE OF THE GAME.

PFITZENMAIER: WELL, IT'S VERY SIMPLE. WE'RE SLAUGHTERING TOO MANY HOGS. AND UNTIL THAT GETS STRAIGHTENED OUT -- WE'VE BEEN SLAUGHTERING MORE HOGS THAN THE USDA SAID WE WERE GOING TO SLAUGHTER NOW FOR THREE OR FOUR MONTHS. UNTIL THAT GETS STRAIGHTENED OUT, THE HOG MARKET IS GOING TO STRUGGLE THERE. I THINK IT'S JUST AS SIMPLE AS THAT. THAT NEEDS TO GET UNDER CONTROL. YOU KNOW, WE'RE EXPECTING SLAUGHTER THE LAST COUPLE OF MONTHS TO BE DOWN, AND IT WAS UP 3 OR 4 PERCENT EVERY WEEK. SOMEHOW WE HAVE TO FIGURE OUT WHAT'S CAUSING THAT AND WHAT'S CAUSING THAT DISPARITY AND GET THAT STRAIGHTENED OUT: IS THAT CANADIAN HOGS COMING IN; IS IT LIQUIDATION OF THE BREEDING HERD; YOU KNOW, WHAT'S CAUSING IT? I GUESS I'M VOTING FOR THE CANADIAN HOGS COMING IN. SO UNTIL THAT GETS STRAIGHTENED OUT, WE'RE GOING TO STRUGGLE HERE. YOU REMOVE THAT, YOU START SLAUGHTERING THE NUMBER OF HOGS THE USDA SAYS, AND I THINK THAT HOG MARKET IS IN GREAT SHAPE. IT'S FINE. IT CERTAINLY IS COMPETITIVE AT THE RETAIL LEVEL WITH THE BEEF, SO THAT'S A GOOD THING. SO I DON'T KNOW. IT IS A QUANDARY AND IT'S REALLY BEGINNING TO FRUSTRATE THE PORK PRODUCERS IN A BIG WAY.

PEARSON: ESPECIALLY WE HAD THAT FOURTH-QUARTER REPORT, OR THAT MARCH REPORT, WHERE AGAIN WE WOULD CHANGE THEIR NUMBERS A LITTLE BIT. WE THOUGHT, GOOD, WE'RE GOING TO COME IN THE LINE. BUT STILL, ANY CANADIAN HOGS -- ARE WE JUST -- IS THE REPORT JUST -- ARE WE IN ONE OF THOSE PHASES WE'RE JUST NOT CLOSE IN THE REPORT?

PFITZENMAIER: OBVIOUSLY WE'RE NOT -- SOMETHING ISN'T RIGHT. AND I THINK A LOT OF PEOPLE ARE SCRATCHING THEIR HEADS TRYING TO FIGURE OUT HOW THAT'S GOING TO GET RECONCILED.

PEARSON: ALL RIGHT. ANYTHING OUT THERE FROM A HEDGE STANDPOINT FOR A PRODUCER?

PFITZENMAIER: WELL, YOU KNOW, ALWAYS HAVING A PUT UNDER HOGS IS A PRUDENT THING, AND I GUESS I'D LOOK AT THAT.

PEARSON: VERY GOOD. TOMM PFITZENMAIER, THANK YOU SO MUCH. THAT WILL WRAP UP THIS EDITION OF "MARKET TO MARKET." NOW, YOU CAN HEAR MORE OF TOMM'S THOUGHTS BY CLICKING ON THE "MARKET PLUS" ICON ON OUR WEB SITE. UNTIL NEXT WEEK, THANKS FOR WATCHING. I'M MARK PEARSON. HAVE A GREAT ONE.

(CAPTIONS BY: MIDWEST CAPTIONING DES MOINES, IOWA)

 


Tags: agriculture commodity prices markets news