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Market Analysis: Mar 14, 2003

posted on March 14, 2003


The grain markets finished the week mixed as the trade continues to try and determine what direction production will take in 2003. For the week, wheat prices gained more than six cents. Corn prices were down five to seven cents. Soybean futures were mixed, with the nearby contracts gaining more than eleven cents, while new crop contracts were down nearly two cents. Soybean meal gained $3.20 per ton. December cotton futures closed 80-cents lower per ounce.

In livestock, fed cattle futures were 17-cents lower. Feeder cattle gained 30-cents. The lean hog contract closed the week one dollar higher.

In the financials, comex gold closed the week more than 14-dollars lower per ounce. The euro finished 265-basis points lower against the dollar. And the crb index finished the week more than six points lower to close at 237.50.

Here now to lend us his insight is one of our regular market analysts, Tomm Pfitzenmaier. Welcome back.

Market Analysis: Mar 14, 2003 TOMM, SOME DRAMATIC NUMBERS THERE ON GOLD, AS SOME OF THE WAR CONCERNS ARE EASED AND, OF COURSE, THE CRB DROPPING BACK AND, OF COURSE, THE EURO WEAKENING AGAINST THE DOLLAR. SO THINGS, I GUESS, WE'D EXPECT TO SEE BEFORE SOME KIND OF GLOBAL –-

Pfitzenmaier: THE WAR HAS HAD AN EFFECT ON OUR LIVESTOCK MARKET AND OBVIOUSLY IN GOLD AND OILS AND THE STOCKS. I MEAN IT JUST HAS A RIPPLE EFFECT THROUGH THE WHOLE ECONOMY. IT WILL BE KIND OF NICE TO GET THAT RESOLVED ONE WAY OR ANOTHER SO PEOPLE CAN START GETTING THEIR ATTITUDES BACK HERE.

Pearson: AND, OF COURSE, FARMERS RIGHT NOW, YOU KNOW -- SO WE'RE SEEING SOME WARM TEMPERATURES ACROSS BIG PARTS OF THE CORN BELT. IT WON'T BE LONG BEFORE SPRING PLANTING WILL BE UNDERWAY. PLANTING INTENTIONS WILL BE COMING UP. ONE CROP THAT HAS BEEN IN THE GROUND AND HAS BEEN OF SOME CONCERN IS THIS WHEAT CROP. AT THIS STAGE OF THE GAME, WE HAD A NICE RUN, AT LEAST IN THE CHICAGO, THE SOFT RED WHEAT THIS WEEK.

Pfitzenmaier: THE WARM WEATHER IS PROBABLY GOING TO START BRINGING THAT WHEAT OUT OF DORMANCY, AND NOW IT'S GOING TO BE IMPORTANT THAT THEY HAVE MOISTURE AS THAT HAPPENS. AND THAT RAIN THAT'S FORECAST FOR THAT SUNDAY THROUGH TUESDAY PERIOD IS GOING TO BE WATCHED VERY CLOSELY NEXT WEEK TO SEE IF IT DOES BRING THAT MOISTURE. IF IT DOES, THAT'S PROBABLY GOING TO KEEP WHEAT ON THE DEFENSIVE. IF IT DOESN'T, YOU MIGHT SEE WHEAT POP UP A LITTLE BIT. IT LOOKED LIKE IT MAYBE HAD SOME BOTTOMING TYPE ACTION HERE THIS WEEK AND MAY HAVE A LITTLE RUNUP. THAT WOULDN'T SURPRISE ME AT ALL. I THINK YOU'D WANT TO VIEW THAT AS A SELLING OPPORTUNITY IF IT HAPPENED, BUT THERE MIGHT BE A LITTLE RUNUP IN THIS WHEAT HERE IN THE SHORT TERM.

Pearson: LET'S TALK ABOUT THE CORN MARKET, WHICH TURNED IN A MIXED PERFORMANCE. NEARBY UNDER SOME PRESSURE AND THE DEFERREDS ALSO UNDER SOME PRESSURE AS FAR AS CORN WAS CONCERNED. DO YOU SEE ANY SELLING OPPORTUNITIES AT THIS STAGE OF THE GAME IN THE DECEMBER CONTRACT?

Pfitzenmaier: I MEAN I THINK THERE WILL BE SELLING OPPORTUNITIES. I DON'T THINK WE HAVE ONE RIGHT WHERE WE'RE AT. BUT CERTAINLY, IF YOU GET DECEMBER CORN UP IN THAT $2.43 TO $2.50 ZONE, I THINK YOU HAVE TO LOOK PRETTY HARD AT SELLING. THERE'S, IN ALL LIKELIHOOD, GOING TO BE AN INCREASE IN ACREAGE. AND THAT REPORT THAT'S OUT THE 31ST AND THAT COMBINED WITH CONTINUING SLOW EXPORTS AND RISING CARRYOUT NUMBERS THAT ARE ASSOCIATED WITH THAT, I THINK ARE GOING TO MAKE IT VERY DIFFICULT TO RALLY. I MEAN WE'VE TRIED TO RALLY THE MARKET BECAUSE WE'RE CONCERNED ABOUT DRY WEATHER GOING INTO THE SPRING AND HIGH ANHYDROUS PRICES, YOU KNOW, HOW THAT'S GOING TO AFFECT THINGS. BUT THE REALITY IS PROBABLY NONE OF THAT IS GOING TO MAKE A WHOLE LOT OF DIFFERENCE AND I GUESS I THINK RALLIES NEED TO BE SOLD. IF YOU DON'T FEEL COMFORTABLE WITH THAT, BUY YOURSELF A 240 PUT OR A 250 PUT, SOMETHING THAT PUTS A FLOOR UNDER THIS MARKET, BECAUSE IF YOU HAVE HIGHER ACREAGE AND HAVE A DECENT CROP THIS SUMMER, WITH THE POOR EXPORTS, WE COULD SEE SUBSTANTIALLY LOWER PRICES GOING INTO THE FALL.

Pearson: REALLY NOTHING UNDERNEATH THIS CORN MARKET IF WE DO SEE 10-PLUS-BILLION BUSHEL CORN CROP.

Pfitzenmaier: NO, IT'S GOING TO BE VERY DIFFICULT. YOU CAN HANG A LITTLE OF YOUR HOPE ON ETHANOL BECAUSE THERE'S A LOT OF PLANTS COMING ON BOARD HERE OVER THE NEXT FEW MONTHS, AND THAT'S CERTAINLY GOING TO BE HELPFUL. BUT I'M NOT SURE IT'S GOING TO BE ENOUGH TO OFFSET THE DROP IN EXPORTS. YOU KNOW, TWO WEEKS AGO WE HAD A REALLY NICE EXPORT NUMBER IN CORN AND EVERYBODY THOUGHT, WELL, OKAY, MAYBE, YOU KNOW, WE'RE GOING TO GET SOMETHING GOING HERE, AND LAST WEEK WE FELL OFF AGAIN. SO IT'S HARD TO GET CONFIDENCE IN THAT PART OF THE CORN MARKET.

Pearson: HOW MUCH CONFIDENCE DO YOU HAVE IN THIS SOYBEAN MARKET?

Pfitzenmaier: WELL, THE SOYBEANS, THEY'RE IN A NICE LITTLE UPTREND. THE FUNDS ARE ALL LONG AND WE'RE DOING THAT -- AND GOING INTO THE FACE OF SOUTH AMERICAN HARVEST. NOW, YOU KNOW, AS SOON AS THEY START HARVESTING DOWN THERE, EVERYBODY EXPECTS THERE TO BE A BIG FLOOD OF BEANS. AND THE REALITY IS, BEFORE YOU START TO SEE MANY BEANS MOVE OUT OF THE MARKET, THEY HAVE TO GET QUITE A WAYS INTO THEIR HARVEST BY THE TIME THEY HARVEST IT AND MOVE IT. AND SO IT'S PROBABLY THE 15TH OF APRIL, REALLY, BEFORE YOU START TO SEE MUCH COMPETITION THERE. SO THE NEXT TWO OR THREE WEEKS, IF WE CONTINUE TO HAVE GOOD EXPORTS LIKE WE DID THIS WEEK, IT'S GOING TO BE DIFFICULT TO PRESS THE BEAN MARKET TOO MUCH. I MEAN WE'RE UP AGAINST RESISTANCE. WE'RE NOT THAT FAR A STRIKING DISTANCE FROM THE CONTRACT HIGHS. SO IF YOU WANTED TO SELL UP AGAINST SOMETHING, THAT'S THE PLACE TO DO IT. BUT IT IS A MARKET THAT LOOKS FAIRLY GOOD. NEW CROP BEANS, YOU KNOW AT 510 OR 515, I JUST ABSOLUTELY WOULD NOT SELL THEM. I JUST THINK THERE'S NO ABILITY OF BEANS TO COMPETE WITH CORN IF YOU COMPARE CORN TO $2.45 AND BEANS AT $5.10.

Pearson: YEAH, NO QUESTION ABOUT IT NOW. SO YOU'D BE SELLING -- DEFINITELY CLEANING OUT THIS OLD CROP. WE STILL HEAR THESE STORIES THAT WE STILL HAVE A LOT OF SOYBEANS –

Pfitzenmaier: YEAH.

Pearson: ON FARM.

Pfitzenmaier: I'D BE SELLING -- I'D BE MOVING OLD CROP CORN AND BEANS. I MEAN I THINK THE OPPORTUNITY IS HERE, THE BASIS IS FAIRLY DECENT, PROBABLY GOING TO GET WORSE AS YOU GO INTO THE SUMMER. I DON'T THINK THERE'S A WHOLE LOT OF REASON TO OWN EITHER ONE OF THEM.

Pearson: OKAY. SO WITH THAT, IT'S TIME TO GET THE BROOM OUT AND GET HER DONE.

Pfitzenmaier: YEAH.

Pearson: ALL RIGHT. LET'S TALK ABOUT THE LIVESTOCK BUSINESS. YOU MENTIONED THE ECONOMY MAY BE STRENGTHENING SOMEWHAT. WE HAVE 50,000 FEWER COWS OUT THERE. WE HAD A NICE RUN IN THAT FED CATTLE MARKET, UP OVER 80 CENTS, AND IT LOOKED PRETTY GOOD. AND THEN WE JUST KIND OF FELL APART. WHAT HAPPENED?

Pfitzenmaier: WELL, YOU HAD A HUGE FUND LONG POSITION IN THERE, AND THEY GOT SPOOKED JUST LIKE EVERYBODY ELSE DID WITH THIS WAR CONCERN AND THE ECONOMY, YOU KNOW, THE STOCK MARKET CONTINUING TO DROP. AND I THINK THAT'S JUST SPOOKED EVERYBODY OUT OF THE CATTLE MARKET. IT HAD A NICE CORRECTION. LIKE YOU SAID, THE NUMBERS REALLY HAVE NEVER BEEN A PROBLEM WITH BEEF. DEMAND GOT LOST A LITTLE BIT BECAUSE THE POULTRY AND THE PORK WERE ABLE TO COMPETE FAIRLY WELL AT THE RETAIL LEVEL WITH BEEF. AND A LOT OF PEOPLE THINK WHEN THE ECONOMY GOES SOUTH, THEY NEED TO SELL BEEF. I GUESS I CONTEND THAT IF YOU AREN'T GOING TO BE ABLE TO BUY A REFRIGERATOR OR BUY A NEW CAR, AT LEAST YOU CAN GO OUT AND LIVE IT UP A LITTLE BIT, FOR $20 HAVING YOURSELF A NICE STEAK DINNER AND FEEL GOOD ABOUT THINGS. SO I GUESS I'M NOT TOTALLY BUYING INTO THIS BAD ECONOMY, POOR BEEF DEMAND. I THINK THAT BEEF DEMAND IS GOING TO BE ALL RIGHT HEADING IN HERE, AND THE NUMBERS ARE CERTAINLY GOING TO BE FINE. SO THERE'S PROBABLY ANOTHER $2, $3 UP IN THIS BEEF MARKET. IF YOU'RE REALLY CONCERNED AND YOU'RE SCARED AND ALL THAT, THEN BUY YOURSELF A PUT FOR A BUCK AND HAVE SOME FLOOR UNDERNEATH YOU. BUT OVERALL, I GUESS, I THINK ALL THINGS BEING EQUAL, WE'RE GOING TO BE ALL RIGHT IN THE CATTLE BUSINESS FOR A WHILE HERE.

Pearson: ALL RIGHT. GOOD. BUT NOT A LOT OF REAL HEDGE OPPORTUNITIES OUT THERE AT THIS POINT?

Pfitzenmaier: NOT YET. I THINK THERE ARE GOING TO BE BUT CERTAINLY NOT RIGHT WHERE WE'RE AT RIGHT NOW, I DON'T BELIEVE.

Pearson: OKAY. THE HOG MARKET... THE LAST TIME YOU WERE ON, YOU TURNED FRIENDLIER TO THIS HOG MARKET.

Pfitzenmaier: WELL, I'D LIKE TO BE FRIENDLY, AND IF THE NUMBERS WOULD COME IN LIKE THE USDA SAID THEY WERE GOING TO BE, I THINK WE'D HAVE FAIRLY GOOD HOG NUMBERS. THE PROBABLY IS, YOU KNOW, WE'RE SUPPOSED TO BE RUNNING 1 TO 2 PERCENT BELOW A YEAR AGO, AND WE'RE RUNNING 3 OR 4 PERCENT ABOVE, PROBABLY BECAUSE OF CANADIAN HOGS COMING IN. IF WE EVER GET THAT THING STRAIGHTENED OUT, THEN I THINK THE HOG MARKET IS GOING TO BE ALL RIGHT. IF IT DOESN'T AND WE CONTINUE TO HAVE THESE BIG NUMBERS OF HOGS GOING IN, THEN THE HOG MARKET IS GOING TO STRUGGLE OVER HERE.

Pearson: ALL RIGHT. NOW, TAKE US OUT 60, 90 DAYS ON HOGS. WE KIND OF THOUGHT WE'D SEE SOME STRENGTH GOING INTO THE SUMMER MONTHS. WHAT COULD THAT LOOK LIKE?

Pfitzenmaier: I GUESS, I'M OF THE OPINION THAT WE'RE PROBABLY GOING TO STILL WORK HIGHER. I THINK THE NUMBERS ARE GOING TO START TO GO LOWER. AND IF THAT HAPPENS, THEN I THINK YOU'RE GOING TO SEE THAT CASH MARKET FIRM UP AND PULL THE HOGS -- THE HOG MARKET ALONG WITH IT. SO SIMILAR TO THE CATTLE MARKET, $2, $3 UP, THEN I THINK YOU HAVE TO TURN INTO A SELLER. BUT RIGHT AT THESE LEVELS, I DON'T KNOW THAT I'D GET PARTICULARLY IN A BIG HURRY HERE.

Pearson: WE'RE WATCHING THAT DECEMBER COTTON FUTURES CONTRACT NOW, AND IT SOFTENED UP A LITTLE BIT THIS WEEK. BUT STILL, THAT LOOKS ALREADY GOOD OUT THERE.

Pfitzenmaier: OVERALL, BOY, YOU TALK ABOUT A NICE, UPTRENDING MARKET, THAT IS ONE. NOW, MAYBE IT'S GOING TO BE AFFECTED A LITTLE BIT BY THIS ACREAGE NUMBER THAT -- PRELIMINARY ACREAGE NUMBERS AT THE END OF THE MONTH. BUT OVERALL, THAT'S IN A NICE UPTREND. I GUESS I'VE SAID ALL ALONG THAT I THOUGHT IT WAS GOING TO STALL OUT IN THE LOW, YOU KNOW, THE 62 TO 64 RANGE. AND I GUESS I STILL THINK WE'RE GOING TO STRUGGLE FROM THESE LEVELS, BUT IT SURE LOOKS NICE. IT ISN'T A MARKET THAT YOU'D WANT TO BE IN ANY BIG HURRY TO BE SELLING ON.

Pearson: OKAY. SO AT THIS STAGE OF THE GAME, MAYBE HOLD OFF?

Pfitzenmaier: YEAH, I WOULD HOLD OFF AND WATCH IT AND SEE HOW THE MARKET REACTS. AS LONG AS IT'S UPTRENDING, WHY GET IN A BIG HURRY?

Pearson: SAME THING ON FEED NEEDS. AT THIS STAGE, THE LIVESTOCK PRODUCER, NO BIG RUSH.

Pfitzenmaier: YEAH, YOU'RE IN A DOWNTREND ON THE CORN MARKET. YOU KNOW, MEAL, THAT'S A LITTLE DIFFERENT STORY BECAUSE IT'S BEEN FAIRLY STRONG. BUT AS LONG AS YOU'RE IN A DOWNTREND IN CORN, I THINK HANG LOOSE ON IT.

Pearson: VERY GOOD. TOM 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. YOU CAN ALSO PERPETUATE PROGRAMS LIKE "MARKET TO MARKET" BY INVESTING IN YOUR LOCAL PUBLIC TELEVISION STATION. IF YOU VALUE WHAT YOU FIND ON PUBLIC TELEVISION, REMEMBER WHO FINANCES IT: YOU, THE VIEWER. INVEST IN WHAT YOU VALUE. UNTIL NEXT WEEK, I'M MARK PEARSON. HAVE A GREAT WEEK.

CAPTIONS BY: MIDWEST CAPTIONING DES MOINES, IOWA.


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