Iowa Public Television

 

Market Analysis: Feb 14, 2003

posted on February 14, 2003


The grain markets finished the week on the upside as the trade continues to focus on weather concerns in parts of the grain belt. For the week, wheat prices gained more than three cents. Corn prices were a fraction to a penny higher.

Soybean futures gained more than 17-cents. Soybean meal gained more than $10 per ton.

Cotton futures were $1.94 higher.

In livestock, fed cattle futures were $1.20 lower. Feeder cattle were down two cents. The lean hog contract gained 22-cents.

In the financials, COMEX gold closed $18 lower per ounce. The Euro finished 58-basis points lower against the dollar, and the CRB index finished the week more than a point and a half lower to close at 246.90.`

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

Market Analysis: Feb 14, 2003

Pfitzenmaier: THANKS, MARK.

Pearson: WELL, WE HAD A LITTLE BIT OF VOLATILITY IN THE MARKETS THIS WEEK. LET'S FIRST TALK ABOUT THE WHEAT MARKET, WHICH HAS HAD QUITE A COMEBACK.

Pfitzenmaier: YEAH, IT REALLY HAS. I MEAN WE'RE ALMOST 30 CENTS OFF THE LOWS OR -- YEAH, ABOUT 30 CENTS OFF THE LOWS, WHICH IS A NICE LITTLE POP UP FOR A MARKET THAT BASICALLY DOESN'T HAVE TOO MUCH DEMAND GOING FOR IT. THE BIG QUESTION MARK IS WHAT'S THE WINTER WHEAT DOING, WHAT ARE THE WEATHER CONDITIONS, HOW ARE THEY AFFECTING -- HOW'S THAT AFFECTING THE CROP. AND YOU'VE SEEN SOME DETERIORATION IN THE CROP ESTIMATES THERE. SO WE'VE HAD A NICE LITTLE RUNUP. I THINK MARCH WHEAT GETS UP IN THAT 336 TO 340 AREA, IT'S GOING TO REALLY START TO STRUGGLE HERE, AND I THINK I'D BE SELLING UP AGAINST THAT SORT OF RESISTANCE AREA.

Pearson: ALL RIGHT. AND IT'S INTERESTING... WE'VE BEEN KIDDING ALL WINTER LONG AS WE GO OUT AND TALK TO FARM GROUPS AROUND THE COUNTRYSIDE, WE'VE BEEN KIDDING ABOUT LOSING THE CORN CROP THIS EARLY IN THE YEAR. IT'S KIND OF HARD TO DO THAT IN FEBRUARY, AND YET THE DRY WEATHER HAS CONTINUED TO CREEP ACROSS THE DRY SUBSOIL. IT DOES HAVE THE MARKET'S ATTENTION.

Pfitzenmaier: YEAH, PARTICULARLY THAT WHEAT MARKET. THERE'S NO QUESTION THERE. THAT ONE COULD GENUINELY BE DOING SOME DAMAGE, ALTHOUGH YOU TEND TO HEAR THAT QUITE A BIT THIS TIME OF THE YEAR. SO I GUESS WE'LL HAVE TO WAIT AND SEE WHEN IT BREAKS DORMANCY HOW IT ACTUALLY LOOKS. BUT IT'S NICE TO SEE THE MARKET RALLY, AND IT'S NICE TO SEE IT BOUNCE UP OFF THOSE LOWS, THAT'S FOR SURE.

Pearson: WE'RE PROBABLY A DIME OR 15 CENTS AWAY FROM WHERE YOU'D WANT TO MAKE SOME SALES.

Pfitzenmaier: WELL, I THINK YOU MAKE SOME PRELIMINARY SALES HERE, LIKE I SAID IN THIS 336 TO 340 AREA. IT IF IT BREAKS UP THROUGH THAT, THEN, YEAH, THEN THERE'S PROBABLY ANOTHER 20 CENTS UP OVER AND ABOVE THAT.

Pearson: WELL, LET'S TALK ABOUT THIS CORN MARKET. OBVIOUSLY, THERE HAS BEEN SOME -- THERE'S SOME WEATHER CONCERN HERE. THE CROP IS -- WE'RE A MONTH AWAY FROM THE PLANTER WHEEL STARTING TO TURN AROUND IN MANY PARTS OF THE COUNTRY. AT THIS STAGE OF THE GAME, THERE STILL SEEMS TO BE A LOT OF FARMER HOLDING OF CORN.

Pfitzenmaier: WELL, YOU'VE GOT TWO OR THREE MINOR THINGS GOING FOR THE CORN MARKET. YOU'VE GOT TIGHT FARMER HOLDING, LIKE YOU MENTIONED. THAT'S GIVEN A TIGHT BASIS, GIVEN THE MARKET SOME UPDRAFT. YOU'VE GOT THIS CONCERN ABOUT THE WINTER DROUGHT THAT WE'RE HAVING. THAT'S GIVEN THE MARKET SOME UPDRAFT. YOU'VE HAD THE FUNDS SHORT. THEY'VE BEEN COVERING KIND OF CLOSING OUT THEIR POSITIONS. THAT'S GIVEN IT SOME UP. TO SUSTAIN THAT, THAT'S GOING TO BE VERY DIFFICULT, BECAUSE ON THE OTHER SIDE OF THE COIN, YOU'VE GOT NOT VERY GOOD DEMAND. YOU'VE GOT ULTIMATELY A SITUATION WHERE THE FARMER IS GOING TO HAVE TO SELL THAT STUFF SOMETIME, SO IT'S A SHORT-TERM PROBLEM PROBABLY. AND THOSE THINGS ARE PROBABLY -- AND THEN BIGGER ACREAGE NEXT SUMMER. YOU'VE GOT WEATHER THAT BASICALLY THERE'S NO CORRELATION BETWEEN DRY WINTER WEATHER AND WHAT HAPPENS IN THE SUMMERTIME. SO USING THAT AS A REASON TO RALLY THE MARKET, IT'S NICE TO TALK ABOUT, BUT IT ULTIMATELY DOESN'T MEAN ANYTHING. SO I MEAN I THINK YOU'VE HAD A 14- TO 16-CENT BOUNCE OFF THE LOWS THERE IN THE CORN. I THINK YOU USE THAT ON MARCH CORN. AND ANYTIME IT GETS TO 242, ALL THE WAY UP TO 250, THOSE ARE SELLING OPPORTUNITIES. NEW CROP CORN, SAME THING. ANYTIME YOU BOUNCE UP AGAINST 250, THAT'S A SELLING OPPORTUNITY. I MEAN IF YOU'VE GOT A RALLY THAT'S GIVEN TO YOU BECAUSE OF DRY WEATHER AND A DROUGHT IN FEBRUARY, YOU BETTER TAKE ADVANTAGE OF A LITTLE BIT OF IT.

Pearson: GOOD POINT. WHAT ABOUT ON THE BEANS, TOMM? WE HAD A NICE BOUNCE THERE THIS WEEK.

Pfitzenmaier: THE BEANS, WE'VE GOT A REAL STANDOFF HERE BETWEEN REALLY, REALLY GOOD DEMAND FOR -- ON THE U.S. SIDE AND A REALLY BIG CROP DOWN IN SOUTH AMERICA. YOU KNOW, THE SUPPLY AND DEMAND REPORT THAT CAME OUT THIS WEEK BUMPED THE BRAZILIAN CROP FROM 49 UP TO 51 THIS WEEK, SO THINGS ARE LOOKING PRETTY DARN GOOD DOWN THERE. SO THAT'S THE TRADE-OFF, ONE VERSUS THE OTHER. AND I GUESS WE'LL HAVE TO SEE AS WE GO INTO SPRING, WE'RE ASSUMING THINGS ARE GOING TO GO FINE WITH OUR HARVEST. WELL, REALLY NOT VERY MUCH OF THEIR CROP IS HARVESTED, AND THAT REALLY DOESN'T GET GOING UNTIL THE MIDDLE OF MARCH, TILL THE MIDDLE OF APRIL. SO WE'LL NEED TO HAVE GOOD CONDITIONS AS WE GO THROUGH HARVEST FOR THEM IN ORDER TO SUSTAIN THIS. BUT, YOU KNOW, AS LONG AS THE DEMAND STAYS REALLY GOOD IN THE U.S., WE'RE PROBABLY NOT GOING TO DROP VERY MUCH EITHER.

Pearson: ALL RIGHT.

Pfitzenmaier: NEW CROP BEANS, HOWEVER, HOW COULD ANYBODY GET EXCITED ABOUT SELLING NOVEMBER BEANS IN THAT 520 TO 530 ZONE? YOU COMPARE THAT AND COMPARE PROFITABILITY OF THAT VERSUS 245 TO 250 DECEMBER CORN, AND IT COMES UP LACKING IN A BIG WAY. SO THERE'S PROBABLY SOME PRETTY DECENT UPSIDE IN THAT, AND I CERTAINLY WOULDN'T GET IN A HURRY TO SELL NEW CROP BEANS.

Pearson: ALL RIGHT. LET'S QUICKLY TALK ABOUT THE COTTON MARKET. AGAIN, WE'VE HAD A WEEK WHERE COTTON HAS AGAIN STRENGTHENED. YOU TALKED ABOUT GETTING OVER $50 TO START SCALING UP.

Pfitzenmaier: YEAH. IT'S IN A REALLY NICE LITTLE UPTRENDING CHANNEL THERE. WE JUST KEEP BOUNCING UP AND MAKING NEW HIGHS. YOU COULD CERTAINLY SEE THAT COTTON MARKET BOUNCE ALL THE WAY UP IN THAT 58- TO 60-CENT AREA NOW, SINCE WE BUSTED UP THROUGH THAT RESISTANCE AT 50. SO I GUESS I'D BE A LITTLE PATIENT ON SELLING ANYTHING THERE.

Pearson: ALL RIGHT. LET'S TALK ABOUT THE LIVESTOCK SIDE. FED CATTLE -- CASH CATTLE MARKET SOFTENED UP QUITE A BIT THIS WEEK COMPARED TO LAST WEEK. WE'VE GOT THE CHAIN SLOWING DOWN AND YET, AT THE SAME TIME, CUT-OUT VALUES HAVE BEEN UNDER SOME PRESSURE. WHAT'S AHEAD NEAR TERM FOR THE CATTLE?

Pfitzenmaier: WELL, THE CASH MARKET SOFTENED A LITTLE BIT, BUT IT DIDN'T SOFTEN NEARLY AS MUCH AS THE FUTURES DID. THE FUTURES REALLY GOT HIT PRETTY HARD THIS WEEK. THERE'S A LOT OF CONCERN ABOUT THE WAR, WHETHER THERE'S GOING TO BE REPERCUSSIONS ON THE U.S. IF WE DO START BOMBING OVER THERE, THE U.S. ECONOMY LOOKING A LITTLE SOFT, THE STOCK MARKET DOWN. ALL THAT -- PLUS YOU HAD A HUGE LONG POSITION IN CATTLE BY THE FUNDS. SO THEY SOLD IT OFF PRETTY HARD. HOPEFULLY WE FOUND SOME BASE HERE AND WE CAN MOVE APRIL CATTLE UP IN THAT 78 TO 78.20 AREA. I GUESS I THINK THE FUNDAMENTALS ON THE CATTLE MARKET ARE STILL PRETTY GOOD. THE WEIGHTS ARE FAIRLY WELL UNDER CONTROL. THE NUMBERS AREN'T TOO BAD. WE HAD A CATTLE-ON-FEED REPORT THIS AFTERNOON THAT WAS BASICALLY NEUTRAL, SO IT SHOULDN'T HURT US TOO MUCH. I GUESS, ASSUMING WE DON'T GET HIT BY SOME, YOU KNOW, GLOBAL POLITICAL PROBLEM THAT WE DON'T ANTICIPATE, I THINK THAT CATTLE MARKET IS ULTIMATELY GOING TO BE ALL RIGHT HERE.

Pearson: ALL RIGHT. AND LET'S TALK ABOUT THE HOG MARKET. COMING OFF SUCH A LOUSY YEAR AS WE DID IN 2002 AND SEEING WHERE WE DID CUT NUMBERS BACK -- WE DID CUT BREEDING HERD BACK, WE SEEM TO BE BACKING OFF SOME ON THE HOGS. WHAT'S AHEAD?

Pfitzenmaier: WELL, THE HOGS GOT HIT BY THE SAME FACTORS THAT HAVE HIT THE CATTLE MARKET, AND I THINK THE FUNDAMENTALS FOR THE HOG MARKET ARE JUST FINE, WITH THE ONE EXCEPTION BEING SLAUGHTER. WE JUST KEEP SLAUGHTERING MORE HOGS EVERY WEEK THAN THE USDA REPORT SAID WE WERE GOING TO. SO YOU HAVE TO ASK YOURSELF, IS THAT BECAUSE WE GOT MORE NUMBERS, IS IT BECAUSE WE'VE GOT CANADIAN HOGS COMING IN, IS IT BECAUSE WE'VE GOT A LIQUIDATION OF BREEDING HERD. YOU KNOW, WHAT'S THE CAUSE OF THAT? AND EACH OF THOSE -- THE ANSWER HAS A WHOLE DIFFERENT EFFECT ON THE HOG MARKET, SO WE'RE GOING TO NEED TO WATCH THAT PRETTY CLOSELY. AGAIN, I THINK WE'VE HAD A NICE PULLBACK, $52, PROBABLY FAIRLY GOOD SUPPORT ON APRIL HOGS. YOU GET UP AROUND $58, YOU PROBABLY NEED TO BE SELLING THEM. BUT LIKE I SAID, I THINK THE FUNDAMENTALS ON HOGS ARE STILL FAIRLY SOUND THROUGH THE YEAR.

Pearson: ALL RIGHT. 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 TURNING TO THE "MARKET PLUS" SECTION OF OUR WEB SITE. JOIN US AGAIN NEXT WEEK WHEN WE EXAMINE A LIST OF RURAL INITIATIVES THAT ARE LIKELY TO DEMAND CONGRESSIONAL ATTENTION. UNTIL THEN, I'M MARK PEARSON. THANKS FOR WATCHING. HAVE A GREAT WEEK.

CAPTIONS BY: MIDWEST CAPTIONING DES MOINES, IOWA

Tags: agriculture commodity prices markets news