Iowa Public Television


Market Plus: Virgil Robinson

posted on November 21, 2012

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Pearson: This is the Friday, November 23rd, 2012 version of the Market Plus segment.  Joining us now is Virgil Robinson.  Virgil, welcome back.

Robinson: Thank you, Mike.

Pearson: On the show we got to talking a little bit about your thoughts on both the United States economy and the global economy at large.  And we didn't get a chance to really expand on it.  Is there anything else there you'd like to add?

Robinson: Well, we didn't speak to the issue of Europe.  But it appears to me, Mike, given what I know today that all central banks, including the European Central Bank, are willing and I think committed to assisting at this point particularly Spain and Italy with their fiscal issues.  And I think, as mentioned on the show, there are economies including ours that show signs of pent up demand that I think have taken shape here over the last four years and we're beginning now to see parts of that develop, specifically housing and autos.  Okay.  And historically those are the two that lead our economy and I think they are in position now to move higher.  The fiscal cliff issue, very subjective, very debatable but as mentioned I think the time for using all kinds of different possibilities has come and gone.  We need to address that issue.  We need to put together a plan.  There needs to be compromise.  Brinkmanship aside, it's time to move forward and I think that will occur.  You're probably too young to remember this, but the famous quote from Al Michaels in the Russian-U.S. hockey game, do you believe in miracles?  I do.  I think we're on the threshold of one in the very near future.

Pearson: All right.  Now if we continue to see the economy strengthen both in the U.S., China and Europe, export demand you think is going to pick up as we roll through this next year?

Robinson: Yeah, it already has in China and exports, aside from our corn issue, have been pretty brisk and strong here in the United States despite the fact the dollar has strengthened.  So yes, I do.  I think the two leading economies in 2013 and 2014 are going to be the U.S. and China and I think that will, in fact, move global GDPs higher.  Now perhaps not at break neck speed but I do sense growth globally in 2013 and forward.

Pearson: The U.S. and China will be the pony motor that starts the big global engine.

Robinson: That would be my opinion.

Pearson: All right.  Since we've been talking politics a little bit we had a question here from Kent in Parma, Idaho.  He wants to know if you have an opinion regarding what effect a late passage of the farm bill, say just before the first of the New Year or worse yet no farm bill, might have on grower's crop plans for next year?  And the he mentions the fiscal cliff is getting plenty of attention, the farm bill isn't and milk producers are already completely in limbo.  What are your thoughts on that?

Robinson: Well, I'm kind of driven by economics.  So when I look at budgets that have been developed by the likes of Iowa State and the University of Illinois and Purdue and I look at various crops including corn, soybeans and wheat and they, all at this point, point to profitability I think there will be an effort made to grow each of those crops in pretty significant proportion.  Now the question that remains, at least in my mind, is how might insurance be affected by lack of a farm bill or a new farm bill?  Insurance, in my opinion, is affordable, it's budgetable and as long as there's profitability in corn, soybean and wheat production I think it will proceed forward.  The farm bill, I wish I could help the gentleman and tell him specifically what will develop there.  Commodity groups are probably his best link.

Pearson: As far as getting information on where it's all headed?

Robinson: Yes, yes that would be my opinion.

Pearson: All right.  Nick in eastern Iowa is wondering, we haven't seen much moisture in Iowa and as you go farther west.  That western Corn Belt has been dry.  He is asking, when does the market start to realize we're still dry?  If weather stays the same for the next few months is that going to kind of be a tip off as to what this next year might bring?

Robinson: Yeah, as mentioned, I think that's probably why these new crop budgets are as profitable as they are, or certainly one of the reasons.  We have areas that are anywhere from six to fifteen inches in terms of deficit versus normal.  My opinion would be in the western part of the Corn Belt, including much of Iowa and Missouri, parts of Minnesota, that will not be recharged through the winter.  It would be very, very unusual if it were.  So as we move forward here the weather factor will continue to be a primary point of interest and a strong fundamental, underlying fundamental factor.  There are people concerned about the drought, don't think there aren't, but at present many are mesmerized by other factors in the market and we have discussed some of them that are macro-inclined.  Don't lose, don't lose fact or don't lose perspective regarding the concern that exists here in the United States weather wise. 

Pearson: All right.  And with that in mind, with the dryness in mind I believe the USDA number for next year's corn acreage is 97 million acres, 98 million.

Robinson: They'll put together an estimate for budget purposes in February, February 21st and 22nd at their annual ag outlook forum.  Prior to that there will be no official USDA guesstimate until spring of 2013.  You might be referring to some of the privates like perhaps Informa.

Pearson: I think that's what I thinking of.  Now, the dryness, that is probably going to have a bigger effect on crop plans next year than the farm bill, would you say?

Robinson: Well, again, as long as the economics are as strong as they are I think farmers will continue with rotation with their cropping plans provided they can acquire the seed.  I don't think liquidity or availability of credit is an issue.  I think all are in pretty good position there, Mike.  So the farm bill, as mentioned, for the purpose of deferring here I'm going to defer them to their local commodity groups for more of a pipe than I can provide.

Pearson: You bet.  Virgil, I appreciate you being on.  Anything else you'd like to add before we break for Thanksgiving?

Robinson: No, I think, Mike, again, there are a number of opportunities for the U.S. agricultural producer.  It's going to require, however, a keen sense of recognizing those opportunities and then making their decision.  I choose to capture some of that margin.  I defer to a later date.

Pearson: Be patient and be prudent.

Robinson: Patience to the extent your pocketbook will permit because we've just brought to their attention there are opportunities right now if they so choose.

Pearson: You bet.  Well, thank you so much, Virgil, really appreciate having you here.

Robinson: Thank you.

Pearson: And thank you so much for watching and sending in your questions on Twitter and Facebook.  We really appreciate it and we'll make sure we get to more of them with each next show.  Hope you have a great Thanksgiving weekend.  Take care.

Tags: agriculture cattle commodity prices corn economy hogs markets Mike Pearson news soybeans Virgil Robinson wheat