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Market Plus: Sue Martin

posted on May 17, 2013


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Pearson: This is the Friday, May 17, 2013 version of the Market Plus segment.  Joining us now is Sue Martin.  Sue, welcome back.

Martin: Thank you, Mike. 

Pearson: One of the things we didn't get much to talk about on the show were your price thoughts for new crop corn and beans.  Can you tell us what you're thinking for new crop corn?

Martin: Well, new crop corn, because of the expectation that we're gaining speed finally on the planting and on Monday I suspect that we're like 60% planted, we may be a hair over that, but I'm going to say 60%, 61% planted.  Normal is 80%.  And so we're gaining on it real quick and it doesn't take long.  You give the farmer a chance and with a GPS and the size of this equipment they can put it in the ground pretty fast.  Also the bean plantings will have picked up quite quickly so this has weighed on the corn and is pushing our corn prices back down towards the low they've seen thus far this year on Dec corn.  I believe that somewhere in here as we start to get in $5.11, $5.19 area I'm going to say the $5.11, $5.12 area there is a support shelf there.  But the contract low is $4.99 and that's not much lower.  And maybe the market goes down, tags the contract low first and then turns around.  That could possibly happen.  But in the meantime I believe that once we get the crop planted it can't kill the crop until you get it planted.  And so then we'll start changing because we'll all of a sudden start working these, as we see that our weather this year is less than perfect and certainly we have gyrations or extremes in many areas and you don't grow record crops that way.  And so I suspect that we'll see the Dec corn put in a low and all of a sudden we're going to start to lift and I think we'll put a high in, in late June, possibly early July and then, and they'll get it propped up to where it's at a nice point to come back and sell it and then the market will roll back over and come on down.  I'm not bullish beyond the early part of July.  Beyond that I think we're going into a hard selloff into fall but I think we have an early fall coming this year too.

Pearson: Okay.  Now, building on that, Kevin in Washington is asking, the last time we had you here was right after the USDA released their yield estimates and you mentioned that you felt their yield estimate wasn't particularly close.  Is that still how you feel?  Do you still think they might be a little bit high on the estimate?

Martin: Yeah, I do.  I do.  I have to agree with Dr. Elwin Taylor.  He is at 147I believe and I'm kind of in that ballpark too.  You know, I would say I don't think the yield will be anything better than 150 and that would be tremendous.  You have to remember we're coming off of this past year of 123.1 and so a yield up to 147 is a pretty good bounce back and we're already late getting in, we've had lots of extremes, the eastern Corn Belt is just too wet other than Ohio, of course Ohio and Nebraska have been aggressive on getting their planting done but that speaks to how dry they are.  So we've got so many extremes going, that's not cohesive to having good production so I'm going to stick around that 147 right now to possibly 150.  I think the USDA is too high but they were quick to drop from 163.1 in this last report and that was probably because of the lateness.  Once we get in, get the crop in it's going to be interesting to see what they come up with at the end of June.

Pearson: Certainly.  As we start to look at more nearby weather patterns and see what's going on.

Martin: Exactly.  And one more thing on this new crop corn, people just need to remember there's this huge gap from about $6.65 up to $7.10, $7.12.  That will be filled at some time so they need to kind of keep that in the back of their mind and if we should get corn down under $4.99, $4.50, $4.37, $4.08 is extreme, don’t' think you're going anything under that, but that's from here into fall, they're going to want to make sure that somewhere along the way if we get too cheap they might want to be buying some calls back to protect their crop insurance.

Pearson: Certainly but look for that high in the mid-summer area for corn.

Martin: I think so.  Yeah, by the end of the first week of July but I kind of think it could be the last half of June too.

Pearson: Well now let's look at soybeans.  What are your thoughts there?

Martin: Well, the soybeans are pretty much in the same mode but the one thing, the reason I said I wouldn't be selling November beans with wooden nickels is because our low is $11.84 and three-quarters.  I have wave four at around $11.24 and three-quarters and a wave five at $11.20.  And these are major, major counts, wave counts and they'll be like the brick Wall of China and the market will not, in my opinion, fall through that and they might not even get close to that.  Maybe they get back down and they get down around $11.50 area or something like that and they find support there.  If they do I want to buy them.  I think they're too cheap, too soon and I think the market is going to put some premium in here to give the person who wants to sell this market a little bit of extra room to make money on the down side.

Pearson: Alright.  Now we do have a couple of questions.  John in Missouri and Jason in Iowa, they're both concerned about wheat acres that are failed or failing being moved into soybeans and adding that to the acreage count.  Is that going to be a major impact on price as we roll towards fall do you think?

Martin: I think that's been expected.  I think that the USDA has expected this.  What they might find is because of the lateness that we've had here with the crops, with getting stuff in and everything, they might find that just because of the lateness of getting crops in, also the lateness of harvesting wheat, they're going to find that maybe there aren't going to be as many bean acres on the back side of that wheat.

Pearson: Okay, less than people were anticipating when planting season started.

Martin: Exactly.

Pearson: Well let's take a look at cotton prices, we didn't get a chance to talk cotton on the show.  What are your thoughts there?  We've seen a little bit down this week, relatively stable, is that going to continue do you think for cotton producers?

Martin: Well, I think demand for cotton seems to be pretty good.  I think that when you look at cotton the weather hasn't been super great there either and so consequently I think that Texas has certainly had its share of issues for cotton producers and I think that's been supportive to this market.  Still, it's another one of these markets that kind of just is percolating along.  I can't even say it enough how funky this year seems to be.  We're losing a lot of speculative traders going over to the stock market and it's showing its hand as to what it does for us.  We need that speculator in our commodities because they are the risk-taker and they move the markets for us.  Sometimes we don't like it when it's against us but it sure is sweet when they're there with us.  So for the cotton producer I would say if you get a little bit of a lift, fine.  Again, I would probably look at that last part of June into early July and then I'd sell it.  Usually there's a high right around in there that I would sell.  But cotton is kind of a market that at the moment nobody is too much in love with.

Pearson: Alright, just going to be hanging out probably.  Now, speaking of funky markets, we mentioned this on the show, you talked about the spread between the cash market and the futures market in cattle.  That's been a topic on a lot of people's minds lately.  And you mentioned that it is hinging on meat demand, we're not seeing it, it's picking up late.  Ethan in Nebraska and Dale in Springfield, Illinois would like you to address a little bit what's going on with the demand situation for meat in general but beef in particular domestically.  What are we seeing?  When is that going to pick up?

Martin: Well, I think it's starting to pick up on the beef, on the meat side.  That is why our cutout is near all-time highs.  So it is starting to do that but that cutout might not be super far from peaking out and starting back down.  The problem we need to keep, we really need to keep an eye on for the meat market -- you know, the East Coast has a big population and they utilize a lot of beef out there in the cities, they go to the restaurants and whatever.  But the problem is we've been hearing this talk about the cicada population this year and there's 600 to 1 estimate of 600 cicadas to every human, that's a lot of those things flying around.  And, you know, how many people are going to want to sit in those outside restaurants or outside grilling in their backyard if you've got those things flying around?  And they last, their cycle is four to six weeks.  They've already been starting to come out in North Carolina and it will work its way north.  I just wonder if that isn't going to hurt beef demand a little bit.

Pearson: Might be one of those factors that people aren't considering but certainly who wants to stand by the grill with that humming in your ear --

Martin: It doesn't sound -- they're wicked looking, they aren’t so pretty.

Pearson: So definitely something to keep an eye on.

Martin: I think so.

Pearson: Well, thanks so much, Sue.  Are there any other thoughts on the market you'd like to talk about with us right now?

Martin: Well, I think patience.  This year is one for the record books probably to have patience and try to work with the market a little bit here.  The basis, you know, it's actually a hedger's dream.  If you look at the grain markets and was short there and had yourself protected well, the markets yes they have come up, but the cash has come up so much faster and you can sell the cash and cover your shorts.  Cattle, same thing.  The hog market is about the next one that's going to start doing something like this where it's going to start to roll over and I think hog producers need to keep their eye on that hog market and be getting hedges on probably all the way out in through the fall and on into the turn of the year.  The feeder market I think still has a little bit lower to go.  I think that August feeders could probably drop another maybe $4.00 or so and then maybe they'll start to catch.  In the fat market I kind of like October cattle but it seems like I've got so much other negative stuff going on that I'm a little leery but the cattle market actually has been a hedger's dream.  You know, if you were short the board it went down and the cash went up, you don't get that very often.

Pearson: Right, it's a spread in your favor, certainly.

Martin: Exactly.

Pearson: Well, thank you so much, Sue.

Martin: Thank you.

Pearson: Appreciate you being with us here this week.  And thanks to all of you for sending in your questions via Facebook and Twitter.  Please continue to do so and we'll continue to have experts answer them for you.  Thanks for watching us and have a great week.


Tags: agriculture analysis cattle commodity prices corn economy grains hogs markets Mike Pearson news soybeans Sue Martin wheat