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Market Plus: Jamey Kohake

posted on September 27, 2013


Pearson: This is the Friday, September 27, 2013 version of the Market Plus segment.  Joining us now is Jamey Kohake.  Jamey, welcome back.

Kohake: Thank you, Mike.

Pearson: We've got a number of great questions here from our viewers on Facebook and Twitter.  Josh has a question.  Coming back to look at the hog report and where we're at with hogs, he is asking, how will the spread of this recent disease, PEDV and PRRS affect hog herds growing forward?  What is the market taking into consideration as we watch the spread of this disease?

Kohake: I think a lot of that was priced in here the last week or two when it came back in the news again.  I know a lot of producers here just across the state of Iowa really have taken a beating with their numbers.  But I think a lot of it is in the market right now and priced into the market so I wouldn't be getting too greedy and think we're going to 105 or something.  I would put some protection on if you can lock in a profit and take advantage of this rally.  You could knock it back pretty quick and have to have some bullish news coming at year end to put new highs in.

Pearson: And are we kind of anticipating this disease to be recurring until we get a decent vaccine?  I mean, are the large losses this year in numbers going to be repeated probably until we can find some way to cure it or contain it?

Kohake: Probably on a smaller scale, I don't think probably near as large but yeah, I could see it popping up sporadically, maybe like a Mad Cow deal, every three to four years, probably a little bit less than this on the hogs, maybe a little more ample time period but something like that, yeah.

Pearson: Okay.  Alright.  Now, as we take a look at the wheat market, Tim in Crookston, Minnesota is asking, and we've mentioned this briefly on the show, but what is with the fire under the wheat market this week?  And what sales targets should we be looking at for hard red spring wheat?

Kohake: Okay.  Yeah, the first part would be Argentina, would be the first catalyst.  They have had a freeze, shorter crop, expectations that our demand is going to increase.  China wheat price is at all-time highs.  Demand is shifting to us off of that.  Russia with production issues as well.  So a lot of talk in the world market that we will get new demand plus our weak dollar.  Dollar has really fell out of bed again with this tapering talk, debt talk wrangling across D.C. has really softened the dollar and that has helped that as well too.

Pearson: Now, where is the dollar falling to roughly?

Kohake: We're down just a tad bit above 80.  I would sell rallies back to 81, buy the Euro, sell a dollar here short-term until this fighting in D.C. gets resolved.  Right now it looks to really tangle on until middle of October when the debt deal has to be done and they're running the clock out again I'm pretty sure to the 23rd hour and 59 seconds.

Pearson: As we've seen them do time and time again over the past number of years.  Alright.  And then what sort of sales targets should you be looking at in the hard red spring market?

Kohake: That is a tougher number there.  The market where the liquidity is, where the fund money is, is in the Chicago contract, the soft wheat number and the number there would be 600, 700 a week is what we need.  Top of my head I don't actually know, I don't trade a lot of the Minneapolis wheat real actively but I can get that and tweet it back to him.

Pearson: Okay.  Alright.  As we take a look, Austin in South Dakota talking corn puts.  Is it time to take profit on our valuable corn put options or is the harvest low still in front of us?

Kohake: That's a great question.  Had a lot of talk this week about that.  I would take some profits.  Technically this thing does not want to break down.  We've had bearish news, like we said on the show, better than expected yield talk and we still can't break this $4.45 mark pretty much.  I think you could push back to $4.70, start back over again on a lower leg.  But yeah, I don't see anything wrong with banking some profits on half of those or a third of those.  Look to put them back on, on a rally to $4.70.

Pearson: Okay.  And then take advantage -- and then perhaps prepare to begin that downturn.

Kohake: Yeah, downturn there depending on what the rest of harvest looks like.  I think the best yields are going to be this first third of the crop.  I think the later harvest could be the worst and we have to fall apart here soon. But if he does have large production and on-farm storage I would look at selling the March just as a carry play, store the corn, the market is paying you a little bit of storage and just sell the March there and not have to worry about this front month December maybe getting jerked around with yield talk and is it going to rain tomorrow or not and harvest delayed and all that.

Pearson: Now, as we're talking, reaching out into the middle of October, looking at the news reports coming out, is the trade still anticipating more bullish numbers for corn on the October USDA WASDE report?

Kohake: I don't think so.  I think it would be more neutral as we're leaning at right now.  But I think the report tomorrow, I'm sorry, Monday, could be more of a shaker.  October still lagging a little bit behind harvest on a five or ten year average but 14 billion number I think will be the key there.  Yields, 158, I think that's got to be the top right now, low end could be some numbers at 153.  I'm at 156 right now.  But I think the report Monday -- historically the last 15 years, Monday the last 13 and 15 has really been a shaker.  And I think it could move the market the first couple of hours.  I don't think it's a game changer --

Pearson: Not a limit up, limit down day?

Kohake: Not holding there just because harvest is progressing.  The weather looks great past Saturday afternoon.

Pearson: Alright.  Now, kind of looking at general conditions of the crop, you get a lot of wind chill time -- Mitch in Wisconsin says there's some sick looking corn in the western part of the dairy state.  I was on I80 coming through Iowa, saw a lot of corn that looked like it was blown down, heard similar reports in Illinois.  What are you hearing?  What are you seeing?  What does the damage look like in the corn crop?

Kohake: I don't think the market is playing the damage at all.  Just here this last storm a week and a half, two weeks ago you could take a ruler and put one end at Ames and the other end south of Omaha and put a diagonal line and all that wind damage there plus out by where you live, the market I don't think is trading that, I don’t think they care right now.  I think it will have to come in the final production numbers is where it's at and I think the market is assuming too that the eastern Corn Belt, which is supposed to be the best, will make up for any crop losses out here on a big scale.

Pearson: Sure, because we are looking at pockets of dryness and downed corn versus record crops in Ohio, Indiana --

Kohake: Illinois, yeah, I mean there was some early corn, 220 plus out east.  It's not widespread, it's still a very small sample size done but it's not like it was last year where you've got two-thirds of the Corn Belt burnt to a crisp.

Pearson: Alright.  Now, Val in Iowa is asking just a general question, I'm sure it's on a lot of producers' minds, especially if they haven't sold anything coming into harvest season.  Give us a thumbnail, fall marketing strategy.

Kohake: I would sell beans, look to reown.  If we can run in some tight carryout numbers, if exports stay good, big export number this week but that was expected because China loaded the boats up big time and bought some even though there's no price on them, there's no destination time, it's an open window contract but they did buy a huge amount.  But if we can keep exports steady, look to reown later and store corn until March if you've got on-farm storage.  But beans, there's no carry at all.

Pearson: Alright.  Now, before we let you go, the dairy market in the front month we're down about 15 cents.  Where do you see dairy headed?

Kohake: I don't see dairy doing a whole lot right now.  We've got a nice little range in the dairy market and it's not doing a whole lot.  There is a lot of talk that we could scale back production to help support the market.  But other than that I don't see much out there.  I would sell rallies.  I'd sell December up around $17.50 is what I'd do right now until we get some fresh news.

Pearson: Alright.  And then do you have a trade of the week?  Anything looking good at you for this next week?

Kohake: I would buy December cattle $130 area if we get a setback and I would sell hog calls, you know, get some deep out of the money hog calls.  I think this could be maybe a start of a leg lower with some fund money coming out.

Pearson: Alright.  Thank you so much, Jamey, appreciate you being with us.  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 get expert analysis for you.  Thanks for watching and have a great week.


Tags: acreage agriculture analysis basis commodity prices corn economy Jamey Kohake markets midwest new crop grain soybeans USDA weather wheat