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Market Plus: Jamey Kohake

posted on November 15, 2013


Pearson: This is the Friday, November 15, 2013 version of the Market Plus segment. Joining us now is Jamey Kohake. Jamey, welcome back.

Kohake: Thank you Mike.

Pearson: We have a lot of great questions from our follower on Facebook and Twitter and let's start with beans. As we were talking earlier beans have some really good fundamentals supporting the market. We got a lot of folks who are concerned. Ernest in Dunbar, Nebraska is asking sell beans now or hold out to see what Brazil has in store?

Kohake: I have been on record at least once on here I know of saying sell beans and I am still sticking with that recommendation. The market as been inverted and to me that signals you know the market wants your crop right now, don't store it. So, I have been advising to sell beans. Now if we would get into a dire weather situation in South America, exports continue to you know ramp up from China, re-ownership is always an option and I am not against that buying some calls or buying the board but I am still in a sell mode here with beans. There are no weather situations going on right now worldwide especially in South America for the beans that I think we are going to go to 14 or 15 or anything like that right now. Weather could change next week but right now South American is sitting very well and I still like selling rallies here in the nearbys and like I said on the show $11.90 for new crop, I think is a great place to get started to hold into spring.

Pearson: Especially if we do see the yields increase. If we see some corn on corn producers switch to beans.

Kohake: Yes. I think the fringe acres will go to beans maybe not you know regular rotations -- with that on corn but the fringe acres I think will be beans for sure.

Pearson: Now to follow that up a friend of the show Robert in Columbus Junction is asking how long do I hold onto 2013 crop if you got any left and when do I start selling 2014 beans and corn?

Kohake: I think we should be starting or have started on the new crop 2014 corn and beans $4.90, $11.90 are the numbers I like. Corn maybe a little too you know risky top side maybe go to $4.80/4.75 but I think we should be started on both of those contracts.

Pearson: Keep an eye on those numbers as we get into rallies and -

Kohake: Yes, still sell the old crop. The corn has had some carry work out of it. We have seen roughly two cents come out of the spreads at times. So there is some demand needed in corn. Ethanol basis levels are very good yet right now. So, I would take advantage of starting to price some of this you know JFM, Jan, Feb, March on rallies up around $4.55 for the March contract.

Pearson: All right. Now Austin has - it is along question but is an important question that I know a lot of people are talking about every time we get a USDA Report. And he says with corn exports appearing to be picking up is a 200 million bushel increase a reasonable number for an export demand increase in the January report and if so could we see that number offset on the supply side under the bigger crops get bigger mantra.

Kohake: I say yes and yes. These USDA reports are getting harder and harder to figure out and obviously to trade off of. It seems like the USDA might have a number that they want to get to as a final tally and the left side of the ledger and the right side have to be offset. They just juggle the numbers back and forth. One example from that would be the acreage number from last week. They finally adjusted the acres in November for crying out loud. I mean where were we in August? I mean just get in the car and drive up to Highway 3 and take a tour. So, I would agree yes the higher exports would be offset probably by feed somewhere.

Pearson: Now as we look into 2014 past the January report and on into the year as this reduction in the ethanol mandate the RFS, as that drops how is that going to impact our carry outs for 2014?

Kohake: Yes, we could obviously be that two billion mark and stuck here around $4.00 to $4.40 corn you know for quite awhile until we run into weather scare sometime next summer. Like I said during the show, I think the timing on this was terrible. Why didn't we do it you know two years ago, a year ago? And also I mean if they are worried about the prices got too high, if that is one of the reasons they are not, I am not sure, but if you go back to where George Bush signed this mandate into law and where we are now the price of corn is within a dime of where George Bush signed the bill at. So, I mean yes we got too high maybe you know a year or two ago but from where George Bush sat in the Oval Office and signed that bill we are pretty much at the same price of corn.

Pearson: Wow. That's impressive. Now Phil in Ontario is asking is the USDA overstating feed demand?

Kohake: I think probably so. I mean smaller hog herd, cattle numbers too tight. So, I think that number will be adjusted not just once, I think several times.

Pearson: Ok. Now speaking of feed demand, we have got a question from Wayne in Williams, Iowa. He says what is the top in June cattle?

Kohake: I think you go $139 area. You know that area but I would not be sitting back to get a hedge on up there. I would be looking at your margins and you know locking something in and maybe buying some calls after you lock your margins in. I think it is going to be tough for these summer contracts to push up in there and be just short quick pop but I would be more concerned locking your margin in than reowning.

Pearson: Do you think it will be a short quick pop even as we head into demand season with smaller cow herd and all the other issues -- cattle?

Kohake: I think that will be factored in probably a lot by then if you look at the seasonals, you run into some weakness from you know late spring to early fall.

Pearson: Jamey before we let you go is there a trade of the week out there that looks especially good to you?

Kohake: I like the hogs at -- December marked the adding shorts on. I don't like selling down here but if we get a pop I would sell back into the nearbys.

Pearson: All right. Thanks for being with us tonight, Jamey and thanks to all of you for watching and thanks for sending in your questions via Facebook and Twitter. Please continue to do so and we'll continue to get expert analysis and answers for you. Thanks for watching and have a great week.


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