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Market Plus: Sue Martin

posted on March 7, 2014


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Pearson: This is the Friday, March 7, 2014 version of the Market Plus segment. Joining us now is Sue Martin. Sue, welcome back.

Martin: Thank you Mike.

Pearson: On the show I had to cut you off but we were talking hog pricing. You mentioned that Monday Russia begins to accept hogs or pork for the United States where do you see the market going beyond front month April?

Martin: Well, when I look at the June contract I do these wave count projections and they’re not really an Elliott Wave per sea but a wave four which is usually like the brick Wall of China, a wave four is 118, I think it is 118.80 and wave five which we, I don't think I have ever seen a wave five in hogs, but a wave five would be 131.50/40 something like that. Since we have already done a wave four what is interesting is the move has been coming so quickly and you know when you look at the Ukraine, what do they do? They eat a lot of pork and Russia, a lot of pork. And you know a situation also with Russia is if you remember the Olympics the weather was abnormal. It was very warm, snow pack in the mountains was not what they were needing for skiing or would have liked. Let's put it that way. So, I think that what was interesting was when Russia dropped the ban of pork imports from the U.S. and they are to start March 10th that next week they also went to the European Commission and also dropped the ban with imports of European pork as well. I think they need pork and food but I also kind of think they were sort of thinking about what was going to happen, and that they were going to do some aggression. I think there was a little more under the table known.  But all that said when you look at the hog market; we are looking at this you know the normal time of the year for your highs in hogs usually tends to be in the June to the first week of July usually around the 7/8th of July. And it seems like here we are already at a wave four in the June hogs and we are just into March. It makes me wonder what is going to happen here and maybe we have a nice healthy little correction before we move on higher. I am not going to say you can't say 130, you might but I would suspect that is after a break follows here if we are going to see that. As far as the PED virus we are heading towards what we hope is warmer temperatures and moderating weather. So, I would think that that virus would tend to kind of settle down a little bit in a -- maybe to some degree but we are certainly a year into this and not been able to get it stopped yet and now you have got Canada with it although so far their number of cases isn't all that aggressive yet, but it wasn't with us at first either. So, we have to keep that in mind and they haven't got a solution to it yet or a vaccination. So, I think this hog market is one that is going to be one that is going to percolate off and on, but as far as number of pigs we are certainly losing a fair amount and you know those are future mouths to feed corn and soy meal to.

Pearson: That is right. That is right. So, we are going to have to be feeding them a lot heavier in order to make up for the lost mouths.

Martin: And you know those last pounds take a lot of feed.

Pearson: Yes, they do. Now we have got - you mentioned moderating weather right? Now we have got a number of folks who are concerned about the weather particularly the frost depth we are seeing throughout the Corn Belt. In some places we are looking three to four feet thick of frost. We are probably looking at a late planting season. Is the market taking that into consideration yet?

Martin: Yes it is. It is starting to think about it because we are into March and at the end of March we will have our first perspective plantings report. So it is thinking about it. The one thing I think that is interesting is it depends on what weather service you look at. I have seen some weather maps that show in the month of April that we should see a very marked change and be very warm above normal temps and below normal precip in much of the country. Just totally opposite of what you would normally think. If that prevails planting is going to come off very quickly in the Western Corn Belt. The Eastern may still lag a little bit but they will get going too. My biggest fear is that the Eastern Corn Belt because of all the snow pack and the melting that they are going to go through and the ice coming off of the Great Lakes Region, you name it, I fear that they could have a cool late spring. And with a cool late spring if they have a shallow rooted system and then you set up a Bermuda high in the southeast which we could do this year and it backs up that Eastern Corn Belt is where they are going to be susceptible to a flash drought. Conversely the Western Corn Belt, you know you look at Nebraska and they have been having temperatures fluctuating all over the place 50s, 60s, you name it, this weekend they are to be in the 60s but they are also very dry. They don't have a speck of snow but yet you look at the Rockies, there is a really good snow pack in the Rockies. That has got to melt off and last fall we had those floods in Colorado which filled the aquifers and the reservoirs for the, what is it the Platte River Valley? And that feeds a lot of irrigation in Nebraska and down into Kansas. So, I think there is some good things for the Western Corn Belt and so we will see just how well we handle this. But no doubt about it with all that frost, you know like in Iowa, for example, and Minnesota boy and even into Missouri, that frost in the ground we are not going to get a lot of benefit out of this snow when it melts.

Pearson: Yes, that's true. We are going to see it all going down the river.

Martin: That's right.

Pearson: Now before we let you go there was an interesting story over these past 10 days with the oat market. Particularly in Canada and the inability to get oats moved and we saw tremendous rally and we don't talk oats very much on Market to Market but I was hoping to get your thoughts. Are we starting to come back down in pricing? What happened in that market?

Martin: Well, oats was limit down today and I think first off oats have been record high over the price of corn. Record high. You know the trade has been caught short because they just didn't think that oats could do this and the logistics up in Canada have not been so that the you know shale has been commanding all the rail and so they haven't gotten oats move. So, they had the Ag Ministry and Logistics met on Friday to talk about this and to come up with a solution and rail was their focus and I think that sent the oat markets you know south and you have got government reports coming up Monday although, you know they don't pay attention much to oats on that, but the one thing I want to caution people from doing, investors from doing, is saying ok, I have been caught on the March, I'll just roll these shorts to May, eventually I will get my money and then they roll eventually to July. But I want to caution, let's put it this way, the last two times we have had this occur both times anyone sticking around and doing that rolling out got in trouble.

Pearson: All right. Keep an eye on it and handle it carefully.

Martin: Yes.

Pearson: All right. Sue, we are going to let you go. Thanks for taking the time to be with us tonight.

Martin: Thank you.

Pearson: And thanks to all of you for sending in your questions via Facebook and Twitter. Please continue to do so and we will continue to get expert analysis right to you. Thanks for watching and have a great week.


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