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Market Plus: May 27, 2011: Sue Martin, market analyst

posted on May 27, 2011

Market Plus: May 27, 2011: Sue Martin, market analyst

Pearson: This is the Friday, May 27, 2011 version of Market Plus. Thanks for joining us here at our Market to Market website. With us this week one of our popular market analysts, Sue Martin, and Sue as we're going to this interesting period, we're trying to get a crop in, and I want to talk about wheat and corn first. We've got problems as you pointed out in the show. First of all up in Canada we've got issues up there, terrible drought in the Panhandle and the Plains, wet weather in Southern Illinois, Indiana, and Ohio. There is a lot of challenges to this wheat crop and prices are responding. But it is high enough?

Martin: Well, I don't think it is. When I look at Kansas City wheat I think we could see new highs on Kansas City wheat and possibly get up towards eleven dollars. Even Chicago wheat, I think, will come along with it and also probably get to those levels also. In other words new highs to where we get up over ten dollars again. The one thing about the wheat and the corn is that especially like with the corn this weather has been so horrible that we're loosing our fertilizer in Indiana and Ohio these areas where they have been so wet. Then on top of it they are mudding it in, pushing it in, these are not conducive conditions to have good crops and we can't afford to have poor yields. Not to mention we're loosing some acres anyway and I'm just kind of things that we're not picking up near - we're not in the good states like Nebraska. We maybe picked up some added corn acres there at the expense of beans but in Iowa I don't think we did much because farmers were so intense on getting that crop in, moving right on in to beans, and they were happy to have it done.

Martin: And we've also seen a lot of areas move to shorter variety season corn. That does not yield well. I mean it yields ok. It just isn't like the long season. So I think we've got issues here that say we're going to see a less of a yield and the other thing is, is that when you look at over the years and you have late planted crops, La Nina type crops, you normally don't have trend line and above yields, you have below. Well this year we're very late planted. We're really getting late and in the meantime everybody might be looking back and saying well but in 2009 we were just like this and we ended up with a super crop. Yes we did but the weather turned very kind. We kept a cool summer and that kind of kept the crop - building on more yields slowly. So it racked on the yield and then we were blessed with no killing freeze timely. I mean we had a nice delayed fall therefore the crop came home. The odds of that is like pry one in a million happening again.

Martin: This year we have got to be careful. I'm almost more worried, rather than worrying about a drought happening in major corn states, I'm more worried about an early ending of our crop year and it is so cool and I fear that if we do just turn back dry but we stay cool we're going to be very open to having a chance for an early frost freeze. And I've been listening to Alan Taylor and I have a great respect for him, and I've looked at his concerns for this year and I don't know if he is as concerned about drought either as he maybe started that way but it is the concern of what is happening so similar to the year of 1974 and we seem to be patterning that way.

Martin: We really have to watch the Southern Oscillation Index as to what it is doing. The corn market, I think it is interesting, Dec corn since it put its low end on - on June 29, 2010 every month we have rallied Dec corn into the first two days or so of trading of a new month other than one and that was October. Otherwise we have always - and the last seven months consecutively we have rallied into the first/second whatever of trading days of a new month and this one looks like it is not going to be any different and I think that June is so typical to put highs I so many times in on corn.

Pearson: All right. So higher prices corn and wheat.

Martin: Absolutely.

Pearson: What about hogs?

Martin: Well the hog market the one thing that I think that we have to keep an eye on is that the type of situation we've got going now is not going to be, even in cattle, is not allowing for expansion and when you look at the hog market. And you've got this market trying to find a low and we have ratcheted it up into a good plateau and I think we have hit a new area that we're going to be seeing prices of pork trade. You have tremendous demand by China for pork and other parts of Asia as well. I think this hog market, if it starts to pull back much that is fine, but at some point these deferred contracts like even as you're going towards Dec and Feb of next year I think are going to be very good contracts in all meats.

Martin: The one fear we have to watch and the only thing I can fear is our concern about, well maybe there is two things, one would be energy prices, what crude does, and that is predicted to go higher by Goldman Sachs and the other thing is the fear of a meltdown overseas in Europe and that it rubs back off into our economy. I'm kind of taking that one and putting back a little bit on the burner but we certainly have to keep our eyes open but I am positive long term.

Pearson: Sue Martin, always great to have you join us. Sue Martin joins us regularly here on Market to Market. Thank you for joining us on Market Plus and from all of us on Market to Market, I'm Mark Pearson, thanks for watching and have a very happy and safe Memorial Day weekend.


Tags: agriculture commodity prices markets news