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Market Plus: Mar 18, 2011

posted on March 18, 2011


Market Plus: Mar 18, 2011 Pearson: This is the Friday, March 18, 2011 version of Market Plus. Thanks for joining us here at our Market to Market Website. I'm Mark Pearson, with us this week one of our regular market analysis Sue Martin. Sue good to have you here. A wild week in the markets. We talked about on the show huge volatility. You don't think it's going to subside here for awhile and based on what you've seen the past year probably going to be proven correct.

Pearson: I want to talk about two key commodities important to the audience of this program and that's corn and soybeans. Both of them were subject to some China rumors which you addressed on the show. One being some additional China buying and that made you pretty friendly towards corn. Made the market pretty friendly I should say.

Martin: Yes, it did. I think that we've been long awaiting for China to come in and buy corn. There's been talk that they were going to maybe drop the one percent import tariff and a thirteen percent back tax but we haven't heard a confirmation on that, but in the meantime there is some thought to that possible some of this corn maybe headed into Japan indirectly. And which I find rather interesting because I would think Japan would just step up and buy it themselves. The interesting thing is Japan being the third largest economy in the world, you know, they've got a lot of money that's going to be going out. They're going to need everything lumber - you name it. They're going to need a lot of things and in the meantime they're spending a lot of money and unfortunately their production that brings money is not going to be as aggressive as it was. So, that's a concern for them. They're bringing money home. It is causing the dollar to drop as they cash in investments here in the U.S. and then of course causing the end to push got against World War II highs. So it's causing the end to push up against it and that is creating the dollar to come down and with that dollar being down after a huge break like we've seen boy, world buyers could just get wonderful bargains, I believe, and they stepped up to the plate and bought the market.

Martin: Now the corn I'm a little apprehensive on old crop corn because of what's happened over the last forty-two years and some might say well, this time is different. I don't think so because its been so aggressive and so accurate in the last forty-two years I would have to say and there is no guarantees in this business but I would have to say go ahead and make cash sales. Make some new crop cash sales and then turn around and buy say a 660 call and sell and 820 or an 840 call in December only move those call options into September because if we're going to have a weather market you're going to know it by then. And so I think that we need to use this market especially in the old. While these can still have opportunity I am fearing that this July corn is trapping people and getting everybody bulled up and I'm wondering -- and we've done all this without a weather market. So just think what it is going to be like if we hit a weather market. But here is the key, you know, if you listen to Harry Hillacker, I read his comments this week and the Fort Dodge Messenger Paper, and doesn't sound like he is looking for a hot summer. It sounds like he is looking for a cool summer and so a cool dry summer? Something like that? Well, that doesn't bare a bull market.

Pearson: Harry Hillacker is the state climatologist for Iowa for people that don't know who Harry is. And he's a guy that a lot of people pay attention to when it comes to weather trends.

Pearson: All right. So soybeans - now you were gone to the neutral territory on corn which is rare for Sue and then you are friendly still on the soybeans based on what's going on right now.

Martin: Well, that's true and the thing is if this crop continues - see I think what is holding the beans back has been the fact that everybody has been so hyped up about the South American crop, how big it was going to get, new record, that type of thing, and I think that that's somewhat settled the bean market down. We also have to remember that we're at 92.3 percent of our export sales already made that the USDA targeted us for. So, when you're this early in, you know, we still have a fair chunk of this season to go into September 1. You know we don't need very much to make every week and hit the USDA estimate. So naturally you're demand is going to slow down a little bit but I just have to think that in years past whenever July beans have made new contract highs in February they've gone on. Now, granted in the past I think it happened ten times out of the last forty-two years and all - all those times went on to see new highs made again and so far the high for July beans was made in February. So, I think beans have the potential to come back and swing one more time and look at the highs. But, you know, these traders spread everything. They can buy beans/sell corn. You know they can do all sort of things. They can buy wheat and sell corn. They can do all sorts of stuff and of course we need to enhance the farmer to let loose of some more corn.

Martin: Everybody's focus now is what is this report going to say at the end of the month? Are we going to find more corn stocks in beans with the lower acres if the USDA comes out like that? We need more bean acres and the rest of the world isn't going to be able to grab a hold of beans until next spring a year from now. So they're going to have to come to us and get them and so I think that's going to cause concern. I look for good demand on new crop beans by foreign buyers. I just as still going to be leaned a little more positive on the beans.

Pearson: All right. Sue Martin good to have you with us this week on Market to Market and for all of us here on Market to Market, I'm Mark Pearson, thanks for joining us on our Market to Market website. A quick reminder it's Festival on most PBS stations. A chance for you to call and so if you value the program and you value what it is we produce for you here on the internet, why not contact your local public television station and tell them just that and tell them to run Market to Market on their local station if they're not already and call in and make a pledge to your local public television station. Thanks Sue. Thanks everybody. Have a great week.


Tags: agriculture commodity prices markets news