Pearson: Welcome to the Friday, February 4, 2011 version of Market Plus. Thanks for joining us here at our Market to Market Website. With us this week one of our regular Market Analysts Elaine Kub. Well Elaine, we talked about a lot of stuff on the show. There's one other thing that we didn't talk about that I wanted to you to talk about and that's the dollar. What do you see ahead there? Everybody has been beating up on it.
Kub: I think, you know, I mentioned the whole commodity sector is in a bullish trend and nothing has specifically happened to change that. Same story with the dollar in the opposite. Its been in a loosing trend, its been weaker, and nothing specifically has happened to change that. I think the bump up we saw this week was a reaction to the Euro and - reaction – it sort of ignored Egypt for a couple of weeks and then all the sudden that was sort of thrown around as a reason for the dollar to be up. I think we're going to see it go back down and remain weak.
Pearson: So, that's wind at our back in the commodities world. So, we can find some strength in that. We also at the tail end of the show I just asked you quickly about metals and you said yeah, fairly positive. you didn't seem to be overly thrilled with the metals market.
Kub: Well, I think there's not particular reason for them to change yet but I do think that if the whole things falls apart and if we see money moving, if interest rates rise for instance, if there's better investment opportunities elsewhere and we see money move out of the commodity sector I think there's going to be a giant flight out of the gold market for instance and all these other metals too. I think that if you had some money that you wanted to throw around. I think some puts in gold or silver or copper would be kind of fun to have.
Pearson: All right. Well let's talk about the grain markets. You talked about on the show both corn and beans, wheat, are all still in bullish trend. Let me ask you the question that I get asked all the time. I want to know what your reaction is to it. What's going to kill this thing? What's going to kill the golden goose here? We've got these record prices. Obviously a lot of discussion in the news about high food prices which usually could be a limiting factor at some point. Maybe impacting ethanol who knows? What could be that - that problem area? What could be the stone to the pigeon, if you will?
Kub: Well, you know I think USDA is predicting that any rationing is going to come out of the feed sector. You see them drop those numbers before they drop other numbers and that would seem to make sense except that the livestock prices have kept up so well. So, your next area of pain is going to be ethanol plants that don't have enough operating capital perhaps running out of money and going bankrupt or your export demand for staple grains like wheat. And like I said that's going to be six weeks out before we really see any of that paying at these prices and really hit the retail consumer. So, it's really hard to say.
Pearson: In the perfect storm world the storm down in Australia hitting that area which already had some wheat problems. This poor quality wheat, you know, we've fed a lot of that over the years.
Kub: Yeah, in the feed sector sure and I think China has been importing feed. They imported half a million tons rather than importing corn. So, that's - that's an interesting new demand factor on the wheat market in wheat, like you say, it doesn't really - isn't really there to be exported to China. They ordinarily could go to Australia, but for just human consumption for food consumption I think it will be interesting to see how grocery prices are affected.
Pearson: All right. Well they are going to go higher. I can predict that one for you. Let me ask you this and we're talking about the grain markets and you were saying, you know, hey we've still got maybe some ways to go up to the upside of this - on this grain market. But you also said you'd be stepping up sales in 2011/2012 from a management standpoint - risk management standpoint.
Kub: Right and I think that's just kind of rule of thumb every year is that you expect to see sort of the high around March 15th and you would want to have a good chunk of your crop sold by then if you're going to do some pre-harvest hedging. But this year particularly because there is so much risk that it could fall apart so fast. I think it's important to manage your risk in that sense.
Pearson: All right. Well said. Elaine Kub good to have you with us this week on Market to Market. Thanks for joining us on Market Plus again. Could be a wild weekend depending on what happens in Egypt. So we want remind everybody to that and we were visiting on Friday afternoon. We wish all of you the best and from all of us here on Market to Market I'm Mark Pearson thanks for joining us and have a great week.