Brugler: Well, basically we have to expand the total pie. We have to come up with more what we call principle crop acres. All of those commodities you mentioned would like more acres and according to our math we'll probably all get some. Now where is it coming from? Well, we've got some CRP ground that is coming out. The head of the - group at USDA basically said that they are anticipating some CRP ground to be planted particularly in areas like Minnesota. We're going to see - we had about a million and a half acres of preventative plant last year if the weather is dry this spring and La Nina is at least starting off that way. We might be able to get some additional acres that way. The third variable that I think, very important one, is that the winter wheat acreage in USDAs report last week went up to forty-one million and the two and a half million acres of that increase was in soft red winter. That's the primary crop that we use for double crop beans. So we think it's very possible to have a two and a half million acre increase in double crop soybeans without having any growth in total planted acreage. It's just you're taking the wheat off planting the soybeans on the same ground. That said you still have this battle during the month of February particularly crop revenue insurance guarantee prices are set during the month of February and we know from 2007 which was the last time we had this intense of an acreage battle that those guarantees are very important in the final planting decisions. So, we continue to see even on market set backs like we had earlier this past week March corn went down pretty hard but December corn didn't December of course is a new crop contract. It's trying to preserve that acreage keep soybeans, cotton, and wheat from stealing it.
Pearson: Right. Alan when you add that up. When you add up what's coming out of CRP this year not a huge amount when you add in the two and a half million acres we're going to double crop. That's a crap shoot. I've been there with the double cropping of the wheat and soybeans and you may be adding acres. You may not be adding that much yield depending on what the year is. But when you add all that up what number are you - do you think we need to add this year to cropped acres those four major commodities?
Brugler: Well, I think we need about eight million acres of additional ground. I mean the market would like ten. That would allow for some slack on yields this summer if there is weather issues. I think that's going to be very difficult but again we know what we did in 2008. We should at least be able to get that number of acres back into circulation. Maybe a few more. I think the one area that people might be getting a little too bulled up is in looking at the current demand levels and assuming those are going to carry forward to next year. The folks are saying hey, we need ten million or eleven million additional acres are assuming that these high prices that we're currently experiences are not going to harm demand in any way. If you assume that soybean exports drop a hundred million bushels next year that takes some of the heat off soybeans. You know wheat if the yields are better on the soft red or - and we have more acreage that takes a little heat off of wheat. So, it's not just an acreage battle you have to look at the demand side as well.
Pearson: All right. I want to come back to livestock because we were short on time on the show. We talked about the fed cattle market. Think we're going to hold this cash market together pretty well?
Brugler: Pretty much. Again the concern is when it hits the retail end of this most recent price spike at the wholesale. When it hits retail how well do the consumers handle it? One reason we think that they might is that the restaurant trade has picked up. As the economy has improved, unemployment has dropped down to 9.4 percent now and so forth. You're seeing it across all the restaurant segments some improvement in sales year over year. That's important to beef particularly for choice and for prime beef. A lot of that is consumed at restaurants and as you mentioned on the show hamburger demand is pretty good right now. So, that helps support that value of that animal. Finish numbers in the feed lots are going to be year over year. This report on Friday night showed the six month in a row with higher numbers but in February in March the finish numbers actually go down because those cattle were placed months and months ago. So again we think that's supportive. We could go below a hundred and five but I think generally speaking it's going to be a supported market.
Pearson: Calf market has also been extremely hot. It used to be the teeter-totter corn went up, feeder cattle went down. Boy we've seen them move up in tandem this year.
Brugler: Yeah, that - and that appears to be tied to this cow slaughter that is - this concern that we're down on calf numbers or will be. You're also seeing some - the feeders going into feed lots early because of the lack of wheat pasture in the southern plains. So, now they're not going to be available in the spring when the feed lot wants to buy them to place. They're already placed somewhere and I think there is a speculated aspect to that too. Some of the investment funds have been buying the feeder futures on the assumption if cattle futures going up feeders would as well.
Pearson: All right. It's been interesting world in the livestock business. The hog market we talked about at the very end of the show. I jumped in and talked about this export demand for pork and the sweet dollar. That is working out pretty good.
Brugler: Yeah and again I mentioned the South Koreans liquidating their livestock. It was particularly the hogs that were hard hit. It was over 12 percent of the herd. That creates some opportunity for some pork imports. China may very well decide that they can't afford to import six dollar corn or fourteen dollar beans but they can import the pork and just skip the middle man. Skip the processing. So we're fairly optimistic about pork exports in 2011.
Pearson: Prices for hogs? What do you think?
Brugler: Look at the - side first. We know that we get into trouble at ninety-five dollars. That's about ten dollars at the retail end that's about ten dollars above where we are at today. So practical limit on hogs futures is probably eight to ten dollars above where we are at. Summer contracts were already fairly high. They're in the nineties. You can actually hedge in a pretty good profit for somewhere in fall contracts right now.
Pearson: Nice change of pace. Alan, thank you sir. We appreciate it. Alan Brugler joins us this week on Market Plus and on Market to Market. And for all of us here on Market to Market I'm Mark Pearson. Have a great week.