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Market Plus: Jan 14, 2011

posted on January 14, 2011


Market Plus: Jan 14, 2011 Pearson: This is the Friday, January 14, 2011 version of Market Plus. Thanks for joining us here at our Market to Market Website. Of course tell your friends and neighbors to join us here as well for a one of a kind insight into what has happened in the commodity markets.

Pearson: With us this week Jamey Kohake and Jamey, I mean, it is bull city. I mean the horns are out throughout Chicago, throughout the commodities world, everything that comes out of the ground is exploding higher. USDA added fuel to the fire with the smaller corn and soybean crops and as you mentioned on the show fairly neutral on wheat but the under pinning of the wheat market are extremely solid. Well what do we do right now? I'm thinking particularly in soybeans because we've got this huge weather market. Maybe we've had our corn weather market in South America with the situation in Argentina. Maybe a weather market happening with soybeans. What's a producer to do?

Kohake: I think you continue to scale up sales in the old crop. The new crop if I think we've ever seen an acreage fight we're going to see one there with a November contract. I think the breaks we bought into even with the little bit of rain forecasted this coming week Wednesday time frame- Thursday. We had a huge close this - today, Friday, in the market. Corn and beans came back after being lower. Off in news, China overnight raising their reserve rates, give them a half of percent and just a buying opportunity, but I think on the old crop sales that you make, like I said on the show, buy July $13.50 that area and look for, you know, a test of a dollar higher.

Pearson: So maybe get a dollar that way and maybe do your re-owning that way?

Kohake: Yeah and then I think once you get that you turn around and get short back the new crop on $1/$1.20 higher. I am thinking here short-term over due for a set back. Beans have been under $4 rally since Labor Day pretty much and without any type of set back and these big bull run markets, you have to feed the bull every day, and I'm not sure what news is going to be out there next week that we didn't know about yesterday and even today to keep this thing running besides a little bit of fun buying.

Pearson: Yeah, talking about the funds. Obviously the first place they went back in '08 was they went straight to the grain markets wheat, corn, and beans. They've diversified some. Now they're buying livestock.

Kohake: Right and they are in the softs too. I mean the sugar market is on fire right now, coffee has been, but yeah they're all over the place and you've got the tight supplies in the cattle market. The feeders have tied us since the late 50s and so they're just coming in pretty much controlling, owning everything and a lot of these markets are, I think, going to be on fire all the way up to April and the brakes, like we were saying, the cattle, the grains are going to be bought into very, very aggressively.

Pearson: My dad told me to never step in front of a train. And so this is not a period of time you want to get short even though you are expecting a set back.

Kohake: Right. Short-term I think you get a $3 to $4 set back in the cattle you take your hedges off. I just like this level in here right now because we're over bought, cash is jumping $3 a week pretty much for the past three weeks and I'm not sure how much longer that can stay up in here short-term. You get a pull back in this April live to $109/$109.40 level I'd blow the hedges off, turn back around, and get long as a re-ownership play.

Pearson: So, yes much happening below that level.

Kohake: Right, the $.03 to $.05 set back in the live cattle. Maybe a $.04 to $.05 in the feeder cattle just because the funds - are a little bit more jumpy there but I think the sell-off, if there is one, short-term it will start in the corn but you get that $6.20 mark in July corn it's being bought into.

Pearson: You mentioned a continued weakness in the dollar. You really don't see that much dollar appreciation versus other currencies. So really that's not going to be much of a governor on export demand.

Kohake: Not really. I got a sell order working at $81.30 for the March dollar gets up in there I would be short but our financials are still very, very week. We're still buying bonds. The Quantitative Easing Program is still in effect full bore and we saw the job report and housing report this week. Just pretty pathetic.

Pearson: Yes, pretty soft. Let's talk about, you mentioned on the show, crude oil and again much of that is going to hinge on what happens with the dollar but a continued week dollar, continued soft dollar, it looks and with a rising world economy, I mean, everything we read, everything we hear, everything we've had on the show tells us that the world's economy is growing as is the U.S. Economy. That usually translates into more internal combustion engines going.

Kohake: Right. We've seen that and here the funds are expecting that. They're buying into it. We're seeing the inventory shrink down too eleven month lows there. Opec's said this week that they're not going to meet until $100 crude is breeched. I mean that could be next week but now they're saying $100 fair value. I mean just two years ago $70 was fair value and then you go back five years it was $55 and now $100 is fair but I think the funds stay long there. I think the demand stays up and I think the crude between now and spring/early summer is going to be in the $80 to $110 range.

Pearson: Jamey Kohake always good to have you with us. Thanks for joining us on Market to Market this week and for all of us here on Market to Market I'm Mark Pearson with a reminder. I've heard from several of you who are no longer able to see our show on your local public television station you can rectify that by contacting your local public television programmer and say hey, we'd like to see the show live as it comes off on our PBS Station. Contact your local public television programmer and I'm sure they will be happy to hear from you. For all of us on Market to Market, I'm Mark Pearson. Thanks for being with us and have a great week.


Tags: agriculture commodity prices markets news