Brugler: It's a big reduction and we did a little research here this week for our clients that basically shows that when they make that kind of a reduction in September typically there's a little snap back in October. Out of the last 15 years we had 8 years where there was a reduction in the September estimate and in 6 of those years they had a higher number in October. So, they picked up, regained some of that production. So, we think the main reason for that steep of a reduction is that they've got so much actual samples, that the maturity is so far along on the crop that instead of using five year averages for some of these states, for ear weights they can actually use ear weights. And the states they are using ear weights in are the ones that have had the worst summer weather, the highest temperatures and the light test weight or wet early and so they were forced to drop the yields pretty heavily in those states. But, again, the possibility exists, nobody knows for sure, test weights could be bad in other places, but we do know that the best crop ratings and the best moisture were further north. And, of course, if you get up in Minnesota, Wisconsin, the Dakotas you didn't have the peak temperatures. You had above normal temps but they were still in a range corn likes unlike say southern Missouri or Kansas or Oklahoma.
Pearson: So, with all that in mind, as we look at what is ahead in the corn market and now that this report at least is out on the table and now everybody is on this page where is this thing going to go? If this is reality we're very tight for corn, regardless of what happens to ethanol, regardless of our biofuels, regardless of where that thing goes we're still looking at very tight numbers and a good demand market.
Brugler: The market's job right now is to keep a margin in there, to keep a little bit of excess grain in the system statistically and it's doing price rationing, it's putting the price up a little bit, that gives the South Americans incentive to plant more corn this fall, they're just getting into their planting season. It also tells the end user make sure you really need this stuff. If you're a cattle or hog guy it's telling you don't expand maybe right now unless you're prepared to pay higher feed costs and it's telling the export customer, hey, we've got it but it's going to cost you and of course it helps balance trade if we have a higher price when we're shipping it out of the country. So, those are all positives but, again, the danger is you get past the point of no return. You price too much demand out of the market or you attract too much production or you get too many acres for next spring and then the price doesn't have to be here anymore.
Pearson: Short crop, long tail.
Brugler: Right. And we basically ended the long tail from 2008 with this little rally and we're trying to find out how short that crop is.
Pearson: All right. As that relates to this acreage battle going forward, we don't have a lot of time left, but obviously you get corn prices up to this level and it's going to steal some acres and soybeans are kind of being held up there because you mentioned on the show big carryouts, big crop leftover from the 2010 harvest down in South America out there. Granted there's been huge bean demand, China alone has been a huge goer there but can we sustain these kind of soybean prices?
Brugler: Well, I suspect that they are going to have to come down a little bit but they may not do it until the South American crop is planted, any kind of significant drop. The profit takes a correction any time but a real break probably more of a gotcha situation, okay Mr. South American farmer you've planted your crop, now we don't need to keep the price up because you're committed. That is the most dangerous period for me and that's going to be later in the fall.
Pearson: All right. Alan, as usual, appreciate your insights, great insights, we appreciate it here on the show and, of course, here on Market Plus. Again, we want to remind everybody we'll see you out in Grand Island at Husker Harvest Days, it's always a great time out there, look forward to seeing everyone. We're going to tape a special program on the rural economic summit. We look forward to you joining us out there at 1:00 at Husker Harvest Days out in Grand Island, Nebraska. From all of us here on Market to Market and for Alan Brugler, I'm Mark Pearson. Have a great week.