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Market Plus: Sep 03, 2010: Market Analyst John Roach

posted on September 3, 2010


Market Plus: Sep 03, 2010: Market Analyst John Roach Pearson: Welcome to the Friday, September 3, 2010 version of Market Plus here at our Market to Market Web site, glad you've joined us. With us this week our senior market analyst, John Roach. John, I've got to tell you, everyone has been coming on the show lately with the horns out and you're kind of saying, let's take advantage of this thing, let's make some sales. What is your deal?

Roach: Well, the hardest thing in the world to do is to sell high priced markets. Emotionally we all get involved in the moving of prices. Producers, if they have done a good job of marketing, have already sold a lot of their crop and now the prices are all higher, they are kicking themselves for what they didn't sell and so emotionally we get everybody leaning on one way and what people have to understand is that these markets have all been driven higher by speculative buying. This is not consumptive buying, it is speculative buying.

Roach: If you look at the commitment of traders report that's where you'll see the buyers have been speculative traders and what prices do in this environment is they go up to a peak and then from that peak they start to notch lower and right now you can expect with the harvest progress cranking up farmers are going to be very willing to sell grain as they harvest it at these price levels. And really the job of the market is to slide low enough in the bulk of the harvest so that most producers put the crop in the bin and the only way to get people to put the crop in the bin is they have to be disappointed with price and think it will be better next spring.

Roach: So, we're just selling into the strength. This is what we do, this is the way we approach markets and we've gone through these big price moves before. Now, the question you have to ask yourself is are we going to have another 2008? Do we have that kind of an engine out there to drive markets as they were driven in 2008? We don't think so. And so we are at price levels right now that we have only been above for a period of a few months in a farmer's career and to think that they're going to stay above these price levels and be able to maintain these kind of price levels over a period of a couple of years the likelihood is that's not going to happen. And so we're selling into it.

Pearson: All right. You talked about you were selling 2010 corn and 2011 corn. You're selling 2010 soybeans. What about 2011 soybeans?

Roach: We're selling 2011 soybeans as well. Now, we do incremental approaches. We know that we will get several selling opportunities throughout the year and so we sell in increments. And so on each one of these sell signals, and we get ten to twelve a year, we're in like the number nine sell signal on corn this year and so we're selling another increment and we're also starting to sell -- and we started actually some time ago -- starting to sell increments of 2011 and 2012.

Pearson: All right. As you look at this market and we move -- it looks like, it appears anyway, we'll know more after the September 10th report from USDA, it seems to be fairly early maturing crop, John, or are you just being more of a normal harvest low for both corn and soybeans this year?

Roach: We'd sure think there would be some sag down as we move through the harvest process and it's going to be a fast harvest because all the corn is maturing, all the soybeans will be maturing, we had relatively uniform planting dates. We're going to have a lot of crop be harvested in a very short period of time, we think.

Pearson: All right. It's going to be another fascinating year. As usual, John, appreciate your insights. John Roach with us on Market Plus this week, our senior market analyst on Market to Market. And from all of us on Market to Market, I'm Mark Pearson. Thanks for being with us. Have a great week.


Tags: agriculture commodity prices markets news