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Market Plus: Aug 13, 2010: Sue Martin, Market Analyst

posted on August 13, 2010

Market Plus: Aug 13, 2010: Sue Martin, Market Analyst Pearson: Welcome to the Friday, August 13, 2010 version of Market Plus here at our Market to Market Web site. Thanks for joining us. Of course, this is now a video segment. Sue Martin with us this week and she's on a bullish tear, no question about it. Sue, you're extremely bullish on wheat maybe pulling back but then maybe going stronger and you're bullish about taking out the highs in beans. Let's follow up on that. This soybean market you think it's going to be that strong?

Martin: Well, I think one thing we have to remember is we're in bean month and we're going to find that our bean crop is not going to be as good as we originally thought. Last year at this time you had new crop sales coming in by China, pretty aggressive, they were setting a record. Well, now they're outdoing that pace and I believe problems are big in China and they're going to continue to take the beans. They are booking the beans but I think they're going to take them and that was a surprise to the trade this year. They thought that as soon as South America's crop came on in January to February or March that we would see cancellations and we never did. Now, in the meantime, of course, we had some other extenuating situations but we're back into a La Nina also. And La Nina is not good for South American crops normally in production and it started early this year so therefore I think we could see some situations with weather, they're already kind of seeing them, in South America in parts of Argentina and parts of Brazil.

Martin: In the meantime, the USDA I think is planning that Brazil and South America is going to step up and steal some of our thunder this next year but I don't think it's going to be quite like that. I think that the demand is going to be good. I think our world economies are going to settle down somewhere in Octoberish and we start to go into the end of the year, into next year with an up tick in our global economies. If that happens demand is going to be on the up tick for food as well and then you put that on the back side of all this weather issue that everybody has been enduring and it's not just us, you know, India has had less of a monsoon than they planned on and you've got, of course, major issues of weather so you've got production in Canada that's going to be down, China huge, huge issues and then in the meantime, of course, we've got Kazakhstan, the Ukraine and so what happens is I think that the bean market you have to look at them predicting a record bean market, or bean crop, and yet the carryout did not increase on the new crop. To me there's, of course, I don't believe the yields, so I'm thinking that carryout is going to end up coming back the other way and I think we're going to whittle away at that carryout as time goes on.

Martin: Now, it's going to take time to work our way through this and demand markets you stair step them. But in the meantime I do think we have demand markets. The bean market I think will ebb and flow itself but I do think that we have reasons to take the beans up to these levels and take a look on the November beans the $10.99 level. Once we get to that level we may exceed it by a little bit and then fail and start to come back. Actually corn and beans have gone nowhere, we're in the same range as we've been in since December of 2008. When you look at the hog market we've got to watch the conception rates. Now, over in the Ukraine it is my understanding that a lot of those hog facilities are cooled by watered walls that have water running down them, sort of like what you see in Oklahoma and Kansas. And that's fine as long as you don't have humidity. Well, they don't have the humidity so they may be all right as far as conception goes.

Martin: In the U.S. we've got high humidity and it's a wonder of how these conception rates are going to be and we won't know that until we get more into next year and towards spring. And to see these pigs per litter how was the farrowings. I have a sneaking hunch we're going to find that conception rates aren't as good. I'm hearing the same thing in the cow calf herds and dairies where they are complaining because their conception rates are not good. And, of course, the poor quality corn that has been going into them. The producer needs to see a good market next year and I think we're going to see it. The U.S. is the biggest exporter of beef in the world and yet our numbers are contracting greatly. We're a little more efficient, we're putting more weight on that animal but in the meantime we're still the number one exporter in the world and the rest of the world hasn't done that turn around to get caught up to start coming back because everybody cut back so hard.

Martin: In the meantime, if economies do start to grow you're going to have a huge demand for meat and then on top of it the pork and, of course, the Ukraine loves pork and so does Russia and poultry, I bet they've lost numbers of chickens over there and I think you're going to see a huge demand for pork. Originally we thought USDA is predicting more pork for next year but yet our stocks are so tight in the U.S. domestically that we're going to need more numbers and I think we're going to be competing with the world.

Pearson: Sue Martin, appreciate you joining us this week for Market Plus, appreciate your insights. A quick reminder, if you enjoy Market to Market on the Web make sure it's on your local public television station, available to all of your friends, neighbors, lenders, lawyers and friends. You can do that simply by calling your local public television program director and say we really like Market to Market on the Internet and we'd like to see it on your station, could you make that happen. And I can guarantee you they will do everything they can to put it on. Thanks for joining us. For all of us on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news