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Market Plus: Jun 11, 2010: Tomm Pfitzenmaier

posted on June 11, 2010


Market Plus: Jun 11, 2010: Tomm Pfitzenmaier Pearson: This is the Friday, June 11, 2010 version of Market Plus. Thanks for joining us here at our Market to Market Web site. With us this week one of our longtime market analysts, Tomm Pfitzenmaier. Tomm, always appreciate your insights. Tell us what you see -- we were talking about corn and beans on the show tonight and there's a lot of producers out there, some saying they wish they had unloaded more corn this winter. You talked about on the soybeans in particular people did take advantage of this bean market. We had aggressive farm selling this winter and maybe the cash market may stay together a little bit more because of that.

Pfitzenmaier: Yeah, the cash market is probably going to be fairly -- the interesting thing about that market is the farmer is playing a giant game of chicken here because the delta was planted fairly early and the general feeling is that there are going to be a fair number of those beans harvested some time in August. So, the farmers that are holding old crop beans are kind of playing chicken to see how high they can force that market to go before they move it and not run into that August harvest weather. Now, most farmers always want to hold through August because that's when, you know, if you're going to have weather problems in beans that is what gives you the pop. So, it's going to be interesting to see how that all shakes out here. But the next six weeks in the bean market are going to be really pretty interesting in that old crop bean -- if we have a good pop up I think you need to use that as an opportunity to catch up on those sales.

Pearson: How much of this new crop price is based on this scenario of what is happening with the tight old crop supplies?

Pfitzenmaier: I think the new crop is being pulled along by that some. I think mainly new crop is being pulled along by weather, perceptions of -- there's a lot of talk about the El Nino dying and La Nina firing up and the fear that that's going to hit in August and maybe reduce the crop here. So, that is -- a lot of that is what is helping hold up these new crop beans.

Pearson: Okay, we've got to talk about the corn market. USDA supply talking about bigger ethanol demand which you somewhat dispute because just because they say it's going to happen doesn't mean we're going to see that demand.

Pfitzenmaier: I'm not disputing the number they came out with Thursday, I think that's probably fairly accurate. Whether there is any more additional to that I think is going to be questionable.

Pearson: But if you look at that and, again, you mentioned the China crop which is really critical this year and whether or not they -- they have been buying DDGs but to actually come over and buy corn would be a huge deal.

Pfitzenmaier: Keep in mind though they're only talking about them even at best buying five million metric tons which is 100 to 150 million bushel. An increase of yield by a couple of bushel per acre on a million acres way offsets that. So, don't let yourself get too wound up about that because we have the capability of producing a huge crop here. If you drive around Iowa, Illinois, anywhere it looks phenomenally good. There's lots of subsoil, every time we have a rain it pushes the time period we're going to be able to tap into that subsoil so I have a lot of faith in the farmer's ability to produce a heck of a crop. And you need to keep that in mind when you're developing a marketing plan here.

Pearson: Especially in light of the fact that you're also talking about the dollar continues to look strong which will impact us at some point.

Pfitzenmaier: Absolutely. Now everybody says well we don't sell that much to Europe but it's not just the euro, it's the yen too and we sell a heck of a lot of stuff to Japan. So, the whole thing as a package is going to be a problem for U.S. corn exports.

Pearson: You said something very interesting right at the start of the show and that is that you think the dollar is headed higher or at least maintaining this very strong level for a while.

Pfitzenmaier: If you're a farmer in a state in the Midwest and your whole, everything you are producing is tied to the dollar owning a few dollars to hedge against that wouldn't be all that bad an idea because your livestock is tied to it, your corn, your beans, your wheat, it is all tied to that and you're at risk for the dollar going higher.

Pearson: How about oil? We've had this pullback in oil. Are you buying oil or gasoline or diesel?

Pfitzenmaier: No, there's too much oil floating around. Every tanker everywhere around the world is chock full of oil, they have sold the carry charge in the crude oil, there's lots of crude oil being produced. Now, maybe the thing in the Gulf, if they don't allow us to start drilling again is going to tighten things up a little bit but ultimately I'm not real excited about buying crude oil at $75 plus.

Pearson: All right, Tomm Pfitzenmaier, as usual some great insights. We appreciate it. One of our regular market analysts here on Market to Market. Now, be sure to join us again next week on Market to Market, we'll have even more and join us right here at Market Plus. From all of us on Market to Market, I'm Mark Pearson. Have a great week.


Tags: agriculture commodity prices markets news