Martin: Well, it did and I'm not a real big fan of the May contract, I still am traditional, I like the June contract, the July, that type of thing. But the one thing we have to go back and look at is the cold storage report belly stocks are extremely low and they're extremely low coming into the time of year when we're going to be pulling stocks out of storage for our demand. So, that means to me, or I think it means to me that we have to ration the bellies. And if we do that the price of bellies has got to go up, this past week fresh bellies increased $10 and they're at now 120. The highest all-time high for fresh bellies was in May 14th of 2004 and that was at 128. It would appear that as tight as we are and pulling them out of storage that we're going to have to ration how well we pull out of storage and make the price high enough to where we slow that demand down.
Martin: And in the meantime -- so that will probably mean higher highs for the product. And I can't believe that won't be somewhat supportive then to the hog market too. We've had a big move on the hog market since last year but this is the first year into a lot of these producers making some money not only in the hogs but in the cattle as well. And the first year in they're just thinking about trying to get their feet back on the ground and please their bankers. They're not thinking about expanding yet.
Martin: So, as we go down the road that's another thing we're going to deal with is the tight supply as we see producers hold back to be able, for breeding purposes, to expand and that will occur and then that will be another round of move up again. I believe that the hog market is very seasonal this year and therefore I believe that we'll see higher prices as we go into June, early July and then I've got to be getting something hedged. A producer that feels a little uncomfortable if we get up around 90, 89 to 90 maybe on the June, if we get there then maybe pull off some hedges, get some hedges on and if you're uncomfortable doing it buy puts, puts will be cheaper.
Martin: But at least get something to floor you, then you're okay. But I do believe we still have some better times yet to go. And we'll have some pullbacks but like I say we're still yet to go through that phase of where we see hold back of heifers and of guilts for breeding purposes and that creates another tight supply. The key here is, Mark, that the whole world is tight supplied at this time. Look at China, their beef industry in 2008 they had downsize because of that melamine scare that they had. They downsized their cow herd on dairy and all of that. Well, now they're trying to come back.
Martin: But their imports of beef is going to increase 25% this year. Their exports are going to drop 26% and they're going to decline in production by 4.7% domestically and that's a country that has a lot of mouths to feed. The pork industry seems to have a lot of hogs. The government is trying to support that by buying pork to put in reserves. But in the meantime, it's still a country that's going to have a population that's going to continue to grow, India too, although India doesn't eat meat, but you've got a population in China that's just going to command everything. Demand for beans is just growing by leaps and bounds in China.
Martin: They're going to probably take 45 million bushels this year, a record, and the bear thought back in December, January that boy when that South America crop came on that we'd see cancellations and we have hardly seen any. They are taking them. And in the meantime it's not only soybeans they're after, steel, they are buying steel by leaps and bounds. If you try to get containers you can't get containers because they're already used. They need more containers. And so I just think that this is a demand but we aren't even beginning to touch the iceberg.
Martin: Maybe we're not paying attention to where the next growth is coming and that's in the Middle East, parts of Africa, India, there's other countries and Brazil and Russia.
Pearson: That's right, may spell some different demand and some different appetites for producers here in the U.S. too down the road.
Martin: Exactly, and if you get Russia they're a big pork and poultry user and if you get those economies really starting to smoke and I think they finally have got their footing going where they're going to be able to be better producers, you have to watch them because they could come back to us and be very competitive. But I think at this time that could spell better times too in the industry and Argentina, they aren't even exporting beef and they used to be a major competitors of ours.
Pearson: That's right, they had their terrible drought a few years ago.
Pearson: And decimated herds there. You're right, if you look around the world you certainly see the protein side of it has shrunk dramatically, we've shrunk poultry herds in the United States, overseas.
Martin: And they're not going through expansion yet, just like us.
Pearson: A lot of them are still shrinking the banker's chair as you pointed out so that's going to be a while for the rancher and the pork producer and the poultry producer and the dairyman out there. So, you're right, excellent points. Let's talk more about protein and you talked about the lack of cancellation of contracts which we normally do see from China, they do cancel and they start pulling over, they are going to the U.S., they feel like we're the dependable supplier at least for the time being. So, you look at this soybean and you're a producer out here and you're getting ready to plant beans, a lot of them have already started, it will be interesting to see what we find out in the crop progress report but conditions have been outstanding, we've certainly had some beans planted. You haven't done anything yet for 2010. What are you going to tell that person?
Martin: Well, I would say for the new crop contract I would suggest look at this rally that we're in the process of going into May and use that rally and get some sold. The November beans might make it back towards $10, they might get that high. We're going to need the July to push up towards $10.50 and hopefully maybe it will push through that. There is resistance lines there from the December high. If you get through that $10.40, $10.50 level then we'll go on probably for a try of around $11.
Pearson: All right. Well, we'll watch it. Sue Martin, as usual, appreciate your insights. We look forward to having you again with us on Market to Market. I want to thank all of you for joining us on Market Plus this week. I'm Mark Pearson. From all of us on Market to Market, have a great one.