Pearson: Welcome, this is the Thursday, December 24, 2009 version of Market Plus from our show based on December 24, 2009 that aired on December 25, 2009. I'm Mark Pearson, host of Market to Market wishing you all the very best this holiday season. With us this week Jamey Kohake, one of our regular market analysts to talk about what's going on in these commodity markets. And the two primary ones that I've heard the most chatter about this week have been corn and soybeans, the impact of the dollar, the weakness in the precious metals, the idea that the U.S. economy is strengthening and the money is coming back to dollars around the world with the weakness in the Euro and what's happening in Greece and Spain and maybe even Ireland, some of the other countries on that side of the continent. It's kind of interesting because they have been beating up the dollar for most of the year.
Kohake: That is right, even speculation that we would not be the resort currency anymore and we've been bashed for everything, the cause of all the problems in the world and now everybody is coming back.
Pearson: It's interesting to see, they have some modifications for us on the commodity side obviously because we export so much of our crop, we're in a global market and it does increase our costs and cause some competitiveness. Let's talk first about the corn market which has been hanging in there pretty good.
Kohake: Right, the corn market has been pretty much all weather, trying to get this last four percent harvested and still playing around with that. Then also expectations that we'll probably see a little bit of a cut in some yield numbers on the January 10th report and see just a little bit of buying come in. I think everybody is kind of scared that if they don't get long corn they're going to be left behind so every little break there is new buying coming in.
Pearson: As you look at the corn market going forward, 2010, on the show you were talking about making sales.
Kohake: Right, I've already laid off a little bit of corn, probably ten to fifteen percent already this year. I'm going to re-sell more at $4.50 December off the board. And like I said on the show how can a guy pass up 30 to 40 percent profit from next year right now? Don't sell the farm off just start doing incremental sales.
Pearson: So, just get started doing something because you're biased longer-term would be lower?
Kohake: Yes, I think you come back lower. If the estimates are right on Informa's estimates two weeks ago, a week and a half, there could be three million more corn acres and who knows what the yield, the hybrids as good as they are, we should have 12.5 crop, 13 crop next year again.
Pearson: There's been some good news, you mentioned E-85, factoring that in already in terms of increased ethanol demand, but this feed usage has been pretty scary. That number continues to shrink. You talk about lower hog numbers going forward, smaller breeding herd and exports have been disappointing so far for corn.
Kohake: Right, this thing is going to be short lived here in my opinion. I think by January 20th, that timeframe, at the very latest maybe even a week earlier than that a guy can't be afraid to step in at 1500 corn trade some day and say I'm getting short. This thing, in my mind, is going to be all of a roll over of fund money going to come from energies or metals into corn as a two to three day deal. It's about the rumors, selling the fact type of deal and I'd step in front of it and get short.
Pearson: Soybeans, everything looks perfect in South America right now. We've seen that before this early and then we've seen them have problems. So, we could still see a weather glitch down there. But by and large a lot of acres down there and certainly it is improved conditions over last year. So, we're kind of betting that's going to be a big crop.
Kohake: Right, big crop down there and too the reason we ran up so hard was a lot of it was China and buying every single day it seemed like and now they might have a surplus and they have already went to South America for some business. You throw in this currency problem, it's a double whammy for our business and they've got already a decent carry out built in right now and I think $10.20 to $10.35 there is some resistance there on the charts and that is going to be looking to be short.
Pearson: Well, we got the livestock sector turned around, you're a little more optimistic there as we go into 2010. So, maybe we'll start to see some of that feed usage and that feed demand start to come back some. But getting back to soybeans you're bearish soybeans then too, you want to sell the 2010 soybeans.
Kohake: Yeah, I like selling beans 30 to 40 cent rally for sure. I think beans probably have more down side longer term than corn does. I think you break beans $2.00 to $3.00 you could pull corn back 60, 80 cents. Beans have already broke 80, corn has broke 30 so I think you'd have to see a little bit of a correction to sell into.
Pearson: All right, Jamey, we appreciate you being with us, wish you all the best this holiday season. And from all of us here on Market to Market, I'm Mark Pearson wishing you and yours a very, very happy holiday season.