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Market Plus: Dec 04, 2009: Senior Market Analyst John Roach

posted on December 4, 2009

Market Plus: Dec 04, 2009: Senior Market Analyst John Roach Pearson: This is the Friday, December 4, 2009 version of Market Plus. We're glad you've joined us here at our Market to Market Web site. Hopefully you can watch us on your local public television affiliate every week and if you're not watching us on there call your local public television programmer and say I want to watch Market to Market. I'm Mark Pearson and with me this week our senior market analyst, John Roach. John, great to have you with us. A lot of insights, a lot of broad looks at what is happening in the market. Of course, you've always been a good user of the seasonality of the marketplace and that is true enough. You are not a big seller of corn at this stage of the game. This is typically not the time of year you like to sell corn.

Roach: This is typically the time of year when we're just waiting for somebody to be worried about the planting season on corn. We think that if you go back and look at the history of corn over a period of 15 years, not counting the last three, peaked on the first of April, the average day of the peak. So, we think that there will be enough concern about getting the corn planted this spring. A lot of guys not getting any fall field work done, not much anhydrous put down and we think there will be enough nervousness that we'll have our normal spring kind of a rally. But plus with all of the speculative kind of demand that is around the market right now and the worries about the dollar weakening we think those are all reasons to do what we normally do and what we normally do is we make most of our sales in March through June on corn. We're going to continue that approach to it.

Pearson: Are we going to have an acreage battle next year with corn and beans, cotton?

Roach: Well, that's what people are thinking. People are thinking we're going to have an acreage battle. There's no doubt we're going to have it. What they're thinking is that we may not be able to plant all the corn on corn ground because of the lack of fall field work. But some people will go back to a more traditional corn and soybean rotation because they didn't get the work done this fall. So, the marketplace is going to have to make sure that we do get enough corn acres planted because corn is the market that should, according to all of the numbers, should be in the tightest supply next year.

Pearson: All right. A big crop coming potentially for soybeans down in Argentina and Brazil and you said on the show so far things look pretty good down there. What is your take on expansion down there? And this year hopefully a good crop for those folks down there because they struggled last year. As you pointed out on the show a lot of soybeans down there right now. What do you see for 2010 for South America?

Roach: Big increases but that is pretty well known by the marketplace and the crops look good and they are coming into their critical time of their growing season and they look good. Continued increased acreage. I actually had lunch today with a producer who owns quite a few hectares in Brazil and he said right there in his local area there is at least 100,000 more acres being planted in that particular area of Brazil and they raise very good crops in that particular area of Brazil and there's lots more ground that can be brought in. I tell you, agriculture is the most interesting industry in that when you put profitability into the agriculture business you get more bushels of everything that is profitable all over the world. And articles on the flight here to Iowa in Newsweek and Business Week that were talking about the people developing agricultural projects in Africa and other places. A little over a year and a half ago I guess I was in the Ukraine where they were developing. So, agriculture is one of the businesses out there that is able to get capital and it has profitability, it has long-term strong fundamentals, it guards against inflation. So, more bushels are going to be coming out of South America over the years and U.S. farmers need to understand that they're going to raise considerably more bushels this year than we just harvested this fall. As a consequence we have been luring sellers on the strength in soybeans in recent days and the last couple of weeks actually and we would like to be out of our soybeans by the time we get into March and April. That's very early sales for us. We typically don't sell beans this quick but we're selling early this year because we're afraid of what is coming. We're also recommending sales both for corn and soybeans for the fall, and wheat for that matter, for the new crop harvest 2010. We think that by the time we get around to harvest assuming normal weather we'll likely have prices lower.

Pearson: So, step up those 2010 sales.

Roach: For most farmers it will be begin the 2010 sales. Most farmers don't have anything on the books for 2010 and most farmers are out spending the money already for the inputs. They should remember, they did that in 2008, they spent the money for the inputs, neglected to make the sales and then went oops when harvest time came around. So, want to make sure that as they are buying inputs they're looking at making sales.

Pearson: John Roach, senior market analyst, good to have you with us here on Market to Market. Thank all of you for joining us here at our Market to Market Web site. For all of us here on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news