Iowa Public Television


Market Plus: Nov 06, 2009: Jamey Kohake

posted on November 6, 2009

Market Plus: Nov 06, 2009: Jamey Kohake Pearson: Welcome to the Friday, November 6, 2009 version of Market Plus. We're glad you've joined us here at our Market to Market Web site. We've had a lot of requests for information about corn and soybeans just because of the odd harvest year that we're having. It's running so slow, it's running very far behind our normal record pace, in fact, for slowness getting corn and beans out. Now, we picked up a lot of ground the last five days thanks to good weather and some good drying conditions throughout the corn and bean belt but now we've had stories of the elevators shutting down because they've got too much wet product whether it's corn or beans, we've had people trying to shift exactly where they're going to haul this product that they are racing to bring in and that brings up a lot of issues. You plug up the lines of processing and pretty soon you start running into some problems. I would imagine cash problems are going to be the first thing we're going to hit, Jamey, the cash market. You're saying that's already happened.

Kohake: Right, we've seen the basis start to widen out, seen the carry widen out, the price between the futures contracts especially in corn to go back close to fully carry again and I think we will be there here probably by the end of the week at a full carry difference, about four to four and a half cents difference between each contract But I think it's pretty simple, pretty obvious, we saw the screen coming on line, there's no reason to bid up for any more, we're at late August versus September when there were no combines rolling.

Pearson: The pipeline is going to get jammed up here pretty good. So, with corn and soybeans -- soybeans have been real laggers -- I've talked to a lot of producers who for the first time in their career they have had soybeans rejected or reduced in price, over 15% moisture by as much as a buck, over 14% 50 cents, they've never even seen that because we typically have a problem drying down soybeans in the field. So, it's been a strange year. Price wise we've had some good opportunities for those people who were able to combine.

Kohake: That is right, those guys got to take advantage of it. I think you still lock in some decent profits in here, November 2010 at $10 I think is a great sell and also getting this front month January, March which I would be selling off of 30 cent rally, take back today's losses and I would sell back into that again.

Pearson: So, November 2010 at $10 you think that's a good place to sell soybeans.

Kohake: Short-term probably I think you could ride it down to $9.30, $9.40, add 60 cents onto your bottom line right now and then wait to re-sell it again next spring or next summer.

Pearson: All right, again, these are pretty aggressive merchandising or cash futures positions to get into. Do you want to sell 2010 corn?

Kohake: On the board, on the last show I said $4.19, did that. I sell more at $4.39 and am sitting pretty well, about 20% sold on paper in the cash markets for next year.

Pearson: So, your thoughts are barring a weather situation prices are going to be lower?

Kohake: I do, I think on Tuesday's report the numbers will be larger than the USDA's were last month but not as big as what Informa came out with the other day. I think this report is not a bad deal but I think as a whole the crop is there and we're going to see the pipelines get full, like you're saying, and it will just grind the prices on lower.

Pearson: With the USDA crop production report coming out Tuesday morning it seems to be a discounted report and it's going to be as of November 1. It's been a world of difference weather wise, harvest progress wise than what is happening on the 1st of November.

Kohake: That's right. The report that everybody will be looking at is the January report to see what the final report is. Here next week a little bit of weather and we're going to be watching the dollar, gold and crude and see if the funds are back active again like they were last Monday and Tuesday or if they're going to sit on the sidelines and just hold what they have.

Pearson: Crude has been a big indicator on what the grains are going to do. What is your thinking now on crude oil?

Kohake: I think crude is a range bound trade, 76 to 81, 81 I think you take profits, 76 you put a long hedge back on, a little bullish inventory report this week, 3.1 million barrels on line, less than the previous week, the market sold off on it. The play there to crude is off the dollar. The dollar is lower, crude is up a dollar. The dollar is higher, crude is off 80 cents. Just back and forth.

Pearson: And you're feeling the dollar will be under continued pressure?

Kohake: Well, longer term I think so. I wouldn't get short here at 75.80, 75.90. I would up around 77.00. It's just a too crowded trade and everything you read, you see on TV are just bearish, bearish, bearish the dollar and it's too easy of a trade so I think it will end up getting flushed out and you come in and sell after that.

Pearson: All right, well we'll see what happens. As usual, Jamey, we appreciate your insights and we appreciate you joining us on Market to Market and, of course, here on Market Plus. From all of us on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news