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Market Plus: Jul 31, 2009: Sue Martin

posted on July 31, 2009


Market Plus: Jul 31, 2009: Sue Martin Pearson: This is the Friday, July 31, 2009 version of Market Plus. Thanks for joining us here at our Market to Market Web site. Tell your friends and neighbors to join us here too. By the way, right now is the time to call your local public television station. If you can't see us on your local public television station, if your local television station is not airing Market to Market simply pick up the phone and call your local public television program director. He'll be glad you did because he'll start carrying Market to Market. You might even be saving his job. So, pick up the phone now and call your local public television programmer if you're not seeing Market to Market on in your local area. Right now is the time because this is when they renew programs so we want to get that word out there. Sue Martin, good to have you with us this week. A couple of things I want to get back to. You talked about corn and hogs and corn seems to be a very interesting case in 2009, late crop in the eastern Corn Belt, late planting in a big chunk of the Corn Belt this year, cool temperatures, agronomically we're behind this year. We haven't had an early frost in a long time, it's been probably 30 years since we had a severe early frost and you have some studies you mentioned on the show went back to '65 and that was a really bad one. What do you see for 2009? You've got people out there that maybe haven't sold as much of the crop just because of concerns in the spring. They still have a lot of crop to sell.

Martin: Well, for those individuals this rally that we're getting I think I would use to get it marketed. We tend to believe -- I went back and I mentioned the study on beans where I looked at years with crop condition ratings like they are, well, I did it on corn as well and I looked at years from 1986 on up to present for crop condition ratings where they are at this time on December corn and what I found was there were nine years similar to this year where we were equal to or greater in good to excellent categories. What I found was is corn is a little schizophrenic. Beans were pretty methodical but corn was different and what happened was corn tended, December corn tended to put a low in, in July, give us a nice little rally which would tend to go along with that seasonal, the fifteen year seasonal and then it turned around and came back down and looked at the lows that it had put in, in July, it looked at those lows and sometimes even exceeded them, I want to say six years out of the nine.

Martin: So, I think corn, you know, we have to look at the crops and beans were the most bullish this year fundamentally, wheat was the worst, corn fell in between. In the meantime, we're losing livestock numbers and if I'm right that we're seeing a liquidation in the hog industry that's not going to spell good times for corn. We do have a pick up in ethanol usage which is good and less imports of ethanol so that's good but I think what we're going to look at is that the corn market is going to take another look at these lows again. The only thing that might save us is two things, one the USDA did announce that they were going to re-survey the corn acres in seven states and they were going to also in two states, Illinois and Missouri, the sorghum makers.

Martin: Well, when that occurred, when that announcement came out it also coincided with the fact that the September corn got down to $3.04 and you're against $3 psychological so the market was due for a rally anyway and that just helped stimulate. But when we look back, last year the USDA re-surveyed acres I think twice and they changed the acres, lowered them I think three times. This time if we look back last year they ended up lowering the acres by just shy of 1.4 million acres but you really had a tough go last year. Individuals that are in Illinois and parts of Indiana, they might argue it out with you as to how severe it is this year but you didn't have the flooding like you had last year and therefore I look at last year as being exceptionally bad, this year was bad. So, I don't think you're going to see a drop in the acres quite as aggressive as you had last year.

Martin: So, as we come into August here maybe we get 500,000 less acres. Of course, one state that stands out for prevent plant is the state of North Dakota. But in the meantime, if you get anything over 500,000 acres I would have to believe those have went to soybeans. So, beans is going to be the benefactor and, of course, that then says we maybe push a few more beans into the carryout. In the meantime, the weather has been conducive to think that maybe the USDA did not change the yield in the last report in July. I think they'll increase that yield in this report and so that is also maybe muting some of this drop in acreage and maybe sets us up for a little increase in the carry on new crop and then to look at the decrease in numbers that we've got going around for livestock usage and it's a concern, you know, tighter cattle numbers even though we're feeding them a little heavier, tighter numbers and then the poultry it can change real fast but I think you're seeing a liquidation in the hog industry and that's detrimental.

Martin: So, of course, in the meantime China increased a lot of swine numbers but also they're crushing a lot of beans over there but will they need as much because the prices have dropped so hard over there as well for pork and the government has had to take over some of that into their reserves in order to cushion it or subsidize the farmer there. So, will the demand be as aggressive for soybean meal next year as it is this year? Probably not.

Pearson: Not a bullish picture for corn or beans in 2010.

Martin: No, actually even on the beans, you know, we've got Brazil, Solaris said this last week, is 83% sold and we have to remember they had less production than what was planned even though the acres were there. But a year ago they were 86% sold at this time. What we're looking at is that maybe they have a little less to sell but basically they're getting pretty well sold out so by the time we get into our marketing year, September, October, from there on forward into February when you start getting a few beans out of Brazil barring that maybe they don't have a weather problem they could look at an excellent crop this next year and, of course, they'll become very competitive but in between there there's nobody else to go to but the U.S.. So, our demand should be front end loaded and that should be good. In the meantime, you've got Argentina doesn't have anything to sell and they've got to get a crop going so that's April, May so I think we're going to have highs early next year and then our competition will take over.

Pearson: You mentioned that hog liquidation, we've got about a minute, Sue, what are your thoughts on pork?

Martin: Well, I think that we stand to have a tight supply of hogs next spring and I think that's going to be beneficial for the February on into June timeframe and I think that if I'm right that we are seeing the liquidation that I believe we are and, of course, if we can get a little hint of pick up in demand if the economies are indeed going to start getting better pork should benefit from that quite quickly.

Pearson: Sue Martin, we appreciate you being with us this week on Market to Market and here on Market Plus. Again, a reminder, call your local public television programmer right now if you're not watching this show on public television, our live version and ask your public television program director to run Market to Market. For all of us here on Market to Market and for Sue Martin, I'm Mark Pearson. Thanks for joining us. Have a great week.


Tags: agriculture commodity prices markets news sorghum