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Market Plus: Mar 06, 2009: John Roach, Senior Market Analyst

posted on March 6, 2009

Market Plus: Mar 06, 2009: John Roach, Senior Market Analyst Pearson: Welcome, this is the Friday, March 6, 2009 version of Market Plus. We're glad you've joined us here at our Market to Market Web site. With us this week our senior market analyst, John Roach, to talk a little bit about what's happening in the markets. One thing that has been happening in the markets and affects us certainly you mentioned on the livestock front too during the show this week and that is this general economy. You've brought up the point and I've seen in print that you've mentioned it that with all the stimulus that has been put in the economy by the President and Congress to get the economy rolling again there's a lot of big numbers floating around there. Eventually this money is going to hit Main Street isn't it?

Roach: It will, unfortunately it's been taking forever to get there and one thing about traders is they're very impatient, they want immediate gratification and if they don't get it today then they react today and they'll continue to react until they finally start to see something changing, something happening and until money gets in the hands of the people, the real people, the people who are needing the job, until we start to see some of that occur then we're struggling. People are starting to believe that this amount of money won't make any difference and that's a fallacy, that's a mistake. People need to understand that the dollars that they're talking about are huge dollars, they're so huge they're beyond anything we can think about. In fact, to get an understanding if we take $1 trillion in hundred dollar bills it's 11 million tons of hundred dollar bills. So, these huge numbers that are so big that we have a hard time -- but until they flow, until you get your first paycheck then it doesn't make any difference. It's coming but it's not here yet.

Pearson: Talk about how that affects the grain markets in particular. You mentioned China and India on the show as well. Still good, solid growing economies over there.

Roach: Fantastic growth. They were targeting an 8% growth rate in China and a 6% growth rate in India. That's phenomenal kinds of growth. So, the economic engine that was really moving us before it still out there and it's not idling, it's running at a pretty good pace right now. So, again, people have been dealing with this uncertainty and this nervousness and negative and bad news for months and so every day it's another bad news, another bad news, another bad news and so we just have to be careful that we don't fail to understand there's a lot of money about ready to flow.

Pearson: And that's got to be good news for the livestock sector. We talked cattle in particular but going forward people, again, with jobs going out to eat with some more disposable income.

Roach: I think that's certainly the case and I think another thing has happened in the livestock business and that is we've started to see people back away from it, people finally saying this is enough. So, at the same time that we're going to see demand coming up we're also going to see supplies being reduced.

Pearson: And so hopefully maybe the second half of the year may be some better opportunities for the livestock sector?

Roach: I sure think so. I think if you're ever planning on getting into the livestock business it's a great time to get into the business and I think that we have to understand that we're likely at some sort of a bottom spot here in all this negative news or the peak of the negative news is really right around us here now.

Pearson: Alright, we're hoping that's the case. You mentioned on the show the commodity markets have started to divorce themselves somewhat from the general economic news and we saw it this week as the equity markets dropped lower and the commodity markets held their own.

Roach: They did a nice job of that and if you look at the actual cash bids, the cash bids are actually showing more strength than the futures markets.

Pearson: So, again, just hopefully you heard it here first, hopefully we're at the bottom of this thing, hopefully we'll start to see some light showing at the end of the tunnel. We're probably one of the few media programs that have that kind of a perspective this week. So, I think it's worthwhile. We want to say a big thanks to John Roach for being with us this week, our senior market analyst. We want to thank you for joining us here at our Market to Market Web site. And a reminder, a lot of public television stations are out there trying to raise money to support programs like Market to Market on their station so we'd remind you to take advantage of that. Also, if you can only see us on the Web and you'd like to see us on your local PBS station be sure to contact your local PBS programmer and say we want Market to Market so we can see the live show as it comes out on public television. So, for all of us here on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news