Hackney: I see two things. I see a reluctance of the normal cattle feeding public jumping back into the numbers of feeding cattle because of the record or near record losses that we've taken in the industry within the last two months. With that having been said those feedlots are going to either personally get the capital to feed cattle within their own feedlot commercially or they are going to be able to salvage a nucleus of cattle feeders that went through a strong, well managed risk management program that allowed them to stay in this market and avoided these $200 and $300 a head losses. So, what do we see in there? It's going to be a seller's market on feeder cattle. It's going to be a risk management driven market on fat cattle going to packers. So, it will be interesting to see how the industry handles that. You have a gentleman here, Don Roose, his insight on the risk management factor and really yours too, Mark, is going to be dictative of the activity that goes on in the slaughter cattle industry this year. There is a potential for good profit in these cattle if it's handled properly. The guy that's flying by the seat of his britches and deciding he's going to have the cash market dictate his market opportunities as we get into the third and fourth quarter of this year may not like the returns any better than what he's experiencing right now.
Pearson: Real quick fourth quarter -- you think we'll see beef prices strengthen as we get into that fourth quarter but before then you're saying let's get our ducks together here, let's make sure that we're properly managed for our risk needs.
Hackney: Well, as a cattleman and living in hope and dying in despair usually I would like to believe that the fourth quarter is going to give us an adequate cash market and it's going to, if you will, turn a positive profit in the cattle feeding business. 2008 should have given us a big enough signal that we need to settle in our minds for less per head profit than what we dreamed of getting and mark in a profit that would be equitable to our operations. So, as a result of that I think the fourth quarter given the fact that we're going to have a general shortage of cattle on feed is going to be a positive. The unknown is what is the economy going to allow the consumer to do in relation to those prices that you talked about the beef market. I don't know where it's going to be.
Pearson: A small cow herd on top of everything else but we need to see some demand come back, we need to get this equity market squared away and these banks squared away. Hopefully we're going to get this economy rolling. But Don, again, we tend to market last year's crop, we tend to market what happened last year and that can be dangerous in 2009 versus 2008.
Roose: Well, it's a different environment in this next year that's for sure and there's a lot of opportunities all the time in marketing, it's just a matter of what tool to use and the tools are out there. And so I guess what we'd like to always look at and promote is make sure that you're aware of what are the big dynamics in the market and I think you have to realize that now we're in a slow down in world trade and I think what that means is we're still relatively high on grain prices from a historical standpoint so if inputs continue to erode like they have been I think there's some opportunities that you can still lock in corn prices using some tools, some put options for $1 down side move with a limited potential but at the same time give yourself a rally on corn of $1 to the up side. So, I think it's more about not being out there just open but make sure you're covered, try and protect yourself and if opportunities after that present themselves so be it but at least you're in a decent financial position.
Pearson: Option strategies dominate a lot of the thinking on your getting some insurance.
Roose: They really do. I think the options have been around since the late to mid 80s and the volume is very high, there's a lot of things that you can do and we found that they're a tool that is just invaluable whether it's last year or going forward and they're still just a terrific amount of opportunities all the way around both for the person trying to sell grain and for the person that's trying to protect himself for the up side.
Pearson: You've got to start making a decision and you've got to look at a price and see what's reasonable and what you think things could do and how could we take advantage of a particular situation. With all the negatives out there right now what kind of strategies are you considering?
Roose: Well, I think you have to have -- where do you think the down side is on some of these grain prices and realistically December corn could drop $1 down to $3 and still be a respectable price historically, beans $7 so I think when you look at tools you can buy, for example, $3.90 corn puts where you're covered there, you can sell some $5.30 December corn calls where you're capped at $5.30 and that's a nice range and you'll still give yourself a chance to break down to $2.70, $2.80. You can do something like that for 20 cents a bushel. And then you can go out and go about your work and you'll look for better opportunities but at least you're sitting in a position that you feel comfortable with financially.
Pearson: Good ideas. Walt Hackney, thank you. Don Roose, thank you so much for being with us, we appreciate it. We want to thank everyone for joining us here at our Market Plus Web site. And for all of us here on Market to Market, I'm Mark Pearson. Remember contact your local public television station and make a pledge if you enjoy programs like Market to Market. For everybody here on Market to Market, I'm Mark Pearson. Have a great week.