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Market Plus: Feb 20, 2009: Jamey Kohake, Market Analyst

posted on February 20, 2009

Market Plus: Feb 20, 2009: Jamey Kohake, Market Analyst Pearson: This is the Friday, February 20th, 2009 version of Market Plus. We're glad you've joined us here on our Market to Market Web site. And with us this week one of our regular market analysts, Jamey Kohake. Jamey, good to have you with us, you always have a great look at the market. The thing I like about your analysis is you also see not only about what we can't do but maybe some things that we can do even in challenging times like we're in right now with this big sell off on soybeans this week, a lot of producers are thinking oh boy we've missed it, we missed the opportunity to sell beans at big prices and maybe there's some opportunities out there for producers.

Kohake: I think so if a guy is willing to wait. I don't think we're going to shoot straight back up by any means but if we can get a correction in the outside markets and push back higher off of that and there's no reason really to lock in a hedge. You've got your new crop beans in an 80 cent basis so you're locking in $2 loss maybe and I think there's plenty of opportunities to see actually if we're going to get a four million acre shift in the beans, maybe not now, maybe a little bit will go back to corn and also make the market prove that we do have a crop in South America.

Pearson: What kind of acreage now are you plugging in for beans?

Kohake: I'm not up to around four million acres any more like I was two months ago. I think maybe a million and a half to two million and I think that's going to be a touchy subject these next two weeks as crop insurance gets done and the March 15th deadline ends.

Pearson: And then we'll see what USDA has to say end of March about what planting intentions are. For producers out there though you think maybe we've got a buck back up?

Kohake: Longer term I do. I don't think you're going to see these funds go short into the March 31st report. They're short about 60,000 corn right now, short about 30,000 wheat, I think they're looking for an excuse to take profits and push us back up and hopefully what that does is just moves the trading range higher instead of right now maybe is the middle and expand it thirty cents downwards, maybe move the bottom side fifty cents higher and then move that range higher for summer months and then get a weather scare in July and be talking $9.50, $10.00 beans then.

Pearson: So, that may be our best opportunity to make sales.

Kohake: I think it's going to be down the road and hopefully we'll get some short covering these next six weeks and get a boost off that.

Pearson: Is product moving pretty well? Bean meal had a big sell off this last week.

Kohake: Right, there's still grain moving, that's why the basis has tightened up a little bit and guys are selling off of that but it's not moving as fast or as hard I don't think as the commercials want it to be and I think we'll show that basis tightening up still all the way until the March report and so the commercials don't get caught wrong and you're talking $9.00, $10.00 beans again.

Pearson: I want to talk about the cattle market. The cattle on feed report Friday as you mentioned on the show was pretty much not a surprise, pretty much a snoozer report. That's not all bad is it?

Kohake: No, it's not at least on the supportive there, not something to add fuel to the fire on Monday if the Dow is lower and the dollar is higher again. I still think there's more down side in the cattle and wait and see next week if 80 holds in the cash or not. If that doesn't I think you could probably see another down week but the market is over sold, heavy and I think just good supportive financials would help out a lot and you'd flush these shorts out. They've got a lot of money on the table and look for a quick reason to get out.

Pearson: That's right, maybe get a short covering type rally and maybe that might be a catalyst for some stronger prices. You mentioned demand, hotel, restaurant and institutional demand has been very soft for beef and partly for pork too. In fact, we've just seen less travel, we've seen less hotel business, less restaurant business, people aren't eating out as much so those are all things, all challenges tied to the equity markets. It's going to be fairly friendly though the equities getting into the second half of the year.

Kohake: I think eventually all of this will get factored into the market. The guys that are scared and that want to get out will be out by then and I think you're going to find some bargain guys wanting to come in there and buy this stuff for 89% off. I don't think it's going to be next week or anything like that but I think sometime this summer we will bottom out and hopefully the stimulus package will help out too and get everything kind of back into more of a stable frame of mind.

Pearson: You're not seeing really much until the second half of the year, maybe start buying some of these cattle below 80 cents?

Kohake: I do, June board especially around 80 I think you only have to risk two cents. Do you risk it to hold contract lows at 78? Any long trade right now you've pretty much got a line in the sand for this week's lows and if it goes below that you're out.

Pearson: Everything is softer this week, I mean, it was just a blow out in equities, in commodities, you name it. And that typically sets us up for opportunities later on.

Kohake: Exactly. You go back to this summer when we did have these meltdowns like this week, it was all financial related, no shift in the fundamentals with corn, beans, wheat or cow or hogs, dollar is higher and you've got to get out of everything by the funds. We went through this this past summer three or four different times and every time you see a big spike along the chart you wait a week and see the short covering come back up. The grains will eventually separate themselves and I think we're closer there than I would be buying a Dow or S&P right now.

Pearson: As usual, Jamey, some great insights, we appreciate it. Jamey Kohake with us this week on Market Plus. For all of us here on Market to Market a big thanks for joining us. And don't forget if you'd like to see the show live on your local public television station, we appreciate you joining us here on the Internet, but if you'd like to pick up the show live on public television contact your local public television station and say we want Market to Market. From all of us here on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news