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Market Plus: Jan 23, 2009: Sue Martin

posted on January 23, 2009


Market Plus: Jan 23, 2009: Sue Martin Pearson: Welcome to the Friday, January 23rd, 2009 version of Market Plus. We're glad you've joined us here at our Market to Market Web site. Be sure to tell your friends or neighbors and, of course, if you'd like to see our show, I've heard from so many of you from being out in the country, speaking all over the place and people say I love Market to Market and I wish I could see the show on my public television station locally, contact your local public television programmer and say we'd love to have Market to Market on our airwaves. With us this week you'd really like to have it on because Sue Martin is with us and she's with us here on Market Plus. She talked a lot about wheat and some things that were new to me and exciting so we didn't talk really as much about corn and soybeans as we normally would with you, Sue. So, let's talk about the corn market. You mentioned a couple of troubled spots and one of those was biofuels and ethanol, where's that going to go. USDA keeps dialing back the demand. It hopefully would work for the VeraSun bankruptcy that you talked about getting plants maybe back into production which would be a positive. But where are we headed corn wise? There's plenty of demand out there. We've got a big carryout though too, do you think we'll be able to chew through it all?

Martin: Well, we do have a big carryout and, of course, if we get 87 million plus acres then we're going to probably be looking at a carryout that holds. I will say this -- in the meantime because of the disruptions with VeraSun, the second largest ethanol producer in the country, and also because exports were slow in their takeoff and part of that was because of the poor fall that we had, the weather delaying our harvest way out we missed our first quarter basically and that's usually your best time for exports. So, because of that I think our March 1st stocks are going to grow. But in the meantime I think that we are going to have a traditional February decline for the corn and, of course, if that occurs then beans are probably helping it a little bit too. And I think corn comes down and we maybe don't get all the way down to test the December lows of December 5th but I think you get down towards that level and then we find a low and catch and start back up as we start into our acreage fight. I will say this -- if we are anything under that 87 million acres that just says we have to have perfect weather this year to be able to get decent yields and, of course, yields that would probably have to be up around 165 bushels per acre. So, I think that when I look at the corn market the one thing that I think that stands out to me in all the studies I've done for a year like this one, you know, last year was bipolar, we went straight up, straight down on everything. This year is going to be more of a massaging market or more of a floating market so to speak. We're going to have our up periods and then we're going to fade away and then we're going to come back and fade away. But the concern I have is that once we get past the first half of May, and it may not even last into May, but once we get past that I envision a market that declines quite hard on corn and these lows that July corn has seen will be exceeded and we may go look at the $2.90 level on July corn. So, if that all comes to fruition really we're trying to push our clients and our Web site clients and getting them geared up that everything gets sold this spring. And, of course, it's all happening when they're the most busy. If La Nina stays with us through February then the odds favor that we could have a cool, wet spring again. Well, that's not what we need. There's a lot of field work to be done. And then you go in through summer, you might have a drought, but is it one like last year where it was cool and dry rather than hot and dry? It's the temperatures that drive the markets in higher prices. We need to have good yields this year because our carryouts, I see in 2010, will not increase.

Pearson: So, you're weather tracking right now and you're always one of the early birds when it comes to what a weather forecast is going to be, you're looking for hopefully more normal conditions then for the most part for 2009.

Martin: Yes I am and the fact that farmers own all the grain. I mean, they built these huge bins and they have all of that on farm. And so unfortunately, of course, we need to see a pick up in the demand for ethanol and that type of thing but unfortunately farmers are holding the product. They are also holding the product in South America. So, the western hemisphere everybody has got product and that's usually not a good environment and they tend to wait until summer to sell rather than the springtime when they're planting. This year I think our window of highs for the year is coming earlier.

Pearson: Let's talk about soybeans. You were pretty upbeat about soybeans on the show.

Martin: Well, I like beans. I think they have the most potential. I think that we have a carryout that could go backwards here as we get into February on our supply and demand report. Exports have been phenomenal and I think that the crush has been awfully good, well the crush has been slow, but in the meantime we're selling beans out the door. I think that we have to keep our eyes on South America because what I could envision is that we sell off beans as well into the February timeframe. We may have a February low or a March low and I'm wondering if it isn't a March low this year instead. Then we turn and catch and come nice up and maybe see the highs of the year again in the spring as our export window has been expanded because of problems in South America. But again farmers own everything here and there and that means we've got a very competitive situation going on and we have to watch what our dollar does.

Pearson: We only have about a minute, Sue, but on the show you also mentioned concern about perhaps some kind of trade action against China because of currency issues. I can't think that's going to be a positive for us.

Martin: No, it's not. That's going to be a very concerning thing and if that occurs -- and see, President Barack Obama was even looking into this the year before he started to run for office. So, according to what Timothy Geithner indicated yesterday he almost indicated that we may see something taking place in the spring. Well, that fits the timing but unfortunately it, again, feeds into a very negative window and we already have our time windows picked for when our lows are coming this year too. And so I think that we just have to be very watchful of what the dollar is doing. The dollar is trying to rally at this time. It looks like it's going to take a look at the November highs and we'll see -- there's tough resistance from 90 to 92 on the cash index. Can it get through that? If it does then look out. I hate it that our dollar has to break for us to have exports, that's not a good thing. If we're all on the same playing field it will be helpful. China has been buying U.S. debt, they may not buy as much as they once did but I've got to say I think China's stimulus package for their country may be better than what ours is.

Pearson: We'll see what happens. Sue Martin, as usual some great information, some great insights, some great thinking. Thank you for being with us here on the show and, of course, here on Market Plus as well. Again, a reminder if you'd like to see our show on your public television station say on a Friday night why not contact your local public television programming director and tell them to run it. thank you for being with us, Sue, we'll have more next week. From all of us here on Market to Market, I'm Mark Pearson. Have a great week.


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