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Market Plus: Apr 04, 2008: Jamey Kohake

posted on April 4, 2008

Market Plus: Apr 04, 2008: Jamey Kohake Pearson: Welcome to the Friday, April 4th, 2008 version of Market Plus. We're glad you've joined us here at our Market to Market Web site. And Jamey Kohake is with us this week and he's a Kansan, he's always got some great insights on what's happening in the grain market. He's actually out there working, hedging with a lot of producers. Jamey, first of all, what is your take on these prospective plantings numbers? The wheat number looks to be pretty solid but this corn and soybean number I'm already hearing a lot of people and I'm sure you're hearing the same thing maybe we might make a switch.

Kohake: Yes, I think we probably will. The last four years going into the June report we've actually increased corn acres and I would not be surprised to see 2 to 4 million more this year and about all that should be based on weather if we can get dried out or not especially down south.

Pearson: Let's talk about the economics of both. The economics have been favoring corn and obviously following this report corn moves up over $6, I know that had to turn some people's heads. And I put the question to you on the show and I was serious but how do you tell somebody not to take advantage of record, lifetime high prices in corn? Aren't some sales warranted here?

Kohake: I think some minor ones could be. Obviously a guy could sell part of it, half of it or all of it if he wanted to, come back and buy some cheap calls, go buy some July or September options to replace it and recapture whatever type of rally we might see and just risk 10 or 15 cents on a call option.

Pearson: Exactly and at least have some insurance on the down side. And, again, if we have a wet issue, which you pointed out runs about from Arkansas up through Minneapolis or a big chunk of the key corn belt, if those areas continue to stay wet we could be right back to beans again.

Kohake: Exactly. That's going to be the key. It's pretty heavy traded weather market right now. This week coming up one to four inches across the same area that got hit last week so there's no relief in that area and the key will be a little bit farther west if we can get planting in that area next week and kind of make up for what's being missed in Missouri right now.

Pearson: Several analysts have said that 2008 has to be the perfect year. And, of course, for that to happen very similar frankly to 2007 which for most areas except for the wheat belt it was a perfect year in corn and soybeans in the world, we need that to happen. Soybean use has been huge. The cheap dollar has been a big factor in exporting the product. What is your feeling on the dollar?

Kohake: I still think it trends lower yet. I would sell rallies into the dollar. I wouldn't be surprised if there is another two cuts this year which should keep the dollar in a solemn note right now with downward pressure. I think that does have a lot to do with exports keeping pretty strong right now especially in the corn. Beans could be a little choppier depending on what South America does with their strike. But everything is proving to be pretty solid right now.

Pearson: On the show I asked you about selling a year out, two years out. You're not in favor of that in wheat, corn or beans?

Kohake: Not right now unless something drastically would change, you know, here in the next ten days or Sunday night or Monday coming to the markets with a drastic weather change or dry out and I would still probably look, especially in corn, if you get a deep sell off, you plant for two weeks, you break at 60 cents, I still think we're probably going to see another balance yet so reown part of it with some calls.

Pearson: Alright, so, again, you think at some point this stuff is all going to go higher?

Kohake: I think corn right now. I'm not all that bullish beans myself but it seems like the easiest path right now a lot of guys are bearish beans and it looks like they're caught wrong and in time to get those guys flushed out it looks like the trend is higher. I would understand a very sharp rally myself either I like to sell into the beans but until the market gets happy and can find a fair value price right now it looks like there's more upside.

Pearson: Jamey, as usual, good to have you with us. Jamey Kohake joining us here on Market to Market. Appreciate his efforts. And for all of us here on Market to Market we want to say a big thank you to all of you. I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news