Kub: Yeah, well, $20 is an interesting price tag for you to mention because I know that there are producers that have been offered $20 for their spring wheat and turned it down because they see it's a bullish market and there's also the idea that they want to keep their seed wheat. You hear from the seed dealers that this should be a big year for seed wheat because they have sold a lot more Durham seed and spring wheat seed but maybe that's just because everyone has sold off the seed in the bins that they would ordinarily have.
Pearson: They'd hold back and were using it. And that was one of the issues where we didn't get as much wheat in the U.S. supposedly is because there wasn't any wheat seed, there was such a terrible crop for the hard red winter wheat growers that you couldn't find it to plant. So, now where do we go? What's going to happen now? It looks like, you mentioned the front months on wheat, new crop wheat looked good. Make sales there?
Kub: Yeah, new crop wheat definitely. I mean, that is poised to bottom out. These expanded limits will allow that to drop really, really fast and if you are in the position where you want to be using the futures or options market or if you have a local buyer that is willing to forward contract for you this would be an interesting time to do it because the chances of it going that high again without some kind of other production issue in the United States are really slim. In fact, chances of the front month contracts, even the March Minneapolis spring wheat which is the one that is most closely tracked, this spike, you know, even that one is looking like it might be getting toppy. I'm not going to call a top on it. There's definitely some speculators out there that have a profit target of $20 and they're going to stay in there until they see it. But it's looking like it could fall pretty fast too.
Pearson: Alright, how does that relate to the soybean market? I mean, we've had such speculative fervor there. Again, the South America crop you mentioned people don't seem to care about that I guess but this could be a lot of beans down there, obviously very tight number here, what, 17 days supply in the United States for soybeans which is tight. We can't have a weather problem and if we do bar the door.
Kub: Yeah, it compares quite nicely to the wheat market and there's also the story here of short soybean seed that people may not be able to source the soybeans.
Pearson: We've heard that one, yes.
Kub: So, if that happens or if any of these things happen like you're mentioning, you know, this will be the next wheat market. The spreads show that, the spreads are inverted past July so obviously commercial traders are very concerned about getting a hold of soybeans already and if anything else happens, like you said, bar the door. It hasn't happened yet but $13 could be the base price for 2008.
Pearson: You mentioned the soybean seed issue, had a long visit yesterday with a producer over in central Illinois who has bumped into that problem.
Kub: In Illinois?
Pearson: Yeah, he say hey, I'm a little concerned about it. So, I think those are issues that are certainly out there that could affect this bean acreage number. You wouldn't commit to an acreage shift number on the air for corn or soybeans. But, I mean, if you look at this thing right now, you look at where the soybean market is, where the corn market is and what input costs are it's got to be a huge favor to soybeans.
Kub: Oh, I think so. I mean, I am personally planning on planting soybeans over corn absolutely just because what I said of the potential. On their own right now if you look at the November soybean prices and the December corn prices you're probably more profitable to plant corn. If you have to lock in your prices now, if your bank is forcing you to do that or you're depending on crop insurance to tell you what to plant corn is the choice for most producers. But if you're ready to gamble it all or if you got burned last year on corn yields, if you were in an area, you know, south of I-70 or whatever or in the northern fringes of the Corn Belt soybeans are your choice absolutely.
Pearson: Alright, well, we'll find out for sure March 31, we'll see what happens until then. As usual great to have you with us, Elaine Kub joining us here on our market plus segment and with us on Market to Market this week. And from all of us here on Market to Market, I'm Mark Pearson telling you to have a great week.