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Market Plus: Apr 27, 2007: Doug Hjort, Independent Analyst

posted on April 27, 2007

Market Plus: Apr 27, 2007: Doug Hjort, Independent Analyst Pearson: This is the Friday, April 27th, 2007 version of our market analysis segment for Market Plus here on Market to Market on our Website. Glad you've joined us. With us this week, Doug Hjort, one of our regular market analysts. And, Doug, we wanted to talk a little bit about a couple of issues we didn't really cover in the show and I kind of want to just give you a chance to pop off since we didn't discuss this earlier. What would you like to talk about, Doug, as we look here at the Market Plus segment?

Hjort: I think one thing we could talk about is buying feed and that sort of thing. On the graphics of the show you noted that the soybean meal prices just continue to keep going down and if you're looking at securing any protein for any of your feeding operations I'd just kind of keep the powder dry for a while. Buy it as you need it and don't build any inventories. The meal prices had rallied along with everything else back a month or two ago, whenever it was and got to really a high level for the supply-demand balance for soybean meal and just carried along by the emotionalism I think of everything else. Now we're back down futures just below $200 and I think they will continue to move on down. Get down around $190 you'll find some pretty good technical support and that will hold for at least a while just because it's technical support. But if the corn gets planted relatively on time soybean acres still going to be plenty large and if weather is good soybean prices will be going down and therefore meal will too. Kind of the same thing on the corn but you've got more urgency with buying corn, feed needs. Obviously weather is the key to that thing. If we come in on Monday morning and it's a warm and dry forecast for ten days to two weeks corn prices are going down, there's no question about that. But we talked about it on the show and the demand for corn is still so strong that I don't think corn prices are going to drop off too much. So, there you might look for opportunities within the next couple of weeks to lay in a supply or at least protect the price on feed.

Pearson: What's going on with soybean meal, Doug? Is this a factor of the distiller dried grains competing with meal?

Hjort: Well, it could be but you've got -- in the oil seed process you've got the spreads going on between the products and soybean oil, of course, over the last year has been supported by energy values and so on. So, that left the meal just kind of out here hanging out here and you had plenty of it around, actually surplus supply of it anyway. Well, finally the speculative market saw that soybean meal was under priced compared to either soybeans or soybean oil so they started buying that and then that ignited the rally that took it well over $200 and way on up. And now it's taken a month or more to work that back out of there. But it's just an oversupply situation. I don't know about the distiller dried grain and how that impacts against it but it obviously has to be taking some demand away.

Pearson: So, at this stage of the game you would be in more of a hurry to get some corn covered?

Hjort: I would at least watch this next week or two because obviously the opposite is true, if we have rain coming in by the middle or end of next week corn prices are most likely going to go shooting higher so you might be looking at the early part of next week to lay in some supply. Don't chase that market too terribly high but, you know, we've settled this market back pretty good on corn, soybean meal too. Your feed costs have been reduced from where they were two months ago. So, take advantage of that and be ready to build some inventories.

Pearson: Alright, some great ideas as usual from Doug Hjort. Doug, thanks for being with us. That wraps up our Market Plus segment here on Market to Market. Now, be sure to join us again next week, we'll be talking some more with our analysts. And, again, from all of us on Market to Market, I'm Mark Pearson. Have a great week.

Tags: agriculture commodity prices markets news