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Market Plus: Mar 16, 2007: Virgil Robinson, Pioneer Hi-Bred International

posted on March 16, 2007

Market Plus: Mar 16, 2007: Virgil Robinson, Pioneer Hi-Bred International Pearson: This is the Friday, March 16th version of our 2007 Market to Market, Market Plus segment, glad you've joined us. Mark Pearson, with me this week one of our senior market analysts, Virgil Robinson. And Virgil we probably, we've talked so much about corn in weeks past I guess we didn't really talk about it as much on our show on the 16th as we normally would have. But it's become, you know, coffee shop conversation around the globe, how big is this corn crop going to be. And, of course, the first indicator is acreage. You talked about the Informa numbers that are out this week. And from what you're seeing those numbers may be a little conservative.

Robinson: Yeah, there are other private sources, Mark, that are touting double digit year over year increases in corn acres. Private sources which I can't visit about tonight would support that kind of thinking, Mark. And if they all would happen to yield at or near linear trend and there's a debate as well but something near 152 or 153 bushel per acre we're talking about a 12.3 or 12.4 billion bushel crop. Should that come to fruition that creates some infrastructure concerns, where will all of this corn go. I think there's been new storage put up commercially and on farm sites, Mark, but I don't think to that degree. So, clearly for those who are going and planting aggressively more corn this year than in years past please be advised have a plan devised. How are you going to manage those bushels? Are you going to manage them at home or are you going to defer that to your interior local elevator? And if so there are different marketing strategies attached with each.

Pearson: Absolutely, and, of course, Virgil, we started talking about acreage and everything and it's the 16th of March. Not a wheel has turned yet. We don't really know, no one has a fix on what could happen weather wise. So, again, really all everybody's doing at this point is just speculating. Obviously there is a feeling out there definitely and you've talked to a lot of producer groups this winter, I've talked to a lot of producer groups this winter, there is a definite shift that's occurred but the impact of that could, of course, in the end be determined by Mother Nature. Having said that if we have a wet spring, if we have crop disruptions is this market that susceptible to a super rally or has the market with where it's hung in terms of the $4 level pretty much accepted -- is that the risk premium out there right now?

Robinson: You know, the $4 level, Mark, I really haven't seen significant signs of rationing because of that price, beginning to see a little of it in the poultry industry although this week, you know, broiler sets were down a percent, the turkey hatch was actually up four percent so kind of mixed signals there but I'm seeing lighter weights, live cattle and hog weights, Mark, how much of that is attributed to rationing and how much to weather is an unknown here. As mentioned export sales remain relatively strong and in that context I neglected to mention earlier, Mark, ethanol futures are at a six month high and corn prices have just recently pulled off 35 to 50 cents a bushel. Nice combination, I don't think that's going to slow the refining of corn into ethanol at all. So, I see no rationing at least as we visit tonight in that particular driving force, if anything, capacities are continuing to grow so the demand for corn is large, Mark, it's going to require a 12.5 billion or something near that corn crop in 2007 to accommodate this growing demand. Anything short of that, significantly short of that and to answer your question this market remains very explosive.

Pearson: Absolutely. Alright, Virgil, that's all the time we have for Market Plus. Again, good background on what's happening in this corn market. And, again, people have to determine what their risk level is and as you say, as you've been preaching for the 17 years I've been on here, Virgil, establish some kind of minimum price is the best, safest way to handle this situation. Virgil Robinson, thank you so much. That wraps up Market Plus for this week. Hey, thank you for joining us and for all of us here on Market to Market I'm Mark Pearson, have a great week.

Tags: agriculture commodity prices markets news