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Market Plus: Feb 23, 2007: Virgil Robinson, market analyst

posted on February 23, 2007

Market Plus: Feb 23, 2007: Virgil Robinson, market analyst Pearson: This is the Market Plus segment here at our Market to Market Website for Friday, February the 23rd, 2007. I'm Mark Pearson, with me this week, Virgil Robinson, our senior market analyst. And Virgil, it's just two months ago that you were on the show and you talked about minimum price and creating minimum price and people were doing that and rolling these things forward. As you said it's not cheap but it's been a great strategy to date. On the show you talked, hey, weather problems, who knows, corn could jump a buck. We got to the end of the segment, we talked so much about corn and beans that we didn't have much time to talk about the flip side, livestock producers, getting feed needs covered because that's been a big topic for most of the groups we've talked to that are in the livestock business.

Robinson: Mark, I think we would be remiss if we didn't warn our consumers, our feed buyers that the prospect of yet higher prices is an awfully good argument. I think they need to be aware of that fact and put together some type of strategy to defend against the significantly higher cost of corn and/or vegetable protein that might be serious trouble for them. So, in that context I did see tonight one of the traditional indicators that we've talked about for years and that is the CFTC commitment of triggers report where they go about the task of trying to measure the length or the size of the non-commercial, which is speculative, entity's position and as we visit tonight, Mark, it has grown to record proportions in corn and in soybean meal. So, that does swing the door wide open to some type of corrective phase and it doesn't need to be stimulated by anything in particular. Simply profit taking, liquidation, some of the trend following systems turn down from up and all of a sudden you have a significant pull down in value. That prospect exists tonight because of the size of the non-commercial's net long position. So, having said that, I would be prepared as a cattle feeder, a hog finisher, a poultry person, should we encounter in the next two weeks a pull back in corn futures anywhere from 15 to 30 cents and in soybean meal anywhere from $10 to $20 I would use that opportunity, Mark, to at a very minimum put together some type of price ceiling with call options. And I think the opportunity is awfully good as we visit tonight within the next two weeks.

Pearson: Okay, obviously the next key report you said on the show is the most important report that you've seen in your career in the market analysis business which goes back 30 years is going to come out at the end of March with that planting intentions report.

Robinson: It is, you know, the increase in planted corn acres is all over the map, Mark, anywhere from perhaps as few as 7 to as many as 13 which is a pretty significant swing and, of course, a lot of those acres, Mark, will be in areas that traditionally are not strong corn growing areas, the Dakotas come to mind, the south, southeastern part of the United States, so it's going to be imperative that in those regions that do intend to grow significantly more corn that weather cooperates and there are a host of climatologists all kind of lined up here at least as we visit tonight warning us of what could be a very cool, wet spring throughout the entire Corn Belt and then followed by what could be a dry, hot and or warm summer, Mark. So, here again with that kind of a forecast being commonly talked about those who depend on buying feed for extended periods of time please be advised that should we get some type of corrective behavior in the futures market and/or cash markets this is an opportunity I think to protect against what could be significantly higher prices a few short months from tonight.

Pearson: Virgil, you're always the best indicator about people leaning too far on one side of the boat. And you think we might see that here in the next couple of weeks?

Robinson: Yeah, I guess maybe it's because I've been there many times.

Pearson: Well, it's given you great insight and it's helped out our viewers a lot, Virgil, and we appreciate it.

Robinson: My pleasure, thank you.

Pearson: And that wraps up our Market Plus segment for this week. For all of you thank you so much for joining us. Of course, plan to be with us right here again next week. From all of us at Market to Market, I'm Mark Pearson, have a great week.

Tags: agriculture commodity prices markets news