Roach: I think we have. I got into this business in January of 1973 and the best thing that happened to me was that I didn't know anything about prices and didn't realize that when corn moved over $1.50 it was at a high price. Before we stopped, of course, in '74 we approached $4 a bushel. We went from a dollar kind of a corn market to a sharply higher one and then settled into a $2 to $3 kind of a market with some exceptions to that. I think now we're moving to a higher plateau. And I'm not the only person, clearly, if you see what land prices are doing and rent prices the whole infrastructure of agriculture is moving to a new plateau and I think that is very smart money that is thinking that way. And what's happened is similar to what happened in the 1970's only perhaps even more dynamic. In the 1970's we moved from primarily the domestic market to one that was very much stimulated by exports. Now we're moving from the market we've known which is exports and domestic to a market that is being stimulated not only by the fuel demand from our products but also by tremendous economic growth in big areas of the world. The Chinese economic growth has been running nine to ten percent now for several years, it's forecast to continue for a while. India is growing at a seven percent rate. Between those two countries you have 30% of the world's population. That is a tremendous demand for food. I think food is the new market play. We've seen precious metals, we've seen land, we've seen currencies, we've seen energies. I think food is the new play.
Pearson: Related to that, of course, is what's going to happen in the corn market and corn prices which are the big driver of this whole thing right now. Obviously the ethanol demand is huge, these new plants coming online and these are real infrastructure items. I was told this week by a guy I trust who said the cost to build a new ethanol plant because of all the inputs that are involved is increasing at one percent a month. So, that explains maybe the haste that people are in to get these plants off the ground and that's going to be big demand for next year. Is the USDA capturing all this new demand do you think in the numbers we're looking at?
Roach: Well, the numbers they gave us this week, what they're calling their baseline numbers, projected a billion bushels increased corn consumption going into alcohol next year. That is a bigger number than I had seen anybody post before. Their numbers for the years out, the second and the third year out were smaller numbers than most of the trade anticipated but if they use any bigger numbers we'd simply run out of corn. So, they had to do something in order to make their supply-demand tables work. Ethanol is a real solid business that's going to be around as long as the relationship between corn and energy prices, gasoline prices are in this relative comparison.
Pearson: Alright, John, what about soybeans?
Roach: Soybean market is following along because if we're going to supply the ethanol business in the United States we're not going to be able to plant all the soybeans that we've been planting. We're going to lose soybean acreage this year in the United States and we're going to lose soybean acreage next year in the United States. And at the same time we have China continuing to have quite an appetite for soybeans and their usage graph is moving up at a relatively sharp angle. So, we're going to have to get increased acreage planted in South America and it's going to take more dollars per acre in order to accomplish that.
Pearson: Alright, well it's going to be interesting to see what pans out, 2007 has already become a record breaking year in many respects for agriculture and we'll see if we can grow this corn crop. And, John, just as a postscript are we going to get the acres do you think? And do you think that USDA report will show it?
Roach: Boy, I don't know. I think so, yes, I guess I do think that we will get the acres. We'll probably find an additional nine million acres, perhaps even ten. I also think we'll have a greater percentage of that corn harvested and less going into silage than what we've normally seen. But interestingly enough I was in six meetings in the last two weeks in a couple of different areas in Iowa and three different areas over in Illinois and the farmers there all said or virtually all said that they're going to plant what they figured they were going to plant last fall, that nobody has really changed their planting rotation ideas since last fall. So, all this market movement we've seen has not yet stimulated people to change what their ideas were last fall. And, of course, that means if the weather allows them to do what they would like to do in a timely fashion. So, it's going to be interesting to see just how many acres they really actually do get planted. I was of the opinion that we've really stimulated or am of the opinion we've really stimulated it. Every meeting every farmer has been to for the last several months has shown the profitability of corn compared to soybeans. But I was a little surprised in these meetings that people had not really changed their ideas from what they had last fall.
Pearson: John Roach, thank you so much for being with us, appreciate your insights as usual. And, of course, from all of us here on Market to Market, I'm Mark Pearson. Have a great week.