Roach: I think the market today is fully priced. There's enough farmers that want to make some sales here around the year end at these kind of price levels in the cash market that I don't think we need to go higher in order to supply all the demand out there that's coming to the marketplace.
Pearson: Okay, so you're not expecting, at least between now and the first quarter of 2006, a sharp up move, people are going to be hitting themselves in the back for selling corn early. On the show you were talking about next spring being the next tripping point for the corn market.
Roach: Yeah, the market has to be comfortable here as we move through the end of December and first part of January. Normally there's a lot of sales that get made during January, there's a lot of deliveries from prior sales. My guess is we're going to have a very full pipeline moving through this early part of 2007. But at some point we'll have farmers pretty well satisfied with what they want to sell and I think farmers will get to be tough. I think they'll be unwilling to make sales on percentages of the crop that they're holding onto, once they get past the February bill paying I think farmers will make up their mind that they're just going to wait and I think that means the market has to come up and entice corn away from them and I think that will all happen at a time when we're worried about whether we can get the crop planted on time, whether we have good soil conditions or poor soil conditions or not enough moisture. It's always too something in April and May and we always seem to worry the market and I think we will again this year.
Pearson: Okay, so that will be your opportunity to make sales.
Roach: I think that will be our best opportunity to be making sales here of this crop year, will occur during that March, April, May, June timeframe. That's our normal high period of the year and I don't see any reason for it to not be there again this year. I don't see the surpluses building, I don't see any surpluses building, we'll increase the stocks but we're not going to get them to be surplused this next year in any way that I can see other than if we're surprisingly large on acreage and have a wonderful growing season. But we won't know either one of those, the answers to either one of those questions until we get clear on out into June really before we'll have good, solid planting numbers and have an idea of what our growing season is going to be like.
Pearson: Alright, you talked on the show, you had made some small sales of 2007, 2008 and 2009, very small percentage sales. You also talked about option strategy.
Roach: Our belief is that if we back up this year the strategy that worked the best this year is to have done nothing, to have sold nothing. But obviously that's not a solution for most producers. Most producers can't roll the dice quite that heavily. The alternative that most producers have adopted for years now has been to contract in the spring of the year portions of their crop, particularly portions they can't store for fall delivery, so when it comes out of the field, it goes to the elevator, it's marked sold. Last year those sales were a lot of them in the $2.20 to $2.30 area and yet when we took the corn out of the field it was well over $3. So, those contracts didn't work well last year and I think they have a potential to not work well this year if there is any kind of weather problem. So, we want to dial down a little the number of contracts we put on and dial up the number of put options that we purchase so we can ensure the crop, have some downside price protection but still have the opportunity to take advantage of substantially higher prices should there be a weather problem. And we think it's time now for producers to start making those plans, putting those dollars necessary to buy the puts into the cash flow, into their budget so that they're prepared this upcoming spring to be able to utilize those put options rather than utilize quite as many contracts as they're used to.
Pearson: Okay, alright, of course the volatility issue and everything else this would solve a lot of that for the average producer.
Roach: Well, we're going to have very volatile markets, you just have to expect that this next spring and so we just have to be prepared for up and down price movements bigger than what we've been seeing here in the last couple of months.
Pearson: John Roach, our senior market analyst on Market to Market, thanks for being with us this week. I'm Mark Pearson. For all of us here on Market to Market, thanks for joining us.