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Market Plus: Sep 15, 2006: Doug Hjort, Independent Analyst

posted on September 15, 2006

Market Plus: Sep 15, 2006: Doug Hjort, Independent Analyst Pearson: This is the Friday, September 15th version of our Market Plus segment, glad you've joined us. I'm Mark Pearson. With us this week is Doug Hjort, one of our regular market analysts. And Doug, you are the wheat guy on Market to Market, always have been, always will be. What is your take? You talked about soft red wheat market which is having some interesting things happen lately in Chicago, we know there's plenty of it. You talked about the hard red which, of course, we didn't have much hard red to talk about this year. What about Durham?

Hjort: Durham prices are on the rise up about a dollar from where they were a year ago at this time, maybe a little more. Supply down sharply this year from last year partly because of acreage cuts in the U.S. and Canada and then, of course, weather had its say as well. I think you look at this Durham market and it becomes a quality issue too to a degree. A lot of the Durham crop in North Dakota really came out in pretty good shape, pretty good quality. Yields might be down some. Farther west you went though into northeastern Montana and parts of Saskatchewan quality is really poor. So, that is the next shoe to drop here, so to speak, in this Durham market, find out just how much of the crop, reduced crop is of good quality. There is a worldwide shortage of Durham this year but we've got, in production, but we've got this big carry over coming over from next year that could be helping it out or will help out at least for a while. I think Durham prices will move higher, probably considerably higher yet in the coming year, several months and so on. So, I'm not really ready to sell Durham. I know it's kind of greedy maybe but, you know, four dollar average around the country now, I think it could go up considerably from there. And as you Durham producers know you get an opportunity to sell Durham at high prices once in a while and I think this is a year where that could happen. So, I'd give this market a little bit of time before I started marketing.

Pearson: I want to talk real quick about fed cattle. We talked a lot about the calf market just because it's been so astonishing for the last three years. You've got to make your money if you finish them out. You've got to be able to buy them high and make them work. You were talking 90's kind of holding this fed cattle market this next quarter, Doug?

Hjort: That is what has to happen to keep this market in tact. I think it probably will but remember we went through a period of very, very heavy and probably still in it placements into the feedlots the last two months or three. And those cattle are going to be coming back out during the winter months. I think we could be in for some rough sledding here if we're not careful. Keeping carcass weights down, live weights down and so on goes a long ways towards keeping those prices good. And so far producers have been doing a very good job of that. If they do that I think we can limit any major down money here over the next, into the winter months. But I would be looking and getting in touch with your broker and see if there are some opportunities for doing some hedging if nothing more just to lock in whatever profits are out there. Profits are pretty slim in the cattle market here so be sure to take them if they're there.

Pearson: Absolutely when you're paying these prices for calves, you've got to lock it in somewhere. Doug Hjort, as usual some excellent incentives, or some excellent ideas for us, some things to think about, appreciate that. From all of us here on Market to Market, I'm Mark Pearson, have a great week.

Tags: agriculture commodity prices livestock markets news