Brugler:: Well, number one, it's volatility. We've got record open interest in a number of these commodity markets, we've got a lot of speculative ownership. That is going to result in bigger moves. You've got new money coming in the first of the month in many cases. That certainly happened this time. We saw some liquidation into May, fresh buying the first couple of days in June. We are getting a divorce sometimes between what appears to be the fundamental value of the commodity and the futures price. That is basis, which is the difference between the cash price and the futures is very poor for Chicago wheat, for example, corn in many areas, soybean meal less so. But we do get the situation where futures just go off on their own tangent. That certainly was the case this week in the meal. I think over time the DDG and the meal will compete with each other for a market share in that livestock feeding sector. That will tend to keep a lid on those prices. It will force some of that product into the export market and we'll have to adjust the rail system and the transportation system to be able to handle that extra by product.
Pearson: Alright, what about the oil business? That's another sector that is going to be impacted with soy based biodiesel. Soy oil prices typically have been relatively flat historically. I mean, it's a jar of mayonnaise, the soybean oil, it's got a pretty substantial food demand out there.
Brugler:: Yeah, we can't eliminate the food demand but at the moment it's kind of an issue we can defer. We've got 2.7 billion pounds of soybean oil in storage. That is historically the largest pile since 2002. So, we, for a while we can support both growth in both ends of it, the food use and in the fuel use. The other thing is that we're not expanding the fuel use that quickly because we have to build the biodiesel facilities to convert the soybean oil, to take the glycerin out of the oil to make it run better in the engines, particularly in the wintertime. We are anticipating within a year we'll be using soybean oil for biodiesel at the rate of about a billion pounds a year. At that point we start to shrink the amount that is available for other purposes. And the question becomes will the consumer pay more or will we get in a situation where fuel costs come down and biodiesel is not that competitive as a fuel.
Pearson: That will be our choice at that point. Let's talk about what our choices are for feeding cattle these days. We've talked about these high calf prices, fed cattle market has had a nice rally. Take us out to the final quarter of 2006. What do you see production wise, demand wise? I keep hearing from people who are saying, you know, this $2.80, $3 a gallon gas is going to impact just how many of those big center cut steaks we're going to actually enjoy this year.
Brugler:: Well, we're not seeing, in the data at least, any substantial cut back in meat consumption by American producers. We don't know where they are substituting dollars, we know they're still spending them at the pump but we know it hasn't shown up in the data. There is a tendency to lag that a little bit. It shows up later on in the process. Months later you realize that you did lose some demand. But I think what is happening is that the consumers have decided that that meat consumption is important to them and they're paying the price at the present time. The question for me is whether, when that export market comes back online and takes out some of the surplus that we're currently dealing with, does that affect us? Does it push prices so high that a consumer finally says, that's enough, I'm going to go to chicken?
Pearson: Well, let's hope we find out, let's hope we get this Japanese situation resolved among others and we'll find out.
Brugler:: Having said that I think the average cattleman or cattle producer would love to have that problem of price rationing the beef or the pork or the chicken.
Pearson: Absolutely. Alan Brugler, thank you so much. That will wrap up this edition of Market Plus. We're glad you've joined us. Be sure to join us again next week for more Market Plus. For all of us from Market to Market, I'm Mark Pearson, have a great week.