Pearson: Welcome to our Market Plus segment here at our Market to Market Web site, glad you've joined us. Two great analysts with us tonight, Darin Newsom and Erin Golly. And tell you what, it's been an interesting week for the soybean market, Darin, and kind of pretends maybe of things to come. People aren't all that comfortable, you talked about it on the show briefly, but people aren't all that comfortable that Brazil is going to have a huge crop this year, Brazil and Argentina.
Newsom: Right, you know, we're looking at still some substantial production in South America. But the thing is it's a huge question mark right now, we really don't know. And as we move through our harvest and we get comfortable with what we have presumably under storage at this point the possible production, the acreage questions, how much did they spend on input costs and what does this mean for final yield, that is going to move to the forefront and it's going to keep our markets on a pretty good edge here over the next few months.
Pearson: So, you're not in a big hurry to price soybeans?
Newsom: No, you know, if I've been holding hedges now for quite some time going back to last planting season or maybe even the year before that depending on how early they got into their marketing program I'm going to let this basis appreciate a little bit. We're into a time of year where we normally see this sort of thing begin to happen where we normally see the market start to firm. You know, futures may start to work higher, it might start to work against the hedges a little bit but keep a close eye on the basis market. It has improved here ten, twelve cents over the last week to ten days, looking pretty good for this type of move to continue.
Pearson: Alright, Erin Golly, you were talking about a number of things but you talked about beef and pork. You kept bringing up Avian Flu. It's on the front page of the big news magazines and the President came out with yeah we're going to respond to it if we have a pandemic here in the United States of Avian Flu. The real issue of this thing is the poultry sector. I mean, to go outside of the United States, outside of the world that is their big concern, fear is the migratory effects of birds might bring it up here. What do you see the impact of this thing potentially?
Golly: Well, the potential is that it could change worldwide meat demand and it varies from country to country how it's going to affect each person and each industry. The U.S. pork and U.S. poultry right now are sort of standing at a, have an upper hand in that right now because those are considered the safe meats right now and of course, they came out and they've got the bird flu in Canada, not the deadly kind, they discovered that last week. And they assume it's going to be down here at some time but I think it's really important for people to realize that it can change the worldwide meat demand and affect us positively.
Pearson: U.S. poultry could benefit?
Golly: Right now it can, before they have it.
Pearson: Before they have it. But the pork market probably is going to be the next logical benefactor.
Golly: That's right and we're starting to see some good exports go out, you know, Wal-Mart is advertising U.S. pork in China right now. So, we feel real positively that we can benefit from the Avian Flu.
Pearson: Interesting, so as we look ahead, so if you're a pork producer out there now and you're watching the show and you're thinking hmm, wow this could impact me you're talking about just using some puts for the time being?
Golly: That's right because if demand really steps in we don't want to keep a cap on the top side. So, I think it's important just to lock in profitability by purchasing puts.
Pearson: One more thing, last time you were on the show you were talking about we're going to see some expansion. We saw that in USDA hogs and pigs report, we saw the expansion. The kills have been huge and we're still moving the pork at pretty decent levels.
Golly: I think the big kills are coming actually from the farrowings that we saw this summer. We had some producers up ten to fifteen percent in their farrowing numbers and I think that is where the large numbers are coming from. People found it very hard to find building spaces this summer, slats were hard to find, building costs were a lot higher. So, I think that has kept a lot of people backing off from putting up the new buildings. But we're seeing the large numbers I think from the farrowing.
Pearson: Okay, well it was a good spring for it and again, you talked also about the summer farrowings with the high heat. You know, we could have had some issues there, some conception problems and everything else. So, be an interesting follow, the hog business and the soybean business and of course appreciate all of you joining us here on our Market Plus Web site. I want to thank Erin and Darin Newsom for being with us and hope you'll join us again next week. For all of us here on Market to Market, I'm Mark Pearson, have a great week.