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Market Plus: Sep 30, 2005

posted on September 30, 2005

Market Plus: Sep 30, 2005

Pearson: Welcome to the Market Plus segment here on Market to Market. Glad you've joined us here at our Web site and you've found us. Be sure to tell your friends and neighbors. Have them join us here, as well. I'm Mark Pearson. With us this week our senior market analyst, John Roach. And John, just before we get started a couple of things I wanted you to touch on in this segment that we didn't get a chance to talk about as much on the show. First of all, we have these extremely high oil and natural gas prices. These are all commodities. These are all trading commodities. There seems to be almost -- right now we are in a cycle with commodity prices where we are in the high end.

Roach: Absolutely. If you look at the commodity indexes, we're printing new highs in commodity indexes and any market that has any kind of a positive supply-demand situation going on is up pushing into pretty strong price levels. We see that across a pretty wide area of the commodities. We actually have sell signals on both cattle and hogs, on all, well, two of the three classes of wheat. We'll have the Chicago wheat in the sell signal on Monday probably and even the cotton market's in a sell signal. The only two markets are corn and soybeans that we cover that are not actually giving us a sell signal...

Pearson: ... that are in the midst of harvest and seasonally we would expect both of those to be under some pressure.

Roach: Absolutely. We're well past the harvest period on wheat and then we've had some good news there. The Iraqi demand has been surprisingly strong on the hard red winter wheat. We've got extremely good demand going on in the livestock business. It's like the markets are kind of climbing a wall of worry here in the livestock, which is always a good situation, but we're very much concerned as we look longer term that these kind of surges up in commodity markets can be followed by surges to the downside as we've certainly seen before.

Pearson: Alright, and of course, two things ... could be, expansion of pork and, of course, retention of heifers and rebuilding the cow herd eventually could all become issues. But near-term with $2.80, $2.90 gas how many people are going to be out in the restaurant trade, which has always been the high end of the beef business.

Roach: Well, we worry about that and we also worry about when the heating season comes full fledged upon us and we have people spending a lot of money for heating their home. So, we're worried about the livestock demand, we're worried about interest rates climbing. So, there are some things here in play that make us worried about the consumer's ability to continue to spend.

Pearson: You don't have sell signals on corn or beans and your strategies there, as you enunciated them on the show: find a home for them, use the carry on the corn and find a home for the soybeans, but then once you get the crop put away, don't be afraid to pull it back out again.

Roach: That's right, we want to be ready to sell beans quicker than normal. We're worried that the tightest supply of beans we think will occur during November and December. We think that once we get past the first of the year, we'll have U.S. beans become more available and I think we'll see South American beans become more available shortly after that. So, we're concerned. We don't want to be long-term holders of beans unless we start to develop a weather problem in Brazil.

Pearson: Alright, as usual some great insights. Thanks so much. John Roach, our senior market analyst, with us this week on Market to Market. And for all of us here on Market to Market and here at Market Plus, thanks for watching. I'm Mark Pearson. We'll see you next week.


Tags: agriculture commodity prices markets news