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Market Plus: May 27, 2005

posted on May 27, 2005

Market Plus: May 27, 2005

Pearson: Welcome to the Market Plus segment here at our Market to Market Web site. I'm Mark Pearson. And joining me this week one of our senior analysts Tomm Pfitzenmaier. And Tomm, right now it's spring, everybody is watching this new crop grow and yet if you look at the USDA numbers there is still a lot of old crop, both corn and soybean either on farm, in storage or unpriced. What would you tell those people?

Pfitzenmaier: I think particularly in corn there is huge amounts of corn sitting out there. The crop is planted, its starting to get up and running and I have this big fear that everybody is going to come to the conclusion at the same time that they're going to need to move that old crop out to make space for the new one. You're already seeing on this --I think a good indication of that was on this rally weve had on corn over the last week or two you've seen every time the corn futures jump the cash market is very reluctant to follow along simply because everybody that is out there wanting to buy corn knows there is plenty of it to come, it's going to have to come and they don't have to pay up for it. So, I think absolutely you have to use these rallies to take advantage of that and get that corn priced and moved because if we get a good crop and we get into June or July and everything looks perfect that cash corn price is just going to get terrible.

Pearson: It's going to get ugly and it could get ugly by, you know, August.

Pfitzenmaier: Yeah, really quick.

Pearson: So, if you're out there and you're in a position where you haven't done anything now is the time to do it. Now, what about on soybeans? There's still a lot of old crop beans out there.

Pfitzenmaier: Well, there's a lot of old crop soybeans and there is also an upside potential. I mean, a lot of soybeans did get moved in that February/March period and so I'm not sure there is quite the, you know, the numbers. Plus, you can carry -- a $10,000 bin holds a lot more value by holding beans than it does corn. So, I think people are more inclined to sit on a few beans and ride those out. But I don't think there is as many of them out there as there is corn. And I think there is more upside potential in beans. So, I guess the corn is the one I'd really be getting aggressive on.

Pearson: Okay, it's time to start making some moves. Just wanted to talk real quick on livestock. You short-termed this fed cattle market. We saw a little bit of softening on the board this week. You mentioned we seem to be putting in some pretty serious highs on fed cattle.

Pfitzenmaier: Yeah, I think so. I think any dead cat bounces you get here back, like I said on the show, up in that $86, $87 area then I think they need to be sold. Now, that is hard for people to do because the cash market is trading above that. But that could get away from you really quick too. If there is any possibility of doing it you know the packers are going to try and break that down. So, I guess I still think you have to be aggressive on marketing and use any rallies as selling opportunities now.

Pearson: Excellent points as usual. Tomm Pfitzenmaier with us this week on Market to Market and right here on Market Plus. And for all of here on Market to Market, I'm Mark Pearson, have a great week.

Tags: agriculture commodity prices corn markets news USDA