Pearson: Welcome to the Market Plus page here at our Market to Market Web site, glad you've joined us. Great show this week with Walt Hackney and Doug Jackson, always good to have those two great heads back in the studio with us. And Doug, I want to talk -- you mentioned the Brazilian contract. We really didn't talk much about that it's now available on the Chicago Board of Trade. We really didn't talk much about Brazilian production and what you're seeing down there.
Jackson: Mark, this has been a very interesting situation. The currency, the domestic currency the Real has just skyrocketed. So, producers there are receiving less Real's per bushel or per bag and this has really thwarted farmers selling there. We started trading the new contract this week and as I said during the show the basis is about 10 over delivered to the ports in Brazil. But typically at this time of the year it would be 30-50 under. So, we've seen a dramatic farmer holding pattern down there. They had been experiencing a tremendous increase in the cost of production. Of course, they have learned to spray an average of two times to control Asian soy rust, on top of that fertilizer which is a key part of their production of soy has skyrocketed with higher energy prices and then they have had the currency effect. So, their cost of production has increased dramatically and this has prompted them to be tight holders. And right now in Madagraso the key area of expansion they see current prices even with futures near six dollars in Chicago at barely break even prices. Well, now longer term, Mark, to satisfy growing world demand for soy we need to increase acreage six million acres per year primarily in Brazil. And with higher cost of production they may not increase at that level. And so we may see a situation here where we have a lot less down side fundamentally long-term because we've got to keep prices at levels that keep Brazilian soy production very profitable to get the required expansion that we need each year.
Pearson: Interesting what is happening down there. It's not just about production, it's about world economies and currencies. Walt Hackney, similar trade issues going on for cattle producers and that is what is happening up in Canada. What is the impact of this thing? I remember back when we embargoed soybeans from Brazil -- or to Japan -- and the Japanese went to Brazil and we kicked off a whole industry down there. Have we done the same thing with value added beef up in Canada by keeping the doors closed?
Hackney: I think we have. I think the Canadian government in response to the total decimation of their cattle industry up there, as you reported on tonight's show. I think they have decided to get behind their cattlemen and promote their own product within their own country and go export with their own product regardless of what happens to the Canadian border. It's interesting because a large percentage, if not a majority percentage of that beef being processed in Canada today is coming to the United States in boxes anyway. Now, the question being what happens if the Canadians develop their own market and go into the world trade on export with their own product instead of so heavily relying on the United States to market their beef for them. IBP or Tyson Foods now, they are getting ready to put another 1000 head a day capacity on their plant up there. Cargill, at High River, Canada, south of Calgary is getting ready to put another 1000 head of cattle a day on their kill. They are in the process of remodeling now for that. It will happen towards fall. The reports are the Canadian yards are literally running over with cattle. They say their tails are hanging over the fences. That may not be a bad omen down here as far as an avalanche of cattle coming down from Canada. But it might in the world trade of extraordinary amounts of beef going to export out of Canada in the markets that we have had in the past and are no longer as competitive as we were.
Pearson: So, this whole situation, in trade situations often it's not exactly just the up and down of what is happening with the border being closed. It could be the overall ramifications.
Hackney: Certainly could, Mark.
Pearson: Good points, good points. Walter, great points. Doug, thank you so much. You guys, good to have you with us. And thank all of you for checking in with us here at our Market Plus Web site. For all of us on Market to Market I'm Mark Pearson. Have a great week