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Market Plus: May 06, 2005

posted on May 6, 2005

Market Plus: May 06, 2005

Pearson: Welcome to the Market Plus page at our Market to Market Web site where you get a little bit more than our market analysts on the show can give you. Mark Pearson here and this week we're with Doug Hjort, one of our senior analysts and Doug, you're a wheat man, you're from the wheat ranches of Montana. It has to do your heart good to see this big wheat crop that looks like it's coming in this year. You mentioned a couple of dry spots that they did talk about on that Kansas wheat tour.

Hjort: They did, it's mainly in the southern part of the state and that extends down through the center part of Oklahoma as well into south central Texas, southwest Texas I guess. Along with that Kansas report, by the way, Oklahoma -- people dip down into Oklahoma a little bit and they come up with a smaller crop than last year in Oklahoma. So, I think we've got different conditions all around. Getting back to my home country up in Montana they still are in the grips of drought up there and bitterly cold temperatures this past week. They had lows in the low teens, 11, 12, 13, 14 degrees more than one night. Now, I don't care if the wheat is just out of dormancy and very small, that is going to set it back hard and probably do some winter kill on some of that.

Hjort: The spring wheat area, western Dakota and northeastern Montana, very dry this year. It's the first time in about I think four or five years that that has been the case. All those years when the Central Montana area was real dry and in drought conditions, the northeastern part was okay. So, we're seeing some of these dry spots showing up. As of now it's not a problem and the marketplace is not paying any attention to it, probably rightly so. But as you get on into May and June you get those temperatures start to rise and get up into the 80's, wind always blows out there so you could have some pretty serious stress on this wheat. The weather forecast now for this coming week I think calls for some moisture out there but we've had two or three of those fronts come through and they have never really amounted to very much. Maybe there was an inch of rain here or there but very limited coverage and so on. So, I think for a wheat producer watch those weather patterns here in the next two to three weeks, see if they don't start to -- let's put it this way, if they don't get some rain in the next two to three weeks we'll see yield potential dropping off.

Pearson: And prices?

Hjort: Prices probably are not going to do very much unless it's a real serious matter. Until you start getting the harvest results or close enough to harvest to where you're going to see an impact there in a smaller crop. Right now even down in Texas where it's been dry, Oklahoma where it's been dry, the yield potential is still fairly good. They'll be harvesting down there within a month down in the north Texas area so we'll be getting some results at that time. But I think the crop is pretty good right in throughout that area. So, first results are going to be relatively high yields.

Pearson: Alright, so keep an eye on it and keep the trigger finger on sales poised. Talking about the trigger finger on sales, boy if you've got a six weight calf to sell you've got a gold mine on your hands. Is that going to stay that way for a while?

Hjort: Well, I'm surprised that the distant prices are just about as strong as the nearby cash. So, contracting for fall I had recommended to my clients to do that contracting back a month ago. Prices are that high or higher right now so I've got to believe those prices are going to come down. Now, obviously that is tied to the Canadian issue. If the Canadian border opens, say along about October or November, let's put it earlier than that, August, September, October, but especially by the time we start seeing the runs out of the mountains of our cattle and the calf runs start we can see those prices down sharply. I'd say 20 dollars a hundred weight to start with. These are excellent profit prices out there and I just think that is worth locking up not only something you have on hand right now backgrounded cattle or stocker cattle, feeder cattle, whatever, but the next year's calf crop too, this fall's calf crop I'd lock up those prices right now.

Pearson: Sell two calf crops, good idea. Doug Hjort, as usual, some good insights. Doug, thanks so much and thank you for checking in with us here at our Market to Market Web site. Be sure to tell your friends and neighbors to join us here for Market Plus. For all of us on Market to Market, I'm Mark Pearson, have a great week.


Tags: agriculture commodity prices markets news wheat