Pearson: Welcome to the Market Plus page here at our Market to Market Web site. I'm Mark Pearson, pleased to have with me this week our senior market analyst John Roach, Roach Ag. And John, let's talk about this corn market. You talked about it a little bit on the show this week and that was about the fact that you really don't want to sell a lot of corn in here. Opportunities to sell corn will be better later on. This may be a year to use those grain bins or perhaps engage in some other kind of strategy so you can lock in some of those gains.
Roach: You know, farmers need to understand when the best price for corn comes and I'm not sure everybody does. If they wanted to see the national average prices for corn for the last ten years, if they look at my Web site, roachag.com, you'll see those averages and what you'll see clearly is that the high price for corn comes during March, April, May and June and these are cash corn prices that are posted there. And if you sell in October it's the low of the year, October and November, and September is not much better than that. So, making sales at this time of the year, if that is your marketing program, routinely you're making sales in September and October and November, those are just the wrong three months. So, am I anxious to sell this year at this time? No, I'm not at all.
However, I don't think we have yet seen the harvest low. I think it will be lower than this. I do believe that the crop is a big crop and I think over the period of the next two or three weeks we're just going to get more and more yield reports that are going to show that the yields are big, particularly in the southern part of the country. And I think it's a good thing we have that big of a crop because we need it. The demand is also going to be at a record level this year, exports may be a little less than we're currently looking at but I think the demand for ethanol might be actually even bigger. And so when we get into next spring the normal seasonal high period, March, April, May and June, I think that we should be high again this upcoming year, certainly well above harvest price levels because world stocks are very, very tight and we need to raise a bumper crop next year and we'll be worried about it. That is the reason prices are higher in the spring, we're always worried about what the crop size will be.
When it's this time of the year people aren't so worried about it. And sure, we may have some bounces because of frost concerns but every day that goes by with this above normal temperature you're just moving one day closer to harvest.
Pearson: Alright, then let's talk about the fed cattle market, which has had a tremendous run, there is just no doubt about it considering all the problems that we faced in the beef business. As we head into the fourth quarter, you noted this on the show as well, why don't you expand upon it, larger weights. We're up a bunch on these carcass weights and the packers are starting to really ding those heavier 950 pound carcasses pretty hard.
Roach: Yeah, and feed lots are just not marketing as aggressively as they should be. The price backed off, the profitability backed off and more importantly, the price of feeder cattle just went through the roof. And so producers started to slow down the marketing, they could put a pound to gain on for a lot less than what they were able to sell it for and as they look to replace the animals then their cost went way high. So, the feedlots just started to put more pounds on and that is what we're dealing with here now. What we're hoping, of course, is that we open up the trade with Japan again and we're able to get out from underneath trouble in one fell swoop. But it would also seem to me that we're also getting close to opening up the border with Canada and so we may get, in a perfect world, we may see both of those events happen at about the same time to perhaps offset each other a little bit. But the longer term outlook in the beef business is positive.
I don't want to talk about it being negative. We got more positive news today, 144,000 new jobs in the month of August. And the economic news is, I believe, better than what the news media might have you believe. Corporate profits are running very strong, employment is coming back, consumer confidence is shaky a little bit but I think the longer term outlook is positive. I am worried, however, it's not positive enough to make these prices of feeder cattle profitable when they come to town.
Pearson: Okay, a word of warning from our senior market analyst, John Roach. I'm Mark Pearson, for all of us on Market to Market, thanks for joining us here on Market Plus. Have a great week.