Iowa Public Television


Market Plus: Apr 16, 2004

posted on April 16, 2004

Market Plus: Apr 16, 2004

Pearson: Thank you for joining us here at the Market Plus segment on our Market to Market Web page, glad you've joined us. Remember, be sure and tell your friends, have them join us here too. The more the merrier as we like to say on this show. John Roach is with us, always a merry time. John, I want to talk, we talked about beans and so we talked about beans until we can't talk about beans anymore. I want to switch to corn. Corn is going in the ground right now, we've got farmers on planters, great season, plant in the dust and the bins will bust and clear across the grain belt it's fairly dry, it's ideal conditions, a lot of corn is going to go in the ground. Right now, as we look forward we've had some awfully good prices on new crop corn. You're not in a big hurry to sell right now because we've had a dip. What is your outlook for corn and what is your outlook broadly for the ag economy as we go forward? Interest rates and currency values I know are always top on your list.

Roach: The outlook in agriculture right now is quite bright. We need to find additional acreage in this country in order to satisfy the demand for corn, soybeans and cotton and wheat. We're going to scramble to be able to get enough corn and soybean acreage in order to satisfy the demand unless we have just extremely good yields. So, the weather is very important but the overall outlook in agriculture is strong. Remember when the Chinese started doing business, we knew that if they continued to crank on their business that we were going to have to figure out a way to produce more grain and we're at that crossroads quite frankly. And South America will be able to pick up some of that slack but as we saw this year where they have a little bit of a weather problem, then suddenly the world supplies are very, very tight. So, the overall outlook is good, but when you look at the price levels that we've been seeing, eight dollar soybeans for new crop delivery. We were very close to that here a week or so ago. That is an extremely high price to be able to sell the entire US crop. Corn at $3.40, extremely high price level to try to sell the entire US crop. So, the marketplace put in an awful lot of weather premium, a lot of weather risk worried that we wouldn't get the big yields that we need and now in the last week the weather has turned about as good as it can be to be able to get those big yields. So, we traded the worry and now we're trading the potential to get those big yields and to get a few more acres of corn, which is what we need. So, how far up can the market go is really going to depend on what the weather is. As long as the crop goes in the ground, good, get some rain on it. You can't do much damage to corn until it's something in excess of knee high. You can't hardly hurt it, it just grows. So, if we get the crop planted in good style and we get some rain on it the corn market is really going to struggle here for a little bit. But any weather problem at all and the corn market comes back alive very quickly.

Pearson: I want you to relate that to livestock production. You mentioned it on the show, that high corn prices are going to -- we have a small cow herd and we have a small calf crop thereby, the hog business, we've had some big numbers, we keep pushing big numbers both in the US and Canada, we talked about Canadian pigs coming into the show tonight. Just real quick John, when it comes to these high prices we're going to see some rationing in this livestock sector aren't we?

Roach: I think we've already seen some rationing in the livestock sector. Part of it came from the BSE scare, we've seen the Asian bird flu issue, I think we're going to continue to see some rationing here at these kind of price levels of grain. People just decide that they're not going to feed as many animals and they're not going to feed them as long.

Pearson: Okay, there you have it. John Roach, as usual, some great comments. John Roach, our senior market analyst on Market to Market, joining us on our Market Plus page this week. Thanks for joining us, be sure and tell your friends and we'll see you next time. From all of us here on Market to Market, have a great week.

Tags: agriculture commodity prices corn markets news