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Market Plus: Apr 09, 2004

posted on April 9, 2004


Market Plus: Apr 09, 2004 Pearson: Hey, this is Mark Pearson, thanks so much for joining us for our Market Plus segment here on our Market to Market Web page. Glad to have Sue Martin with us this week, talk about these volatile soybeans. Sue, we spent a lot of time talking about soybeans on the show this week. There's a lot of things that can still happen to this bean market.

Martin: Well, it certainly can, Mark. I think that we're not rationing soybeans yet and we're tightening our carry further. The USDA did a pretty good job on this last report showing where the carry was and finally being honest with us. But the thing is, we still have to watch the crush to see how strong it stays as we go in through May and June into July. I think that we're looking at a chance here, I think we're going to break back down a little lower here yet this next week. But I think we should be putting in a low and then we try to rally on in back higher. It may be, the next timing I have for a potential top again, the first one I had was the first week of April and that one prevailed. Now, the next one is April 25th, 26th, possibly May 2nd. And then we need to skip on out into June, hopefully we have another leg yet, one more leg in this market. I think we do but this bean market is going to shell out, I think, a few longs here for a minute.

Pearson: And you pointed that out Thursday, that is what happened, some of the longs took the money and ran.

Martin: Absolutely, the funds are starting to liquidate out as commercials are buying back shorts. And in the meantime we can still get another swing up in that but, you know, it's the funds that have made a lot of the money. We have to go back and look at cattle. Cattle had a fairly healthy break, maybe a four, five dollar break before they went on for their last major swing in the market. To really get this market running rampid again I believe is going to have to take some kind of news, something like maybe Brazil down to 50, 49 million metric tons or you come in and we're very dry and warm through the spring and we go into early summer, very warm and dry and the fear of a drought enters into the market and it ramps you up that way. But my weather sources are looking for a good year this year for the producers. And so I hesitate to mention weather to farmers because with these kind of prices they're so willing to hang on and they're so, you know, what is that say, hope springs eternal, or faith springs eternal and I fear they're there. That concerns me a little bit. I think that if a person wants to play the bean market, when you're up in ten dollar levels you sell some cash beans. How often have you ever done that? And the other thing is, is then if you still think prices are going higher, but an at the money call and sell a dollar out of the money call. You limit yourself to a dollar but at least you don't have everything on the table. If the market goes down, you lose maybe twenty cents or twenty-five cents, but if the market goes higher you'll make that dollar.

Pearson: Absolutely, great strategy for those who use options. I want to talk real quick again, we kind of gave short shrift to the hog producers out there. You mentioned it, they had a decent month, starting to feel a little bit better. Of course, it's hard to feel real good in the hog business when you're talking about the meal prices and bean prices and corn prices we've been talking about. But going forward, you feel a little bit better about hogs.

Martin: I do, as we go to June I think that we're still going to see some good prices. Now, unlike the last two years, we broke prices down through April and May and then bounced in June, I think we're more something like three years ago where you had a rally into April, maybe hesitate a little bit in May and then you could still get another little bounce in June. I'm wondering if we aren't kind of trying to ebb back to some old fashioned markets a little bit. And, of course, it used to be June was a good month. Many times you'd see 50 dollar hogs in the month of June. And so I think we've got that potential. In fact, we're there and I think that when I look at the June hogs on the charts, seventy-five cents was a tough area. Our second counts were around 74, 87 I believe and we managed to close over that on Friday and close over seventy-five cents on Friday. This market now could be headed for 77.5 to 78 cents and I don't think that's asking the world for that market. In the meantime, demand for pork seems to be very good, especially for the bellies. New all-time highs in bellies and yet we keep pulling them right out of the freezer, the demand is just almost insatiable for meats. And I think that what we're seeing is, you know, if you look at McDonald's and Hardee's, they've got these chicken wrap sandwiches and they're going to come out with a hamburger that is a wrap. Well, what they have is bacon in them as well and yet no bun. That all goes back to those Atkins, South Beach, Dr. Phil diets and of course, I think, you know, just because there's a border between us and Canada doesn't mean those diets aren't going on in Canada as well. I bet you we find that there won't be quite as much meat coming across the border as we think.

Pearson: Good point, Sue Martin, as usual, great insights from Sue Martin here on our Market Plus segment, thanks for joining us. Be sure to tell your friends to stop by and say howdy doo here at the Market to Market Web site. For all of us here on Market to Market, have a great week.


Tags: agriculture commodity prices markets news