Pearson: Welcome to the Market Plus segment here at our Market to Market Web site. We're so glad that you've joined us. Be sure and tell your friends and neighbors about this very special offering here at our Market to Market Web site, part of the Market to Market program. Sue Martin, our guest this week. Sue, you stirred up a hornet's nest tonight. I know everybody is going to hear $14.55 and $14.60. You've got some caveats in there but there is some strong technical things that point this to reality.
Martin: Well, I certainly think it does and of course, I think that the dominoes that I see that would help us get there would be if we continue to lower the crop production in Brazil, which I think we will and also as we lower that crop production. Then of course, you know, and we get down to 52 million metric tons or if, God forbid, we ever take that out, well, then you're looking at a, remember we were looking at all that extra production to help take care of the added demand by the world this year and if they are no better than they were last year and we certainly came under and the quality is bad, which means you have to crush more beans to get the end result for the bean oil and the meal. I think that realization will just continue to drive the market. Now, the other side of the, the other thing that helps enhance this is, I really believe that bean oil is going to go to forty-six cents. And if I'm right on that I'm not sure what that equates to in a bean price, but I do see China as being a good importer of bean oil.
Pearson: Old crop, hold on. New crop, hold on. You would not be selling either one right now?
Martin: I would not sell at this time. I think that we're still going to get better prices yet. I think that if last year's new crop beans were worth eight dollars and they closed at $7.94, there is a double close there, double top close there on the November contract, year in, year out in old beans and if last year's November beans were worth eight dollars, under the type of environment we have, this next year's crop is very important. And we're going to garner more bean acres, granted, but it's a very important crop and I think we're going to see every bit of the reasons to have eight dollars again. I think that $7.35 is too cheap.
Pearson: Cattle market, a couple positive things that are happening here, obviously strong talk about Mexico reopening, which would definitely be a plus. But also the beef market in general, as you pointed out, we've been pulling cattle forward here for some time.
Martin: I think we really have. It was either that or the government reports had to be wrong on their placements and I think what it really came down to was we just have been pulling cattle ahead. I think they've marketed earlier and easier and of course, after the BSE issue did break out with good weather and the weight gains coming in I think that producers were very willing to move cattle as fast as they could because they were fearing we were going to go a lot lower than we actually did.
Pearson: Absolutely, so at this stage of the game you're friendly to this cattle market. What are your targets? Would you want to have some hedges in place? I hear you analysts talking about maybe another event could knock a leg out from these cattle markets. So, would you hedge up more?
Martin: Well, it certainly could but I think what is going to happen is April cattle futures are going to go to eighty cents first. I think, you know, we have gaps up to that point. I think we're going to go fill those gaps. If we couldn't break on the bad negative undertones or overtones that we had, well then we ought to be trying to rally. And if you take Mexico out of the picture, that their ban is no longer in place, well that ought to really start to lift this market. And I remember hearing on WHO radio this morning that Creekstone Packers out of Kentucky had an agreement with Japan that if they would be willing to test every animal that Japan would take their beef.
Pearson: Could open up those markets.
Martin: Absolutely, so you've got a packer already saying I'm willing, let's do it, except that they've got to get the USDA to agree.
Pearson: We talked about it on the Market to Market show Friday too.
Martin: That's right.
Pearson: And so that could be what it takes to get the wall down and get the beef moving back into those key Asian markets.
Martin: Well, we're very tight on supply. Not only are we tight on numbers right now, but with the tonnage down that even tightens us a little further, even though supplies and freezers are high.
Pearson: Strong demand driven markets through this. This is feeling pretty good out here in farm country.
Martin: I'm pleased to see it, farmers have deserved it for a long time. We went through a very, you know, we've seen city people doing well with the stock market but the producers, agriculture was suffering, now it's our turn.
Pearson: Alright, well we're going to, the only way to take advantage of it is to do just that, make some sales. Sue, we really appreciate you joining us. More on our Market to Market show next week, hope you join us then. Be sure to join us back here on our Market Plus site here on Market to Market's Web site.