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Market Plus: Jan 09, 2004

posted on January 9, 2004

Market Plus: Jan 09, 2004

Pearson: Welcome to the Market Plus spot here on our Market to Market Web page. Glad you've joined us, I'm Mark Pearson. Our analyst this week, Tomm Pfitzenmaier, one of our senior analysts. And Tomm, what a wild run it's been in this fed cattle market. I mean, we're talking a buck fifty in the beef here not long ago and now we're back down there selling $75 fats. Cattlemen's heads are just spinning and everyone is trying to guess what's going to happen. You're saying, let's air on the side of caution.

Pfitzenmaier: Yeah, absolutely. I mean, it's hard for me to believe we're going to have that kind of an event hit the cattle market and then it's all going to be over within five to seven days. I'm just really afraid of the thing. It's not surprising that you're going to get a dead cat bounce here on this market and you might even see the fat market trade back up in that $76-78 area, that wouldn't surprise me. But I think you need to stay current and you need to plan for the possibility of another event. Maybe there won't be one, hope there's not one, hope you waste your money doing it but I think for your own financial protection a guy needs to have a little coverage here.

Pearson: Maybe start hedging on some of these rallies, is that what you're looking to do?

Pfitzenmaier: Yeah, absolutely. I wouldn't sell the breaks but I certainly would use any rallies that come along as selling opportunities. Like I said, you get up in that $77-78 area, probably not a bad place to step in there and do a little something.

Pearson: You said something else in the show that I think bears repeating and we're forgetting this. We're two or three bucks ahead of where we were a year ago in this fed cattle market. I know we've got some higher priced feeders to work through but still, this ain't all bad.

Pfitzenmaier: No, that's right and I'm fairly optimistic with the future. I mean, the numbers aren't going to be huge. If we can keep ourselves from putting weight on these cattle they're probably going to be alright. But we just need to be, just like you said, air on the side of caution, I believe.

Pearson: Alright, let's talk about the bean market. Now, there's been a lot of talk out there, but out in the countryside speaking a lot of groups and man there's a lot of optimism about this big spike in beans. The spike is going to come, we're overdue for a spike, we've been flat in the bean market for quite a while.

Pfitzenmaier: Bean, I didn't say this on the show, but bean rallies don't last more than 12 weeks. If you look back historically, anybody who wants to buy beans, needs to buy beans, is scared that they're not going to get their beans bought, historically always gets them bought within twelve weeks. And this rally has gone on well over 12 weeks. So, everybody knows the situation, everybody that needs to get covered has gotten their chance to get covered. Like I said, those three or four things on the show, if one of those four doesn't come true, and they're all a little iffy, then this bean market is going to struggle and may go back and retest the seven dollar area.

Pfitzenmaier: So, everybody is counting on this spike but what's out there that we don't know? South America is in great shape, we're all hanging our hat on this rust that may or may not happen. We're starting to see some meal maybe creep into the Southwest/Eastern United States. If you look back at the last big rally we had, what is the one thing that killed it? Soybean meal coming into the Southeastern United States. So, you know, everybody is all excited and they think that we're ready for the big one here, but maybe we're not, maybe we've had it.

Pearson: I tell you what, a lot of producers out there have already moved cash beans.

Pfitzenmaier: Well, you know, it's kind of interesting. I spoke to a group this week and talked to several guys and they said, well, several of them said well I'm 100% sold. And I said well, did you intend it? And he says, no, I thought I was fifty percent sold but I've only got half a crop.

Pfitzenmaier: So, yeah, they're more sold than they want to be, I think, in a lot of cases.

Pearson: Alright, again, maybe a little bit more of a cautious tone as you do additional marketing here on these beans.

Pfitzenmaier: Yeah, I think the upside potential, even if it breaks up to the top side, like I said on the show,$8.50, $8.75, that's only 40 to 60 cents up from here and with maybe a dollar downside potential.

Pearson: Good comments, as usual. Good analysis from Tomm Pfitzenmaier. Thank you for joining us here at our Market to Market Web page. Be sure to tell your friends and neighbors. For all of us here at Market to Market, have a great week.


Tags: agriculture cattle commodity prices livestock markets news