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Market Plus: Nov 07, 2003

posted on November 7, 2003


Market Plus: Nov 07, 2003

Pearson: Welcome to the Market Plus page here at our Market to Market Web site. Mark Pearson here, glad that you can join us. Be sure to tell your friends and neighbors, they can punch us up here too, we'd love to have them join us. And this week our market analyst, one of our long time analysts, Virgil Robinson. Virgil, again, I mean, you've gone the countryside, you going into any sale barn, coffee shop, convenience store in a rural area and you're going to talk about soybeans and soybean prices. We haven't had much to talk about the last few years on the ag front. So this is, you get beans around that eight dollar area people really start thinking. Talk about what you see ahead, obviously we're going to get a lot more clarity, at least from the government standpoint, next week.

Robinson: Yeah, Mark, I think you're right. The eight dollar mark, I think, attracted quite a movement of beans to the pipe, the pipe was temporarily satisfied and the markets have come tumbling down. I think there's probably some additional leakage in the futures market simply because it is highly ladened with speculative interests, Mark, and some of the oscillators and moving averages and those sort of barometers have turned. And that's probably going to attract some additional liquidation here in the futures market. I've pegged this $7.20 mark basis Jan. beans is kind of a pivotal number, Mark. And I think we'll hold and find pretty good support there and I think, again, it will be led by, at this point, some pretty strong domestic interest in procuring and acquiring beans simply because margins, processing margins are profitable. So, again, for those folks who have only the desire to make one cash sale or two, I would, at this point, resist the panic button here and be a bit more patient. I think there's a recovery in the futures market in the not too distant future. The catalyst may even come as early as next Wednesday if the USDA does in fact project the US crop another 25 or 30 million below what they did in October, Mark.

Pearson: Okay, let's go over to livestock. We didn't talk much about hogs in the show, there wasn't much time, there wasn't a whole lot to say. Like you say, the big thing is how big is this pig crop going to be and are we going to expand. It still comes back to the beef market, we've got high retail prices, good demand. You said on the show, everything is, the stars are aligned for this fed cattle market.

Robinson: Yeah, it's still very, at least to the best of my knowledge, very firmly underpinned, Mark, by good strong demand and as mentioned earlier, producers have been very disciplined to keep their inventories sold to the point where we're actually selling cattle maybe even a little before they're ready in some instances. Again, Mark, I don't sense that there's any significant problem in the market aside from the fact that we have a huge high price here. And competition is clearly available and clearly will be a factor. But to suggest, I witnessed, I've witnessed and seen the end of this big bull market in cattle would be misleading. I have not seen any of those indicators aligned thus far.

Pearson: I talked to a cattle feeder in the western Corn Belt this last week who said he went out west to look for calves, couldn't find anything he felt would even come close to working, he said they're going to fix pens for the next twelve months, not going to reload with cattle. What's that going to do for us?

Robinson: Well, in some instances, Mark, you know, an empty pen site can be the best decision made. That person could always, of course, if he or she chose, accumulate an inventory in futures contracts or in some type of option strategy and manage his or her money maybe a little more effectively than by filling the lots. But that clearly is not going to replenish the supply of fed cattle if that in fact in the prevailing attitude amongst the industry, Mark. I don't sense that it is but you're example, I think, is well noted here.

Pearson: Alright, Virgil, always good to hear from you. Virgil Robinson, our guest this week on Market to Market, here on our Market Plus Web page. Again, thank much for checking in with us. Be sure to check in next week for more of these volatile commodity markets. For all of us here on Market to Market, I'm Mark Pearson, have a great week.


Tags: agriculture commodity prices markets news