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Market Plus: Sep 19, 2003

posted on September 19, 2003

Market Plus: Sep 19, 2003

Pearson: Welcome to the Market Plus segment of our Market to Market Web page. We're so glad that you've joined us. Why not tell your friends and neighbors to stop by too or click on as they say, click and be a part of this special segment here on Market to Market. I'm Mark Pearson, with me this week one of our regular Market analysts Virgil Robinson, he's been the flavor of the month out there on this soybean market in particular, Virgil, you were saying this thing's gotten way over done to the berry side back in August. Boom, things have certainly changed. They're still changing, this bean market is continuing to rise. We talked on the show about the fact, yeah, there's beans in Brazil, there's beans elsewhere, talk about where you think things could head from this stage, Virgil, again we're getting, we're doing this program in the face of some early harvest activity, yield reports are extremely negative as you mentioned on the show.

Robinson: Mark, I think, again, that is driving the market or at least one of the primary drivers and in that context we should note that the speculative community which is tracked by a CFTC report, routine report, is approaching, you know, as long a position as they've ever had in soybeans and that's fine, Mark. And to this point they've been accurate in positioning themselves that way. But as earlier mentioned it remains to be seen here in the near term with these higher prices, does our export pace pick up from where it left off here at the end of last crop year? And again we were deprived of that data this week because of the hurricane on the East Coast. My guess is, Mark, it's probably slowed some, I know the domestic processing margins have also weakened of late, primarily because of the reluctancy of soybean meal to contribute much here. You know, meal is competing with distillers product and competition globally and it's an anchor as we visit tonight. So, there's a combination of events developing here near term wise that trouble me and lead me to believe should the speculative community decide that it's time to ring the register, move to the sideline, we could find ourselves with a thirty or forty cent price decline very, very quickly, could happen as quickly as a day or two. So, my idea here is trying to bring to the attention of producers if you've made no sales to this point in time, the six dollar fifty cent mark basis the futures contract, the spot futures contract in my opinion is pretty dog gone stiff resistance, so this appears to me to be a short-term opportunity, Mark. Positioning yourself at a later date in the harvest for the pole as we think about how big will the crop in the southern hemisphere and so on be, I don't have any problem with that either. But I think there will be an opportunity within the next couple of weeks to do precisely that. And take advantage of basis of many areas.

Pearson:Virgil, real quick, the cattle market. We talked about record prices, record beef to pork spreads, which as you point out rightfully, and going forward based on this cattle on feed report that came out Friday afternoon, how does this change your outlook?

Robinson: Well, Mark, again I think if history serves us well and I'm using tonight, the reference between retail beef, retail pork, that spread which I think if I calculated correctly is as large as I've ever seen, it's historically wide, about thirty dollars between the two, that, even levels below that have encouraged in past additional pork consumption to the sacrifice of beef. So, I think that demand is going to slow. I don't think it's going to fall apart, Mark, I think it's just going to slow down and the ability for us to sustain ninety dollar plus live cattle is in jeopardy here. So, the American cattle producer has done a phenomenal job keeping lots current and resisting being overly bullish at ninety dollars plus. I'm just of the opinion we can sustain something in the low to mid 80's for an extended period of time.

Pearson:Alrighty, Virgil Robinson, as usual, some great comments and insight. For all of us here on Market to Market, thanks for joining us here at the Market Plus page.

Tags: agriculture commodity prices markets news