Iowa Public Television


Market Plus: Aug 01, 2003

posted on August 1, 2003

Market Plus: Aug 01, 2003


Pearson:And joining us this week on Market Plus is our market analyst Tomm Pfitzenmaier and thank all of you for joining us here on our Market to Market Web site and don't forget, tell a friend, we appreciate it. Tomm, let's talk about what's ahead, corn market in particular. There's a lot of folks out there with long faces saying, you know, corn market has gone down, we've lost thirty, thirty-five cents and it's all over nothing I can do, whoa is me, let's LDP.


Pfitzenmaeir:Well, I think they're going to get an opportunity to LDP but I don't know that all the pricing opportunities are gone here. With the big crop, probably not a very great ability to store it all. There's going to be basis falling, deterioration probably going into harvest not to mention all the dingers you get from, you know, holding a crop at the elevator. So, I think there's an opportunity here on any strength of three, four, five cents, sell corn, sell cash corn and then wait and I think there's a potential for fifteen, twenty cents down in corn and you could have a fairly substantial LDP to tack on top of that. So, I guess, you know, you could certainly do nothing, wait and take your LDP and sell corn for whatever the corn price is but you've got an opportunity here to pick up a little twenty cent premium maybe by making the sale now. Or like I said on the show that $2.20 put for ten or twelve cents gives you a pretty good floor, you know, make some money on that, stick an LDP on top of that plus all your counter cyclical and all the other payments and $2.50 corn or better.

Yeah, with a very, very good yield. So, I mean gross dollars per acre is what you're looking at and that's about the only way to max that out. I mean, you can sit and complain about, you know, I didn't get stuff sold at the higher level, well I mean, that's water over the dam, you can't spend a lot of time worrying about that. You've got to take advantage of the opportunities that are presenting themselves now and you don't have to look around too hard to see we've got a big corn crop coming up and that's going to be depressing the corn prices.

I mean, you can talk about heat and you can talk about dry weather and all that. It doesn't matter, with the subsoil we've got you aren't going to ruin this corn crop from here on out.

No, so get active and don't turn your brain off and just go to the LDP, let's try and make some money on the way down. Yeah, there's more money to be made here.


Pearson:And a lot of times the producers, we don't think about making money on the way down and yet that's what we need to be doing. Two good strategy ideas there, Tomm, that's excellent. Alright, let's talk livestock, fed cattle market, it's just rolled along. This U.S. market just looks so good and yet there's this cloud up north in Canada that is at some point going to come...

Pfitzenmaeir:I have a little concern that the producer is going to rapidly here become complacent about that and start thinking, well, you know, this is where prices should be, Canada isn't going to get this thing worked out and I don't need to take any protection, everything is going to be fine. I'm starting to sense that attitude already here over the last week or two and it's going to continue to get worse as prices firm up here. So, I really think having some insurance on this thing and avoid becoming complacent about it because complacence becomes the worst enemy of cattle producers every single time. You're right that we're current, the fear has been there, you know, we're in really good shape but we've got to make sure we stay on our toes, take a little protection and protect that because these are very good prices that are very much worth defending.

Pearson:Absolutely but it's hard to get defensive when we've got eighty-one cent fat cattle out.

Pfitzenmaeir:Yeah, it is, it is but everybody has gotten so comfortable with it being Iowa that the puts have gotten relatively cheap too so you can buy a put that's not that far away for a buck or less and have yourself, because if they open the gates we're going to have a big correction in the cattle market. I don't think there's too much question about that.

Pearson:No doubt about it, some good ideas, Tomm. As usual we appreciate it. Tomm Pfitzenmaier joining us here on the Market Plus segment of our Market to Market Web site. Thanks for joining us from all of us here on Market to Market.


Tags: agriculture commodity prices corn markets news