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Market Plus: Jun 13, 2003

posted on June 13, 2003

Market Plus: Jun 13, 2003

Pearson: Market Plus here at our Market to Market Web site. I'm Mark Pearson, glad that you've joined us and don't forget, tell a friend about our Market Plus site and have them visit us here at our Market to Market Web site. Our guest this week, Doug Hjort and we're going down memory lane. Doug, you've been on this show for what, 25, 26 years?

Hjort: It's coming up on that yeah.

Pearson: It seems like something is different every week. This week we're talking government numbers. There was some disgruntlement about the corn and bean numbers from some people, felt maybe the USDA got a little light on the export numbers. Let's talk about this wheat number. You've been talking about this wheat rally which we've had, we've had a nice little wheat rally but also there are a lot of other issues out there in this wheat business besides just the production, quality is one.

Hjort: Well, that's right and it's a big concern. Oklahoma, I thought some stories out of there this past week were interesting. In part of the state they're talking about test weights on the crop that's been standing in wet weather for a long time, 54, 55 pounds. In other parts of the state they claim they had some 65 pound wheat down there. Now, I think that would be a record for hard red winter wheat if it's that heavy. But very good quality wheat in other parts of the state that haven't had as much rain.

The soft red winter wheat, soft red named that way because the shell of the kernel is a little softer and therefore can not stand as much moisture on it before it starts to deteriorate. That wheat in Tennessee, Arkansas, anywhere south of that too and moving on up into the Ohio River Valley now that stuff is ripe and ready to go. Well, not into southern Illinois yet but a lot of it is and having some serious quality problems even to the point that, as we mentioned on the show earlier, the USDA cut production a little bit on that soft red winter and it was just because of this extensive wet weather that we've been having.

Well, the quality is another factor and you've got to have good quality to have a reasonable cracker or cookie product and flour for that. So, very important on the wheat that the rain stops.

Pearson: So, this price rally that we had earlier that's now flattened out and gone south, we may see some additional upside?

Hjort: Well, I think we can and primarily because the world picture is a little different this year. The U.S. exports should be better this coming year. Now, Canada has chances of a good crop this year but Australia, they're looking at continued dry weather. Last year was a horrible crop of course and now already they've started to pull their projections down, well USDA pulled their projection down a couple million ton too.

India's crop is down three million ton. China's crop, you don't have quite the number of acres there but yields are still kind of so-so. So, all in all the former Soviet Union, a terrible crop. They exported a tremendous amount of wheat last year because they had two record crops back to back and now they've had, like in Ukraine, they say 65% of their winter wheat crop was killed by winter kill.

So, they were big exporters last year. They're not in the picture this coming year. The U.S. is going to be able to pick some of that business back up again.

Pearson: Quickly, I want to talk about the hogs. We talked about cattle because the Canadian situation, of course all of that ties into the meat complex and pork has been a bright spot here lately.

Hjort: Well, it really has and part of the reason is that beef wholesale prices went to all-time record high levels. $1.50 a hundred weight or a pound and now that was a week ago and now it's down to like $1.42 or something like that. But $1.35 was the previous record before this thing took off a month ago or more. So, the pork just carried right along on the coat tails of the beef there and it was a very reasonably priced product for the retailer to push.

And that's going to continue to be the case for a while longer but then pork demand usually holds up during the summertime better than beef so I look for pork prices to stay pretty good.

Pearson:No hedging opportunities right now, we've got pressure on those deferred's.

Hjort: None at all.

Pearson: Stay current and stay with it. Doug, thank you so much. That'll wrap up this edition of Market Plus. I want to thank Doug Hjort and for all of us here on Market to Market, have a great week.

Tags: agriculture commodity prices markets news