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Market Plus: May 30, 2003

posted on May 30, 2003


Market Plus: May 30, 2003

Pearson: Welcome to the Market Plus segment of our Market to Market Web page. I'm glad you joined us. Be sure to tell your friends, a chance to get some extra market discussion in and this week our special guest is Sue Martin. Sue, you're talking about these beans. Now, you went through a lot of numbers and what ifs because you're starting to get concerned about the timing of another leg to the bean rally.

Martin: Exactly, Mark, I've always felt that our highs would be in June. Now we're going to turn the calendar over here this weekend and we go into Monday and we're in that timeframe now that this market should be trying to move higher. I suspect the bears are going to try to make a stand next Monday, Tuesday, try to take the markets down for a few days, test the $6.10 area, $6.09 and then we should get a bounce from there. I believe that the market is still going to try to move higher and come back out of this but the deeper you go in this sell off then the tougher it is but I also believe that when this turns it will be a very streaking, extremely fast, possibly very short lived move.

Pearson: So, one you don't want to be on the sidelines for any length of time.

Martin: Absolutely, we'll want to watch it. You've got to be somewhat cautious here because this market is of concern, it's struggling, every time we make a higher high the bears are at it and yet we are not rationing beans. Export sales at 9.6 million bushels again and this has been one of the premises that the bears have had that we were rationing beans and it obviously appears we are not.

Pearson: So, the thinking is that maybe with the new crop coming on, things looking more normalized, maybe the panic is over?

Martin: Well, I think one thing to watch is, is that as long as the new crop, you know the crop is getting planted, as long as that new crop is planted easily and everything looks good weather-wise then the attitude will be, well we've got another huge crop coming in South America next year, probably up six percent again. You know, we've got more acres here this year but yet the production might be down a little bit. By the time it's all said and done we may not see what we think for a crop. I think that when it's all said and done I do think there's a chance we could have a swing at the weather. Just about nearly every weather guru that I talked to are all concerned about the summer, starting about mid June and all of July into August. They're very concerned that we're going to see some La Nina show up and that that's going to create a warm, dry summer. Now, maybe it could be dry and maybe we just aren't as warm as normal for a La Nina summer, we'll see. If that's the case then the market will probably not pay attention to that. Another thing we have to be watching is the dollar, Brazilian Real. Right now my time indicator on monthly data is down to five tenths of one percent on the dollar index which is saying that we're getting extremely overdone and that says we're looking for a bottom even though we closed under the 200 month moving average this week and sell quite hard, the dollar is probably not far from entering in a low. And then that will probably in turn rally through the summer. Now, it may take until the end of June to get that. As that occurs then you're going to start to also see the Brazilian Real soften. Well, that South American farmer is not going to be too anxious to rush in and sell, especially if he sees us having some weather issues as well as tight as our crop is. I think they'll hold their crop, the remaining amount that they have not sold and so we may see them more of a later seller than normal, they may be more August/September on us, about the time our crop should be coming to fruition.

Pearson: Got about a minute Sue. You touched on the show but the Canadian beef situation, what that's going to mean. You talked about, when you talk about pork, you know, pork is filling some of the vacuum here, giving some decent returns for the short-term. As far as the fed cattle market overall is concerned depending on what happens obviously with the mad cow situation up there, what does this do down the road for beef prices?

Martin: Well, I would be concerned, you know seasonally beef demand has a tendency to peak out in early June. And I would be a little concerned that the ban from Canadian beef coming into the U.S. gets lifted right about the time our demand peaks and then you've got down as you enter into July a pick up in cattle coming for market that will be ready. All of a sudden we're entering about as many cattle as we had a year ago at a time when demand softening and of course as soon as they start pumping cattle into the U.S. they're going to be shipping cattle and product, big time.

Pearson: Sue Martin, thanks so much for joining us, we appreciate it. Thanks for joining us here at the Market Plus segment of our Market to Market Web page. Thanks for clicking us and we'll look forward to talking to you again next week. For all of us here at Market to Market, have a great one.

 


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