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Market Plus: Apr 11, 2003

posted on April 11, 2003


Market Plus: Apr 11, 2003

 

Pearson: Welcome to the Market Plus portion of our Market to Market Web site, boy I'm glad you stopped in. Now, be sure to say something to your neighbors and have them get on their computer, they can tune and pick up on our analyst's comments as well. A little bonus from our Market to Market program. We have Tomm Pfitzenmaier with us this week of the Summit Brokerage in Des Moines. Tomm, I'll tell you what, you've been talking $2.45 December corn. A month ago I just didn't think you were going to get it done, we've been there, we're close to it again. You know, you're saying make some sales.

 

Pfiitzenmaier: Well, yeah, and for people who are apprehensive or scared or whatever there's a scale here with doing nothing being on one side of the scale, doing just flat out selling everything on the other thing but there's a myriad of strategies in between there that allow you to take advantage of these prices and leave some upside or a little upside or whatever. I mean, the first part of that would be just to flat out go out and buy yourself a December $2.50 put. We had opportunities to get those bought for twenty-two cents this week.

If you're one of those that says well, gosh, that's too expensive, I don't want to pay that much you can go sell yourself a $2.70 call, limits your upside but collect at eleven cents on that but it does help pay for half of the put that you bought. So, you've got do nothing, buy a put, buy a put, sell one call. If you say, well, that's still too expensive, I want to buy a put and not have any expense, then buy the put for twenty-two cents, sell two of those calls at eleven cents, the calls you sold pay for the put, you've got some upside potential to $2.70 approximately. You've got a floor at $2.50 and no cost and then finally, like I said, at the top side, sell yourself a December futures contract at $2.44 to $2.45 and that's the gamut.

But I think, depending on what you're comfortable with, what works for you, what fits in your operation, how comfortable you are that you're going to have a crop, there's a myriad here of strategies to allow you to be not short at all or very short or several things in between and I think some of these opportunities need to be examined, particularly at this time of the year when you're heading into the crop, there's a lot of uncertainty, but yet there's a decent enough price that you'd like to take advantage of.

 

Pearson: And there's a decent enough prospect that we're going to get a pretty good sized crop.

 

Pfiitzenmaier: Yeah, I mean, the acreage number at 79 million, I personally happen to be in a camp that thinks that's off, that the acreage is going to be higher. You know, people have called me and said well there's no insecticides available because the insecticide companies are cutting back and it's like, maybe there's no insecticide because everybody is planting corn on corn and all that insecticide is being sold.

So, you know, the anecdotal evidence, at least from what I hear and from people I talk to, is that there's going to be more corn on corn if that acreage number is a little bit low. Irregardless of that, we do have over the entire corn belt, fairly good subsoil, fairly good planting conditions and I know, I've heard all the calls that it's a little dry here and there and that's fine. You know, that surface doesn't matter all that much, it doesn't take much moisture to get a crop, you know, planted, germinated and up and out of the ground.

I mean, it's actually better off for most people to have it a little on the dry side during planting than coming in and get that June and July rain. So, I guess I'm not too concerned about that. I think there's an opportunity presenting itself here that people need to look hard at and try to take advantage of.

 

Pearson: All right, very emphatic. Tomm, we appreciate you joining us with that edition here on our Market Plus segment of our Web site and hey, thank you for joining us. Again, tell your friends and neighbors about our Market to Market Web site and of course the Market Plus portion. For all of us here on Market to Market, I'm Mark Pearson.

 

 


Tags: agriculture commodity prices markets news