Iowa Public Television


Market Plus: Feb 14, 2003

posted on February 14, 2003

Market Plus: Feb 14, 2003

PEARSON: Welcome to Market Plus, an extra service on our Market to Market Web page. I'm Mark Pearson, glad that you've joined us, our guest this week, Tomm Pfitzenmaier. And Tomm, first of all, a couple of quick things, things people really should consider doing and one of those is this corn market, as you said during the show, is a nice pullback, strong basis, aren't we being told to sell our corn?

Pfitzenmaier: Yeah, the market is exactly saying, we have a very tight basis, you've even got a fairly tight basis going into the new crop and the market is saying reward me. I have this big fear that we still have close to a billion-bushel carry out. If all the farmers decide to hold their corn into the summer and then we end up with a big acreage and a decent crop on top of that, you're going to, at some point in the summer the market is going to say whoa, we've got a big crop coming, we don't need to pay up for this and the whole thing falls apart.

So, I don't know, I think this is a market that needs to be rewarded, you've had a nice rally up, as I said on the show a lot of the reasons it has rallied aren't all that sound, demand still hasn't shown up in any big significant way. It's a market that needs to be rewarded and as I've said the last two or three times on our extra market session that buying the December puts, $2.50 puts around twenty cents I still think to get started on that new crop corn is certainly not a bad place to have your floor started.

PEARSON: Good point. All right, now let's talk livestock. Fed cattle market, it just didn't look good. It didn't look good on the board, cash market softened up some, got a lot of cattle feeders out there a little nervous about what is ahead. Short-term you've got some concerns.

Pfitzenmaier: Well, I mean, the funds had a humongous long position and that's gradually or rapidly been liquidated this past week so that's one reason why I think the market is a little, should stabilize. But you've also got some major geopolitical problems around the world right now, particularly against the United States and you know, if anything goes wrong there or there's any contamination of food or any of the million things that could go wrong, in my mind U.S. livestock producers are probably the most vulnerable of any industry we've got in this country.

So, you know, I don't think spending a dollar or two on a put for the livestock you've got on feed, especially if we can catch a rally back up here and retest some of the resistance levels, I just don't think it would be a bad idea, it would be a fairly prudent business decision in my mind.

PEARSON: Buy some insurance?

Pfitzenmaier: Yeah, absolutely.

PEARSON: All right, fundamentally you're not that concerned about the fed cattle market?

Pfitzenmaier: No, the cattle market on its own I think it fine, you know, numbers aren't that great, demand, even given the economy has been real good. I mean, it's difficult to maintain cattle over eighty bucks, you look back through history and it just doesn't last very long, so I mean, it's a victim of its own history in some respects there that having some just disaster insurance I think it's important. I mean, if it wasn't for all that other stuff going on I'd probably say stay open or risk it or maybe you could take a chance. But, you know, there are some genuine things to be concerned about here.

PEARSON: All right, some good points as usual, Tomm Pfitzenmaier joining us. Tomm, thank you so much. That wraps up our Market Plus segment for this week. Thanks for joining us, I'm Mark Pearson, have a good week.

Tags: agriculture commodity prices corn markets news