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Market Plus: Jan 24, 2003

posted on January 24, 2003

Market Plus: Jan 24, 2003

Pearson: Hey, welcome to the Market Plus page here on our Market to Market Web site, I'm Mark Pearson, glad that you've joined us here at eight. Don't forget to tell your friends. With us this week is our market analyst Sue Martin and Sue, we've been talking about this bean market, a lot of folks are holding beans, they see they're at a dry area if they're in the Western corn belt, they're extremely dry, concerned about next year, thinking at some point there's going to be a rally coming. You talked during the show about a couple of reasons for the rally, kind of give us your scenario that you see.

Martin: Well, I think that first of all in South America we're going to see not the big production that they seem to think that they're going to have. Now, they may still come off with a record crop but right now they've got us with a monstrous crop and I think that's going to be down played, one between weather and two especially with the soybean rust. The next thing is, is that, and in the near term we've got the Chinese lunar New Year coming up and so that's probably going to ease off our demand a little bit by China for the next couple of weeks and so we'll have that over with or slowing down the exports a little bit. So, the market will probably ebb backwards a little bit after this next week.

Then when we start getting in towards spring we're going to be looking at less acres and as we start to come in I think the new crop beans are going to have to do some pricing or try to push up to try to compete a little bit for acres against corn. And then of course if we have weather, if we're a dry March into April we're going to be pricing into weather all the way into June.

The demand poll will be good for soybeans as well as out of South America but we're going to be very competitive and not to even mention we don't hear a lot of talk about their economy but they've got some problems going on down there especially in Venezuela that I think in time is going to rub back off into Brazil.

Pearson: Okay, so there is a bullish scenario out there. Sue, right now would tell a soybean producer and holder out there to sit tight?

Martin: Well, what I would say is, you know, basis is really tight right now so go ahead if you want to sell some cash beans. Go ahead and market them but retain ownership, go back out and buy your July options if you want to buy calls. I would buy the 560's I think for seven cents you're paying, you'll lose twenty cents if you go to the 580 so I'd buy the 560's. The other thing I would do is own futures outright and of course I'm looking for the highs this year in June so you probably shouldn't have to go out any further than July.

Pearson: Real quick follow up to our conversation during the show about the beef market, you've been friendly, you talked about it, there's been nine months of a rising market, of this cattle market. You were friendly all last year, you were concerned you thought maybe we had topped out a little bit but it looks like that's what's happened right now. So, you talked about some of the reasons we could see this thing pull back up but you also had some other concerns out there in this beef market.

Martin: Well, I certainly do, I think that the poultry bans that are happening are a concern if they continue to escalate or get larger taking in more states. Of course to do that it will have to have more problems, more avian flu showing up. But the other thing is, is that we have an awful lot of beef in storage and that needs to be dealt with. And so I think that cattle prices for now have hit a level of how strong they're going to be. We're going to get a little correction then I think we come back and March should give us something better, I think, for the April contract.

Pearson: Over eighty bucks?

Martin: Oh, I think so, I should think April's would be better than the Feb's. We should have tighter numbers coming and if we don't have any more problems with the avian flu I kind of think that we'll come back and have a stronger market in the cattle market latter part of March, maybe into April proper.

Pearson: Alright, Sue, really appreciate it. Sue Martin joining us here on the Market Plus page of our Market to Market Web site. Thanks for joining us. Be sure to tell a friend. I'm Mark Pearson.


Tags: agriculture commodity prices corn markets news