Pearson: This is Mark Pearson, welcome to the Market Plus page on our Market to Market Web site. Kind of down in the throat this week but that's alright, we've got two analysts who can talk plenty. Doug Hjort, one of our long-time analysts with us this week and Doug, this grain production report came out and sent everything into corn and beans into a tailspin, you talked about that quite a bit on the show. We didn't talk as much about hard wheat. We talked about soft wheat, the Chicago variant, but hard wheat? What's ahead there?
Hjort: On the report the hard red acreage was up seven and a half percent, eight percent, something like that, pretty much in line with expectations. So, that kind of sets up a good news, bad news type of thing. The weather in about half of the hard red winter wheat producing area hasn't been that great for the last month or so. Most areas, including Montana and most of Kansas and so on had some pretty good rain right around the planting season, one to two inches of rain, enough to get the crop up, germinated, established and so on. But they're very short of sub-soil moisture in a lot of those areas.
So, now we're going into this open winter with quite a bit of wind blowing out here in the last week or so and that's really spooked some of these people taking the condition down of the winter wheat. Now, in the wintertime it's tough to say, well this plant is sixty percent good or not, you know, and that sort of thing. But the conditions have dropped off in like Nebraska and Kansas rather substantially during the month of December, still way above last year and in a better shape, well, Nebraska was actually rated a little lower. But it's not time to cry wolf yet but we do need to have a very good spring, nice rains, modest weather, not too much wind in order to get this planted acreage figure, increased acreage to come on to give us a large crop. Although the acreage is up a little bit it's still down from historical levels. So, it's not real bearish for the new crop, the bearishness is on the old crop at this time.
Pearson: Let's go over and talk about livestock and Walter, we're talking about the fat cattle market...really didn't talk much about this feeder calf market out there which I keep thinking has got to be hotter than a firecracker with eighty cent fed cattle.
Hackney: I think generally speaking the industry felt that as the fat cattle market appreciated up through the mid to upper seventies, bumping eighty at times, lately cattle feeders coming out of a deficit for two years where they've been buying feeder cattle on the come and it not materializing. Now, they're in an opportune position to make fifty or a hundred a head on fat cattle. All of us actually felt that in spite of the threat of our price ration cost, feeder cattle would have a significant response. Actually they haven't.
Actually the feeder cattle, for the first time Mark that I can recall in probably three years, maybe four, you can buy feeder cattle today that have an ability to be hawked in at a profit versus betting on the come when you buy them. It's kind of a phenomenon going on out there. We're buying cattle today in the Dakotas coming off a dry wintering growing program. We're buying cattle coming off of grow programs preconditioned out of the Midwest areas.
These cattle, Mark, have got a wonderful opportunity using the Mercantile as a hedge tool to make them work right now even with the cost of rations as they are. What Doug was talking about today about this corn potential, I don't know where that's going to take us but the current market on feeder cattle is as lively but is as reasonable as I've probably seen it for at least three years. And the people buying them are mostly guys that were going to get over three dollars a bushel for the corn. It may not have materialized for some of them. As a result, they've got corn on hand, they've decided to go ahead now with this market as it is on grains and buy the feeder cattle and put them on feed.
Pearson: All right, well it makes an interesting situation. Good opportunities out there for feeder cattle right now. Doug, thank you, Walter, thank you and that's this week's version. Thanks so much for joining us here at our Market Plus Web page.