Sprecher: This is Market Plus with Virgil Robinson. Virgil, let's take a little more time to examine the corn market. What are the prospects for corn in the bin and corn that is yet to be planted but we expect will be next spring?
Robinson: Sid, I think it's important for producers to, again, evaluate their local market conditions and specifically, is there any carry in the cash bid arrangement from spot value to deferred value. As you mentioned, if you're carrying corn in a bin site ideally you'd like to be rewarded for that effort and for the risks involved in doing so.
In many markets there is virtually no carry from prevailing spot value to deferred values and that clearly is a message being sent to producers that hey, you're doing this solely on the assumption that price will move higher. Okay, there are other ways to participate in that assumption that are less expensive than carrying bins full of corn with no assurance of any return or any carry, Sid, and specifically that is go ahead and move the inventory to the market place and at some point selectively repurchase with a futures contract or some type of option strategy. Not a new scoop by any means, but one that I think needs to be, our producers need to be reminded of.
I think that's precisely what's going on in the market today from the commercials perspective, those entities that have corn piled on the ground and detect, because of a strong basis and lack of carry, there's no reason in the world to retain that inventory and take the risks of ownership. So, as quickly as they can acquire logistics, transportation, that grain is finding its way into the pipe and that's going to continue, Sid, until these piles and these hedged inventories are dissipated and that's going to keep the price of corn, in my opinion, about where it's at.
Sprecher: For how long? A good long time?
Robinson: I could see that extending into the first quarter of 2003 very easily.
Sprecher: Beyond that?
Robinson: That is kind of a function of developments in other regions of the globe and macroeconomics, as you were mentioning earlier, I'm reluctant to get real aggressive hedging next year's crop based on futures prices at $2.40, even though I think they could drift a little lower in the near term, Sid. It's uncommon, at least in my experience, that we don't get an opportunity in that deferred or new crop futures contract at or near $2.50. I think we will again over the course of the next several weeks.
Sprecher: Okay, thank you Virgil.