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Market Plus: Oct 18, 2002

posted on October 18, 2002

Market Plus: Oct 18, 2002

Pearson: Welcome to Market Plus on our Market to Market Web page. This is Mark Pearson, host of Market to Market. Glad to have with us this week, Sue Martin. Sue, I'm telling you, you said one thing that everybody is going to remember and that was ten dollar beans. Now, you had some caveats to that. What all has to happen before we see that?

Martin: Well, first of all I said if the right bill passes. I think it's highly possible to see $7.80 this next year to $8.00. But the first thing that we have to see of course is that the demand continues to come to us. In other words, a lot of these other oil seed producing countries have been having trouble. Canada with their canola crop, Australia with their canola crop, those are two major producers. Okay, then you've got El Nino hitting into Brazil and of course that takes in Malaysia and Indonesia and affects the palm oil production.

So, eventually the fact that a lot of our stocks are getting tighter and tighter on alternative oil seeds, the soybean is the most economical and that will bring soybean oil as one of our leaders in this bean market. In the meantime we play tag with meal as well with protein because for a need as a feed operative or a protein to feed in, overseas and in the U.S.. So, we're going to have to play tag with the products and they will just help keep propping up the beans.

Now, last year's crop, this past year's crop is gone out of the U.S. and South America's crop is pretty all sold out as well. So, there's nothing behind us now so as we go in we're on a shorter crop in the U.S. from last year, we're looking at less acres in the U.S. this next year as acres go to corn and wheat.

In South America, of course, they're taking on the acres that we're not having. But in the meantime they may pick up a few more acres also if the weather continues to stay wet in South America, in Argentina and southern Brazil, then we could see some corn acres go by the wayside to beans. But that doesn't necessarily mean they're going to produce. As they produce or put in these acres you have to assume they're going to have the best crop possible. From there you start to look at all the things that's been going wrong for them in weather. Weather is less than ideal. And I would suspect as we get into the first of November we will start adding in a weather premium. It could be as much as seventy-five cents.

I look for November beans to make new contract highs by expiration. If they don't then this is going to slow the pace down into next year before we get what we want to see. But the fact that they're sold out way ahead on new crop beans, they're sold, I want to say close to fifty percent sold by the time they get this crop started into the ground. By the time they get it out they could be up to seventy-five, eighty percent sold.

In the meantime, the producer is kind of slowly getting took on what he's selling because it's all priced in Brazilian real to the dollar. So, the commercials that put in the inputs in turn taking beans back, they're selling into the world market, all of a sudden if they don't have near the crop that they think they're going to have they're buying back. As this all hits panic sets in and you've got the world in a concern because there's no other place to go to get beans but us until March 1st.

Pearson: Okay, so that goes back to tie it all up and don't settle making bid for it this year on the beans.

Martin: Absolutely.

Pearson: Real quickly on the hogs you mentioned that you were friendly to hogs between now and December, talk about that.

Martin: Well, I think that first of all continued demand for the loins and bacon is excellent and we've obviously been having very good slicer demand because the cold storage report indicated that today. The thing that I would look at is that we continue to pull hogs ahead and I think that we'll start to continue -- and we're getting a setback in here right now which is fine. But I look for higher hype again in November. I don't know about if we'll make it into December but I certainly think we'll see higher hype again in November on these hogs.

Pearson: Sue, we appreciate it. Sue Martin, our guest this week on Market to Market. Of course, our guest here on Market Plus. For all of us here at Market to Market, I'm Mark Pearson.

Tags: agriculture commodity prices markets news