Pearson: Hey thanks for joining us on the Market Plus page here at the Market to Market Web site, I'm Mark Pearson. And joining us this week two of our veteran analysts, Doug Hjort and Walt Hackney and Doug has been covering the grains for us tonight. Doug, we talked about the wheat rally, we had a heck of a rally. You said, take some profit, make some sales in here. Also with the idea that we want to control this crop so maybe a rally a little bit later on do you think?
Hjort: I think so on the wheat. I think we could see another rebound but we've had pretty good warning there that maybe, especially the Kansas City and Minneapolis markets might be high enough. Up around the five dollar mark that's nothing to sneeze at, you know, in price historically speaking.
On the corn though, I want to emphasize that a little bit. I think the break we've seen on the corn is justified, the price break went a little deeper than I thought it would from the late summer high into harvest. But justified because of harvest activity and so on. But we're not doing the rationing. You're not going to ration out the usage of corn at 2.20, 2.30, 2.40 a bushel in the cash market.
And the world total grain picture is tightening more and more all along. The stocks report in the United States showed that on corn and wheat. Canada's feed grain crops down a little bit on Friday's report again. Australia expected to bring back their production a little more again. So, that total supply of grain in the world is tightening down and down and down to a much tighter level than it was at the end of the '95, '96 year. Somewhere along the line we've got to at least give the impression that we have to take prices sharply higher if we don't do the rationing. We haven't done that yet.
Pearson: Okay, so some upside there and that's a good point. That's a real good point for the kind of market here we're having. Let's go over and talk livestock. Walter, for all your dire predictions about this fed cattle market and your concerns about it, this feeder cattle market has held in there pretty good.
Hackney: This feeder market has been influenced originally this year by the drought. In the Western states we had the anticipation in the spring of cattle as usual coming off land in the 7.50 to 8.50 range off of the grass country, Montana, Wyoming, Colorado, Nebraska sand hills. The drought hit and changed that entire availability picture of those August delivery feeder cattle. They came in June. They were 100, 200 pounds lighter than usual. They went to the feedlots, a matter of fact those are part of this huge size fed steer problem we're encountering today.
But the fact is, that's where they're coming from. But it also created a real shortage of available year end cattle, available from July through right now. So, the problem there lies in availability, the producers seem to feel that they can make those cattle do handsprings when in truth they're buying them at a level that is going to take in the spring, a 72 to 74 dollar cash market simply to break them even.
That's not very good odds when we're selling steers today in the cornbelt at 62. So, the feeder cattle industry has been created by a demand factor for the raw material of the feeder steer. We've got a wonderful calf crop. We've got calves in Colorado that are coming two to three weeks earlier than usual due to the drought out there. We've got Wyoming cattle coming two to four weeks early due to the drought.
On the other hand we've got cattle kind of as usual in Montana coming off the cow herds as we speak but about in schedule with what is usual. Weights, Montana is about even. Wyoming is down 30 points, probably 30 pounds a head. Colorado might be down 50 and 60 on their calves coming off the ranches.
Pearson: All right, well it's posted quite a picture for these feeder cattle guys out there despite what we're seeing in the fed market. That will wrap up market plus for this week. Thanks for joining us. For Doug Hjort and Walt Hackney, thanks so much for joining us. I'm Mark Pearson. For all of us at Market to Market have a great week.