Pearson: Welcome to Market Plus on our Market to Market Web page, I'm Mark Pearson. This week our analyst is Doug Hjort and if you've been following Doug over the years, at least for the last year anyway, he's been talking about tighter world wheat supplies. He's been talking about it in the wheat markets and then absolutely nothing until the last 60 days, Doug, and now it look like you're quite a seer. Now, you're saying the top's not in yet, you don't believe it is. What is your thinking and what do you think we'll see in this wheat market?
Hjort: Well, I think, we've got Minneapolis futures touching the five dollar mark here late this week. That's nothing to sneeze at. Now, Chicago is down, what, seventy, eighty cents below that. That's the speculative market. So, I think if you're talking cash marketing, you're looking at hard red spring wheat in the northern plains, hard red winter wheat in the central plains, there's not much of that stuff selling right now. That's another reason why these prices keep moving on up. When you look at the Chicago market, once the speculator decides to really jump in and buy this market and he did the last couple days of this past week, there's a dollar there that could come on that market very, very quickly just to see the, catch up with the other two exchanges. So, when you talk about rallies, think about this, Kansas City wheat topped out at $7.44 in the '95-'96 year. We finished, I believe, at like $4.80 or $4.90, something like that on Friday. I'm not suggesting we're going to $7.44 but I do think that we should be able to see prices move on higher. We've got to get in that mode of rationing out the usage and I don't think we're there yet on the wheat because we rallied it so fast this past week that it just went by everybody, it was just more of a shock than anything else. So, maybe we are thinking about rationing now but I think it can go higher. But more importantly I think the corn price will start to move higher later on after harvest too.
Pearson: Alright, so you're talking December or will we see kind of a spring moving corn?
Hjort: I think earlier rather than later. In the wheat market you've kind of sold the market off a little bit into the end of May and then right when the winter wheat harvest went on prices started moving higher. I wouldn't be surprised if you see the same thing in corn. This week I think corn prices would have maybe inched up a little bit but not this fifteen cents up or whatever it was had not the wheat rallied so strongly. So, I think wheat, or corn, is overpriced a little bit, a little bit higher than where it would like to be as we finished Friday, maybe a dime higher. So, I think that can come out maybe, obviously the September 12th crop production report will tell us an awful lot about where we're going but by and large I think corn prices could start moving very quickly at the tail end of harvest and moving right on higher. One of the reasons I think that is basis levels are still very strong even for new crop delivery.
Pearson: Yeah, even in the face of harvest the basis, as you pointed out in the show, is hanging in there. This is all well and good for the grain farmer. We don't have a lot of time Doug but talk about covering cattle. These livestock guys are getting hit with low prices and for the first time in six years higher feed costs.
Hjort: That's right, on soybean meal coverage, I've covered some already. I think we should see, if you noticed this week soybean meal was pretty sluggish, it didn't want to rally, didn't want to follow the rally along. I think we'll see some weakness in that soybean complex but I would certainly look at covering protein, if not the whole year, within the next month, a good share of it. On the feed, corn or whatever you're feeding, kind of the same thing. I don't look for prices to drop off very much but I think you should have a fair amount of coverage, probably up to six months coverage of the new year, I wouldn't go beyond that though.
Pearson: Very good, Doug Hjort, appreciate you joining us, that's Market Plus for this week. For Market to Market I'm Mark Pearson.