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Market Plus: Jul 12, 2002

posted on July 12, 2002


Market Plus: Jul 12, 2002

Pearson:Mark Pearson for Market Plus. Happy to have with us this week, Wayne Newton, and of course, Wayne has been one of our regular market analyst for a lot of years. And Wayne, we look over what has happened to the grain markets this week and the corn and the soybeans and fall back in wheat and producers start scratching their head. It seems like we get a rally and people really wonder what to do. Fear and greed in the commodity markets. Talk about, you're saying it's time to jump in on wheat, corn and beans.

Newton:I really think so Mark. We have got to deal with averages and we have the potential for at least an average crop of 135 bushels of corn and 37-39 in soybeans and I think that we have to reward this market. It's is tough looking out the kitchen window and to watch a crop roll up and not think the market it is going to go up, but when you look across the country, I think one Monday when we get the crop progress report, we will see an improvement there out of the 52-55 good to excellent range and the market is probably going to come under pressure, particularly the corn market.

Pearson:We've had a nice rally in every crop and "always reward rallies" the old rule.

Newton:You bet, you bet. I just think that you have to have some kind of a marketing plan and when these opportunities come along, get some of it sold. If you are nervous about that, then go to the options and buy calls if you think it is going to go higher, but at least you have got a floor under your production costs and get the interest paid and keep the banker happy.

 

Pearson:We ran out of time, but when you mentioned on the show we are talking about feeder killer, you are talking about some of those big auctions, had some no shows this week and people didn't want to price these calves too cheap, going into fall delivery and yet your kind of thinking that maybe that's about where there going to be.

Newton:Well, I think so Mark. There has been so much equity lost in this business and I think that it's going to be tough to finance the same amount of production that we have had in other years and so, as I look at it, when the things are edgeable, it's time to take advantage of all of those tools and make them work, but I can't blame the producer. We are looking at cattle $12-13 under a year ago and you multiple that times a 5-6 gap, that is real money and these cow/calf people can't live on a $1 a day and when you average the steers and heifers together. This is probably one of the rare times that we have a really a weather influence on the market in such a tremendous amount, because, if the reports on the pasture conditions are exactly as the government reports them, the hay crop is probably going to be a third of normal. And so, we get started into winter, and these guys are short of feed, those cows come to market at the same time the yearlings come in sooner and the calves come in sooner, we could bunch cattle up, but the report next Friday is suggesting that we will probably have 18-19% reduction in placements. And so, from the standpoint of the fundamentals, there are some reasons to be positive about these markets, but once again, that can all get distorted if the pasture stay dry and feed becomes scares in the high plains and up in the mountain states.

Pearson:Good point. Wayne, we appreciate it for being with us here on Market Plus. Thank you for checking in our Market to Market Website. For Market to Market, I am Mark Pearson.


Tags: agriculture commodity prices markets news