Iowa Public Television


Market Plus: Jun 28, 2002

posted on June 28, 2002

Market Plus: Jun 28, 2002 Sprecher:This is Market Plus for the Market to Market edition on June 28, we're here with Sue Martin. Sue, on the program we didn't talk as much about livestock as we normally do so we'll spend a little more time in Market Plus talking about this. It would seem that the red meat complex is going to have a very difficult third and fourth quarter.

Martin:Well, it certainly does, especially when the pig crop report today did not gratify the producer and the pork industry with some signs of liquidation. So, what it says is you've got to have good demand. I find that a lot of the end users are not covered in their corn needs. Should there be a further weather scare in the corn market it's certainly going to set the tone for the same things that are sending the corn prices higher will send the livestock prices lower. It's going to squeeze the hog producer who is already losing money in that fourth quarter and can't even lock in prices profitably so he needs to use puts so that he puts a floor under him and yes, puts are expensive right now but I think at this stage of the game they're the lesser of all evils. Should something happen that we have a hog outbreak of hoof and mouth in Canada, those borders would close up and of course then it would totally change the picture for the hog market and send hog prices higher at a time when they would normally go lower. But that's an if and so I would say the producer at this stage of the game needs to use put options for protection and floor himself so if we do turn higher he's not got himself locked into losses. In the meantime, the cattle guy, again not able to lock in profits per say, the one thing that sends corn prices higher this summer is going to be the same thing that sends his cattle lower, future prices lower and fat cattle prices lower because of the fact that there will be a liquidation of cows to market. Of course, also we'll see lightweight calves who are feeders go into the feedlots where before we were seeing 800 pound feeders aggressively and the lightweights not. Now we're going to start seeing the other side of it where it's going to be the lighter weights moving if we stay hot and dry.

SprecherOkay, well thank you Sue, this has been Market to Market's Plus edition of its market analysis with Sue Martin.

Tags: agriculture commodity prices markets news