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Market Plus: May 31, 2002

posted on May 31, 2002

Market Plus: May 31, 2002

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Pearson: Welcome to Market Plus on the Market to Market Web Page, I'm Mark Pearson. We're glad to have Sue Martin with us this week and we were talking, Sue, in the market segment about soybeans. You were talking about some pluses which, like you say, even three months ago there really weren't very many pluses in the soybean market. Do you think that's changing?

Martin: Oh, I absolutely do. I think that, first of all, the concern by India and Pakistan, especially India with the ??? crop in trouble or having some problems with drought and their concerns over war and the potential of war. They're trying to book in a fair amount of bean oil for protection for their cooking needs.

Likewise, I think that when I look at the soybean complex now on a technical basis we're moving up, this month has been five months up in a cyclical count, if you take continuation charting. If you go into the month of June then it'll be six months but if you take just the July futures then we're into a whole new game, we could only be about maybe a two month up deal in a cyclical count.

So, we still have room. The one thing, if there's any one thought I could leave with producers is that, first of all, when you look at new crop beans and your old crop is gone or basically gone, how can someone actually get aggressive in selling new crop beans when you're under the price alone. Because any little hint, especially with your whole season yet ahead of you, if any little hint of anything goes wrong, South American crop, you know, when we came into the first of the year they talked about 42-43 million metric in crop, that's down to about 36 million metric ton out of Brazil. The corn also decreased by about two million metric tons.

So, they have a lot less around and now they're talking a rust problem, a fungus in their soybeans, not only in Brazil, Argentina and Paraguay. How can we afford to have beans sold cheaper on the board or priced ahead of time than what loan rate is at this time? I don't think it's a wise decision this year. I think we need to carry that market and wait ourselves out because once we go through June, even if you have a healthy little correction, once you get into the month of July, if you take out June's highs this year I believe July is an extension, you'll go up all of July and probably most of August.

Pearson: Okay, well there's some good news on the bean front. Less good news on this livestock front Sue, do you want to just touch talked about this cattle trade and what we're seeing and it's just flat big numbers.

Martin: It is and unfortunatly it's not only that, we have lots of poultry and the same rhetoric everybody's heard. But the cattle market, I believe that as we look at August futures, one, I think we're going to see some basis change take place in August, in the August contract which means futures will probably start to gain on the cash market. Let's put it this way, the cash will probably drop down closer to what the futures are and maybe go discount under futures to where August futures will run about a dollar to maybe a dollar and a half over cash price.

I think that will happen by the Fourth of July. Now, what I suggest to producers is to stay current and keep those cattle moved as fast as you can keep them moved because I look for sixty dollar cash cattle as we go in here and it could come next week into the early part of the week after. I'm wondering if we won't see a low, if not a temporary low, on the August futures, probably around the 6th to the 7th of this next week, Thursday, Friday is when I look for a lull.

So, if futures break then we could very well put in a low if not a temporary one with something more of a nicer bounce around Thursday, Friday and that should mark a bottom.

Pearson: Okay, on the futures. Really appreciate your insight. Thanks much for being with us. Sue Martin, joining us here on the Market to Market Plus program, glad you joined us, I'm Mark Pearson, have a great week.



Tags: agriculture commodity prices markets news soybeans