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Market Plus: Feb 22, 2002

posted on February 22, 2002

Market Plus: Feb 22, 2002

Mark Pearson: Welcome to Market Plus here on the Market to Market Web site at Mark Pearson here, Market to Market. Our analyst this week is Doug Hjort. Doug, we talked about a lot of things. What is it going to really take to turn the grain markets? We've had really almost five years where we've had flat prices, surplus crops, decent crops. It's going to take a pretty heavy weather phenomenon to reverse that change. Are we due? It would sure seem like it.

Doug Hjort:Well, there is some talk, growing talk now about all kinds of weather developments that the forecast for spring and summer are coming out now for what they're worth. But the story on Friday of this week, talking about El Nino and how it would effect Chinese production, talking about torrential floods in the South, the rice growing area and dryness in the North, the corn, the beans, the cotton and wheat areas. So, maybe something like that could come. I see where the experts here in the United States are saying El Nino, even if it does develop strong, would not necessarily impact our crops all that much here. We should have fairly normal wheat, corn and bean production. But weather is something. We've had pretty good weather. We've had our scares here and there. The other thing is that I think weather scares are going to finally start to have more impact on this market price down the road because our ending stocks keep coming down, getting a little smaller and smaller worldwide, especially on the grains.

PEARSON:You mentioned the labor, you mentioned on the show we're down around 295 carry out on the beans. What level do we start to get some excitement? It has to go below 250? 200?

HJORT:Below 200 perhaps. You get to 175 and you're really starting to gin things up. Now, that changes too because you go back, years back and South American production wasn't nearly as large as it is now. So, now with your two six month periods here of soybean market so to speak, it doesn't take very much to move things one way or another.

PEARSON: Let's talk about livestock. We didn't get much of a chance to talk about hogs tonight. You're eyeing those summer futures. With this expansion maybe guys should start looking there.

HJORT: Yeah, as I look at summer futures they're about at the same price level they were a year ago. I thought that was a great hedging opportunity and I recommended hedges, probably some before that really. But then the prices rallied another four or five dollars going into exploration of those summer contracts. So, it turned out not to be a good idea. This year, if these monthly hogs and pigs reports are right, December and January we've had about three percent more hogs produced in those months. Now, the monthly report doesn't have much of a history yet so we can't have a lot of confidence in it. But if they would be right maybe these prices we're seeing now on summer futures might be about as good as they're going to be. We put in a new contract high just two weeks ago. So, the two weeks now since we've kind of sold off a little bit. So, if we can't get back above those highs we better take a look at doing some protection I think.

PEARSON: Doug Hjort, thank you so much. I'm Mark Pearson for Market to Market, that's Market Plus.


Tags: agriculture commodity prices crops markets news