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Market Plus: Feb 15, 2002

posted on February 15, 2002

Market Plus: Feb 15, 2002

Pearson: This is Mark Pearson of Market to Market with Market Plus. Our analyst this week is Sue Martin from Ag and Investment Services up in Webster City, Iowa. Sue, we're talking about the grain markets and we didn't have time to talk about some of these other factors that people are looking at frankly about these markets. We've been in a period here, a five year period of a pull down and a flatness in these commodity markets. You mentioned about people really getting lulled to sleep. This is really the typical of an end of a bare market isn't it?

Martin: It certainly is. First of all Mark, we have an eighty-four year cycle that was expected to peak in April of this year and it's been high to high in the past cycles. This one I think has inverted and went from high to low so we're making a load there which is about to end as well and may have seen, when you're talking eighty-four years you can wind around that with several months. So, we may have already made that low but we're in the process of it. Also, we have an astrological aspect of where Jupiter is center of mass and center of sun. The last time we had that type of a pattern was in 1966-1971 and on the back side of it we came out of it and of course the markets had been in a turmoil, not a turmoil per say but just a coiling or whatever you want to call it and started to move out nicely to the upside and that's where you start to see your volatility hit. Also, maybe start to go more counter seasonal too. And that's what I think we're looking at here again that we have that same aspect coming and by the end of this year, in fact by August, we should be really on the end of that. Of course that would coincide with the El Nino strengthening if it continues in a way I think it will. Out of South America you have dry planting. If you have all these economical problems still coiling in Argentina and Brazil you could see where they're sold out early out of their crop and then the demand is back at us along with them having a dry planting season. We could be taking our markets higher through the fall.

Pearson: Okay, so again really that period, astrologically, is a period of very flat prices, dull prices again for agriculture. Those are my glory years, 66-71. Then '72 things started to get volatile. That's a hopeful side. Over on the livestock side, we talked about shrinking cow herd. You're not quite as bullish on the cattle as some of our other analysts are. You've been friendly to cattle here really since their turn around began.

Martin: Yes I have. I think that, first of all, I think one, the good thing that has been for us here in front of us has been the fact that demand of course has picked back up with the restaurant trade after 9/11. And exports are now out of Asia, especially South Korea, is starting to pick up for beef. So, those are the pluses. But I also think that, unfortunately, with cattle having gained the weight like they have and the tonnage that we have and the number of placements that have been going on feed, I think that's going to, we've slowed that up a little bit but we still have a lot of cattle on feed that went in as lightweight cattle. If we come in and we have dry weather here going in towards summer, we're going to have a lot of cattle moving off of grass early and that could hurt us. So, I think we're good into April but we need to watch the cattle market probably around the 8th to the 11th of April, I would be hedging August cattle.

Pearson: Good point as usual. Enjoyed it, thank you so much. Sue Martin, Ag and Investment Services, our analyst this week on Market to Market. That's this edition of Market Plus.

Tags: agriculture commodity prices markets news