Pearson: This is the Friday, November 18, 2011 version of Market Plus. Thanks for joining us here at our Market to Market website. Be sure to tell your friends and neighbors to join here as well for our bonus portion of our Market Analysis and here this week with Jamey Kohake a regular market analyst.
Pearson: Jamey corn and beans are still the hot button out here in the countryside. Still a lot of concern about what the size of the crop actually was. A lot of concern about what we are going to see in terms of demand. A lot of concern when I listen to all the politicians criss crossing the Corn Belt talking about how they don't like subsidies, they don't like ethanol, apparently don't realize after December 31 ethanol won't be subsidized anyway. But how worried are you about 2012? You seem to be fairly friendly.
Kohake: Longer term I think we can still get the market back up to $6/$6.20 area and we've plowed down you know to $5.60 area this week on spill over from the nearby contracts. I think there is plenty of time to let this thing rebound and sell into. Just two weeks ago coming into the November crop report we were hanging $6.15/$6.17. We are a dollar off the contract highs right now more than a dollar. So I am just looking at some type of - a little bit of retracement to sell into. There is still plenty of time. I think we will have a couple weather scares, you know, one in South America, one here, planning somewhere/somehow to be able to sell into. Right now there is just no catalyst at all export wise, weather, Southern Hemisphere is fine. So - these are just paths to just grind lower.
Pearson: It really looks; Jamey and I know I have said this before, like a short crop with a long tail.
Kohake: Yes, I think you are probably right there for sure and there are plenty of investments out, big crop report the one in January to be able to see what happens there, but it is hard to sell into this five sixty area. A lot of guys got put in the red this week for their numbers and those profits have slide away but there is so much grain still laying around the country, tight fisted grain, and I think we will have to somehow find a way to apply that loose to sell into.
Pearson: You mentioned China and some good news there. At least as far as soybeans were concerned. No, there were no confirmed corn sales to China but we did have bean sales.
Kohake: Right, bean sales, the weekly numbers they were involved in and they had a fresh sale again here this morning and their supplies are historically low in both corn and in beans but our corn numbers worldwide are still trying to find a competitive spot. We're still a little too high worldwide. Beans were fine pricing out there. I think China will be a buyer continually. If beans could separate from corn and from the wheat I think we would probably be $12.20/$12.40 on the nearbys but we can't get separated from corn or wheat right now.
Pearson: Well, it doesn't look like it. Real quick we talked at the open of the show about crude oil and what you see happening there. You mentioned a critical thing with Cushing with that reverse of the pipeline. There has been all this talk about the excess supply of Cushing and we have had that huge Brent to WTI spread maybe narrowing now.
Kohake: Right. Even Brent going to a discount is probably where it should end up at. You go back and look at the spreads historically it should be that way. I don't know if the money flow is ready to yet to blow at them completely and finish them off but Brent could go discount longer term. But the yes, the pipeline reversal was the big news there and I think you saw rallies. Fundamentally I don't see any reason hanging around $103 crude up in here. Like I said sell $110 calls in January. Sell the futures up around $101.
Pearson: All right. Jamey Kohake as usual great to have you with us on Market to Market and of course here on Market Plus and for all of us at Market to Market a big thanks. Of course be sure to contact your local public television programmer if he is not carrying Market to Market. You can see the live version of the show on your local PBS station. From all of us on Market to Market I'm Mark Pearson thanks for being with us. Have a great week!