Sue Martin discusses a few extra points about the markets in this edition of Market Plus.
Pearson: This is the Friday, January 27, 2012 version of Market Plus. Thanks for joining us here at our Market to Market website and with us this week very popular analyst Sue Martin. It is always great to have her join us. Sue, lots of stuff. We talked a lot about corn on the show and we got some mail from wheat people, we forgot about cotton and other commodities out there, but you got the countryside that all they are talking is corn. North Dakotaa ton of nitrogen has been applied and all around theMidwest. We had a great fall for the most part. There is going to be corn planted. You think 95 million acres, a little bit bigger than the Informa number, but that is a lot of corn Sue.
Martin: It is a lot of corn and we are due for a good year and we had a lot of states that just didn't come up to par. And of course they said Iowa produced, but still regardless of this you had areas that surprisingly like Ohio. This week I was in Ohio and found that they had good yields, very good yields, but extremely late planted and that area still remains very wet. When I look at corn we are into an area I think we still try to push this market a little stronger. I think you close next Tuesday higher for the week and we will try to push into February but I think the market is going to keep its focus on South American weather for corn because Argentina is the number two producer in the world, and they have been courting China.
Martin: They intended to export to China or try to get that solidified and on top of that they are also starting an ambitious ethanol plant, not only are they but also Brazil. Well, those plants have been kind of pulled back just a little bit mainly because of the fact that the weather hasn't been conducive. If the world with tight supplies - if Argentina and you know let's face it that corn crop comes across the finish line before soybeans, if that crop is not what they say even at 22 million metric tons we have a job to do here and it is to raise corn. And then the next thing will be ok, can ethanol still stay strong? I think our blenders has hit the wall. This last July we did 3 million gallons a month, blue barrels I should say, and the year before we were doing 800 thousand blue barrels a month. Do we go much over 5 million or 5 billion bushels of corn needed for ethanol? I don't think so.
Pearson: Do you kind of think you are in camp that is probably a pretty static number for the time being? At least through 2016.
Martin: I think it is. Oh, I think so. I think that for now I think what is going to become as we go through the spring I think the ethanol plants yes they are going to need corn, they are making money, but if crude oil was to fall back because of slowing economies which we are seeing, if that continues to happen all of the sudden now we have got these slowing economies. We didn't even import as much crude oil. It is not because we are trying to change our ways it is because our economy has slowed. And therefore that means that crude may not be pushed out the upside as aggressively as everybody thinks. You get maybe dry weather and the price of corn pushes higher. All of the sudden they are not making as much money and things slow up and they go maybe hand to mouth if that happens.
Martin: The cattle producers will be that way too, but in the meantime I think when we look at corn we have got to watch the market here in February because I think if we do push higher in February and I will be disappointed if we don't close higher for the month at the end of January here on Tuesday because the market to me after you have heard all the concerns about Argentina, why should we not close higher for the month? What is holding you back?
Pearson: Right and we have had kind of this mini-rally after the reports. So there is some momentum there.
Martin: Yes there is.
Pearson: Where is the big money? Does the big money - chasing dollars? Where is the big money Sue because it is not in our commodities currently?
Martin: I think the big money is still kind of parked if you want the truth. I think a lot of the bigger money is still sitting on the sidelines and they haven't really come at us yet. So to speak for commodities in a big way and I don't think they are really that enthused about the stock market. I think they think this year could be a good year for the stock market but they're still apprehensive. They are still unsure of themselves and I think a lot of that money is still parked.
Pearson: All right and it is parked getting zero which is going to be the trend for the foreseeable future.
Martin: It won't stay that way long.
Pearson: We have had some great twitters come in and we love getting twitters and Agro and Bolivar I hope our question during the show was answered by you which was what Sue was thinking in terms of the outlook for corn and soybeans down in South America. Fell from Canada bullish on corn these tweets from Phil who always checks in are you bullish corn and I don't think you are Sue. I mean you have not come across that. Can we go back and push the highs again? It is going to become a weather deal at this point?
Martin: Oh, if we were to push the highs I don't see that at all this year. This is what I am looking for Mark. I look for a year where ok, we have had this rally in January, it could stretch into February, by the first part of March I think this rally is done, and it may not last that long. It may be that we just barely get into February and it is done, but by the first part of March I think it is done because we are going to be looking at acres. Our focus is going to start to shift and we are going to start looking at all these acres and the weather of what it is like going into spring and then we get into and we break down into planting time because maybe the weather is good and it looks like we are going to get in. We're going to get these big acres and all of the sudden the market is going to say you know we are kind of dry maybe we need to add back in some premium, some weather premium. The market does that but it doesn't live long and all of the sudden maybe we start catching some rains, the weather starts to take on a little different posture --
Pearson: If we have a decent spring this year. It has been so long who knows how the trade is going to react to that. Real quick, I am running out of time, Peter in Canada tweeted that tragedy for 2013 wheat which you talked about on the show could be a lot of acres coming in for wheat. There could be some opportunity depending on what happens as you mentioned from the Black Sea. Would you lock in some prices now?
Martin: I would be locking a little bit and I don't really want to get too carried away right yet in front of us. I think I would wait it out a little bit longer getting more into February. Again wheat almost tracks right along with the corn for now but I am not real crazy - and probably what is holding me back, Mark, is I have these technical indicators that I use for timing and they are just not looking negative on - you know it might be for a week or so that we get friendly, but they just basically speak to me do not sell just yet. But on the rallies here before the end of February we want to be sold.
Pearson: All right. Sue Martin, thank you so much, appreciate it, being with us this week, joins us regularly here on Market to Market, and I think all of you for joining us here at our Market to Market website. And by the way from everybody here at Market to Market I'm Mark Pearson thanks for watching and have a great week!