Iowa Public Television


Market Plus Video: Market Analyst Don Roose

posted on May 4, 2012

Pearson: This is the Friday, May 4, 2012 version of Market Plus. Hey thanks for joining us here on our Market to Market website. And with us this week one of our regular market analysts, Don Roose and Don, I appreciate you taking time to join us. One of the interesting comments we got offered some interesting stuff trading hours certainly is something that everybody is talking about but we had a note from Tom in Indiana. A great question about these trading hours and what impact you see on the show. You are not expecting much. We are not going to see a whole lot of non-traditional trading even though they are open 22 out of 24 hours right?

Roose: You know I really don't because I think it is going to be on the go. Right now if you really think about it we stop, we get a report at 7:30 and we start trading a couple hours later and so it is just, you know we stop and have a chance to reflect and think. Well I think you will better prepare for the report. So, I don't see a big change. I think it is more about what is going to happen with these crop reports as they come out. Particularly the monthly production reports.

Pearson: Oh yes and of course we watch those very closely this time of year and now they are going to come out as the market is trading. So we are going to see a viewed impact barring any change of what is the CME is announced.

Roose: Yes. And I think we're just, you know be on the fly, we will be trading. I mean I think you are just really going to do a lot better preparation before those reports. You are going to be pretty alert and you are going to have your positions already in place and then be prepared right after that to have target orders or what not.

Pearson: We talk about futures on the show because it is universal. No matter where we are in the United States or the world, if you are watching Market to Market you know we are referring to the Board of Trade and a futures market that is driven from that location. So we don't talk as much about the cash market but you pointed out the hot topic out there in the Corn Belt. If you talk to producers where are they going to sell some corn this week? Because we have got wild basis levels throughout the Corn Belt and we have got economics that aren't that great on ethanol these days and these plants are having to bid up to keep them going.

Roose: Yes, most definitely the issue is we are just red hot on the basis. You know of course it started in the Eastern Corn Belt but it has moved to the center of the Corn Belt and now to the Western Corn Belt. So we are at some record high basis levels and you know the inversions that we see in the market old over new crop are certainly, you know run almost on what 95 cents the old crop over new. It will certainly tell you that you are playing musical chairs and at some point in time don't over stay your hand.

Pearson: Always good, good advice. Don't stay at the party too long. And that - it also goes to the point that this new crop transition period from old crop to new crop and I had a colleague of yours tell me that yeah there is going to be plenty of new crop corn available because we were able to get in early in Southern Indiana and Southern Illinois in a big way, parts of Missouri, parts of Ohio that were able to get planted very early to get crops harvested by a September deadline to make delivery. But his point was those crops are going to be in the wrong place. They are going to be needed more in Western Illinois.

Roose: Yes, it is going to be dislocated. Now the other side of it is we are going to have a lot of wheat harvested also and Kansas is going to be help lock that a little bit. So it always amazes me, Mark is how this always seems to work out, you know just the supply/demand issue and we think that we will block that very tight old crop situation and transition into a new unless the big question, Mark, is unless we get a weather problem.

Pearson: That is right. Of course weather is going to throw everything out the window from what we are talking about right now. Based on decent conditions where we are you are bearish on corn. Doug from Lincoln sent us a note and said hey, we have got all this potential China ban. Why is that driving this corn market higher?

Roose: Well and I think part of the problem is it is good demand. There is no doubt about it. But you're increase in one bushel per acre on the corn can really suck up a lot of that demand pretty fast. So, I think it is just the fact that we just have - our supply is going to be up 4.1 percent this next year. So, just too big to overcome that smaller demand. On the show you pointed out something that DJ up in North Dakota sent us a Twitter about and that is the fact that this cattle market for the bad new that has hit it, and he mentioned that finely textured lean beef, the BSC outbreak, the fact that a lot of the big fund traders got nervous and pulled out. We went from a lot of open positions to not that many. Despite all that this cattle market - in. He is pretty optimistic on fed cattle. You sound like you are fairly friendly to the fed cattle.

Roose: Yes, I don't think there is anything wrong with the fed cattle market. I mean third and fourth quarters are going to be just, it is going to be supply bullish whether we can get you know the demand behind us is the key. In short term I think we have stocked in those lows with these big discounts that we have had. We have kind of matured past the negative news. The second quarter beef actually for one of the few years is going to be actually lower than the first quarter beef. So that is a plus.

Pearson: All right. Another question that came in from one of our viewers, Doug in Washington, who thinks do we give the ghost on old crop wheat? Just go ahead and liquidate? - 20 cent/30 cent bump?

Roose: Well, I think we can get over sold and we are right now on wheat. So we can get those quick rallies like that. So that kind of a rally is not a big surprise. We can have some disruptions in harvest. But there is no doubt that we are in a market that is two steps down, one up, and so you have to make sure you take advantage of that. You know we are a ways away from socking in our harvest low yet.

Pearson: On the show we mentioned the Informa numbers 96.1 million acres on corn and a 75 million acre number on beans up I think right at 2 million acres from the last USDA survey. Do you think by June it could be higher than that with these beans priced the way they are?

Roose: Yes, I do. I mean because we haven't lost it, you know the big thing is we are going to have wheat come off 2 1/2 weeks early and there is a going to be a lot of double crop beans. And that is really where the big one is going to come from. So yeah, I mean don't be shocked if we happen to go up 3 million acres.

Pearson: All right. Don Roose, appreciate it, always great insights. Thanks for being on the show this and of course joining us here on Market Plus. And of course we are glad you joined us here on Market Plus. Just a quick reminder make sure you talk to your local public television programmer if Market to Market is not on in your public television viewing area. Just give them a call. You would be amazed the impact a farmer or agri-business person can have by calling that public television programmer. Thanks so much for being with us. From all of us on Market to Market, I am Mark Pearson. Have a great week.

Tags: agriculture commodity prices Don Roose economy markets news