Pearson: This is the Friday, May 25, 2012 version of Market Plus. Hey, thanks for joining us here at our Market to Market website. Plenty of room, tell your friends and neighbors, we would love to see them here too. They all love to see Sue Martin; she joins us this week as our market analyst. Sue, one thing I wanted to touch on in the show there never seems to be enough time. We have had a couple of days and had almost a week of the extended trading hours from the CME. There has been some talk that they are actually going to extend the hours so the traders can more quickly trade government reports. I heard that report today. What has been the impact in your mind? Has there been much?
Martin: I don't really think so. I think that we have to remember the cattle market has been trading---
Pearson: Yeah, nothing new there.
Martin: Yeah and so this is about the same. What seems strange is that, you know before we used to talk about opening calls and we no longer talk about that. It is just talking about what is happening in the world and what is going to affect the market trade that day and that is it. What I have also noticed is as you go towards 115; you know when the pit closes that is where the settlement is going to be eventually at 2 o'clock on the electronic. And so all of the sudden you still get this rush of trade electronically into that 115 time frame and then we kind of go oh-hum and settle down just like cattle do. So, unless something really shocking happens after 115, the market is probably just going to be that way oh-hum, and then we reopen at 5 o'clock. So, I think that the idea of opening or closing, I should say the markets, at like 715 and reopening at 930 or something like that on report days, government report days, is probably a good thing. One because it does take time to sift through all those numbers and it is kind of a nice thing to be able to see, just get all that out, and then take a look at the market where granted the flip side of that could be, you know if you have stops in you are protected if the market keeps trading. If they close it and you assess the report and then you put a stop in and it reopens and it gaps through it, those stops are no longer valid in the electronic. That is the downside I see, but otherwise I think it is a good thing if they just do settle it down. I think it still keeps more stability in the market.
Pearson: All right. Well, that is going to be interesting to see what happens with that early start of those key report days to the open -. I wonder how that is going to impact us. We will see how that goes. And Evan over in Indiana, one of our Hoosier viewers want to know about that - about the new trading but also what do you think it is going to do to liquidity down the road? I mean five years down the road, what could this do?
Martin: Oh liquidity. I think liquidity is going to be very good. But it is a global thing. It is allowing everyone to trade from around the world and everybody has equal opportunity. And so I think it is very good for liquidity. It maybe even helps out with the volatility because of the fact that you are not giving a pent up situation into the market place with openings and closings, that type of thing. So, I guess I think it is fine. I look at the cattle market; I think it is very similar to the cattle market.
Pearson: And it has worked well there to almost oh-hum. I want to talk crop conditions here too for just a moment and then I want to come back and talk about livestock again. And we watch these drought monitors and we had a note, Tim up in Crookston, Minnesota. That’s God's country. I will guarantee you. Boy, the rain was messed up there in that Spring Belt. He said they are seeing a lot of moisture stress. You see that area getting hit as a moderate drought area. Some of the dry spots in the Corn Belt are also disconcerting at this point, but there is a definite need for rain and we don't really see that in our forecast short term. You talked about on the show June is going to be July this year.
Martin: Yes, it is.
Pearson: Because we had this early planted corn.
Martin: Yes, it is and that is going to make June, I think a very volatile month. It also, we have to remember many times markets peak. Grains and corn and soybeans peak in the month of June to July and July is one of those key months for highs. So, that will probably be a June this year if not already part of a May.
Pearson: All right. Keep that in mind. Tim, appreciate the note. A couple folks down in Kansas want to know what we can do about getting some rain down there in the Wheat Belt and unfortunately our links to that are just about as good as yours. I want to talk about livestock; fed cattle, hog market. More hogs coming, bigger crop than maybe what the USDA counted last year on the hogs?
Martin: Well, I think that but there is another thing that is also and I didn't mention it, you know on the main part of the show, but the one thing that we have to realize is the weights that we are carrying this year on not only cattle but hogs as well. You know, you have more numbers you are killing and then you turn around and you are adding in more tonnage beside. And then you have your prices at record high levels at the retail. That really is s rub to the consumer. And I am fearing that this is going to weigh on the hog market as we go towards fall.
Pearson: And fed cattle market also has always been dependent on what is happening in the general economy too.
Martin: Exactly and of course gasoline prices, got to keep an eye on those, and with the break recently in crude and stuff that's maybe a little helpful. But still at the end of the day the consumer is really going to the burden of proof here and then they only have so many dollars to spread around and so I think with an election year, very critical. I think that, when I look at cattle prices I would like to be friendly of the two or all the meats. I think cattle is pry the most friendly fundamentally, but I also see cracks in the cattle market. And the feeder market looks to me like it has put its highs in, like August feeders, for the year. I have been a bear on August feeders. I don't think they will go through 164. So, I think that is done and therefore the fat market seems like it is limited on the upside to me too.
Pearson: All right. Ok, plan accordingly in the livestock business. You mentioned crude oil. Didn't have a chance to talk about that on the show either. What is your thought on the crude oil trade right now?
Martin: Well, as long as we continue, this is bringing up another thought process too. As long as we continue with this ebb and flowing almost daily of concern over the world economy, the global economy and China, naturally crude oil drops back because if we are slowing down as a world, means less usage on crude. So, that is allowing for the market to slow down and drop back. But here is the kicker. When you look at Europe they are planting - or printing more currency. When you look at Japan, printing more currency. You look at the U.S.; we're getting ready to pry print more currency. We have got so much currency out there chasing itself that this is going to ignite, I think a horrible inflation, round of inflation. Now that is good for commodity prices but it also means everything goes up. And we have never seen it in our country where prices escalate so fast that you just can't hardly keep up. An example would be like you go to the grocery and before you get to the counter the price has gone up. That type of thing. Well, we have never seen that. Could we see something like that? Other countries have. This seems to be a time where things happen that we've never seen and I wouldn't be surprised at anything. I think next year is going to be huge in prices and this maybe the starting year of it.
Pearson: So, you think we could be like Germany before Hitler here with inflation at some point?
Martin: Well, I afraid we could be. I am afraid that we are already starting the phase of it and we are in the -- You know, years ending in a two tend to be a transition year and I think that's what this year is. But I am looking at next year being a potentially very bullish year in prices but unfortunately everything escalates along with it and that could really cramp our style a little bit.
Pearson: All right. Sue Martin joins us regularly here on Market Plus and of course on Market to Market. And again a remainder if you enjoy Market Plus you will really enjoy our live show. You could be carrying it on your local public television station. Make sure you contact your local public television programmer and for all of us here on Market to Market, thanks for joining us. Have a great week.