Pearson: This is the Friday, September 7, 2012 version of the Market Plus segment. Joining us now is Naomi Blohm. Naomi, welcome back! We have got a couple of questions here submitted on Twitter. Chris in the Northeast @OKCableGuy is asking what are we going to see with input prices. How are fertilizer prices going to look next year?
Blohm: That is a great question and likely whenever we have high grain prices then all of the input prices suddenly go up too. So, I would say definitely you will see fertilizer prices go up. I don't know what percentage they will be higher than previous years. It is just going to be such a struggle because with guys having half a crop or no crop or only getting insurance to cover just expenses, it is really hard to budget for next year right now. But I would say for the most part just plan on everything just being a little bit more expensive.
Pearson: With that in mind should they look if they have the ability to start locking in prices now do you think that increase is going to come pretty quickly?
Blohm: I would say if they can really pencil out what their input costs will be and they know it and then if it correlates well with what they can get with new crop prices, then go for it. But I have also heard this week; some guys have told me that they can't even lock in the cash prices for 2013 yet. So, that might be a pickle for most. So it is something where you just got to be - have it mapped out on paper, know what you are going to do and when the opportunity strikes and allows, you just got to go for it.
Pearson: All right. So keep flexible, stay nimble and --
Blohm: But have it penciled out. Have it penciled out.
Pearson: All right. Frank in North Central Illinois is wondering with the fundamentals being so strong in soybeans, why do they feel so heavy? Why are we still bobbing around in the same $17 area?
Blohm: Sure. I can understand that. With soybean prices rising right now the long term fundamentals are friendly and getting friendlier. But the market can't just go up. There is this thing called gravity that will bring it down and producers, I think sometimes forget that. That sometimes when the market goes up they feel that it is going to stay high for a month or two until they are ready to price it out. But by then the opportunity has already passed and the market falls lower. So, it is a tricky thing and I don't know - especially how to, you know it is not going to go straight up and stay up. It is going to chop around and that is how the market works and that is price discovery and that is normal market action.
Pearson: All right. So, it is just kind of a wait and see? See what happens with harvest? See what happens on September 12th?
Blohm: Yes and then with the South American production as well.
Pearson: All right and you mentioned we were going to be seeing record production in South America - or record acreage planted. How does that translate to acreage in America? Are we going to see another acreage record next year do you think?
Blohm: Absolutely. I think we will see the same cycle happen again that we had this year and hopefully we will just have the weather to correlate with it. Guys aren't - the American producer gets knocked down once is going to get back up. And he is going to just - just go on through and he is going to fight. And with the prices being so high, what I am curious to see, is if we will at all see a shift back towards beans from corn. A lot of guys are frustrated with how their corn on corn worked out. Especially a lot of -- root --
Blohm: Thank you. Sorry.
Pearson: Yes. Crop sustainability issues. We have heard a number of those complaints.
Blohm: Yes. Absolutely. So we are hearing a lot of that problem and so guys are ready to go back to the rotation of beans, I think. So that will be what I am most curious to see.
Pearson: All right. And with that in mind, I mean looking at exports; I know the USDA just announced record exports are anticipated next year. If we get record acreage South America, record acreage North America, how are prices going to look come next fall with normal weather?
Blohm: If we have normal weather for the growing conditions for South America and then our spring and summer next year it is going to let prices set back. But we are not going to have such an abundance of a crop to make our ending crop supplies balloon up. It will come up to a comfortable level but it is not enough to make it feel like this is big cushy surplus. It is not going to happen. So that wouldn't be until 2014. So 2013, I think we will see just nice stable firm prices even if we have good growing conditions.
Pearson: All right. With that in mind, I mean looking towards the future maybe on more of a long term basis kind of coming back to that pricing next year's crop preferably worth keeping in mind, not necessarily jumping on but thinking about currently -
Blohm: Very much. Right.
Pearson: Looking now towards livestock, do you see kind of a similar idea in fat cattle or feeder cattle? Should guys be locking in their feed costs now maybe if there is a buying opportunity in corn?
Blohm: Good question. If we get a set back at all, like if there is no surprise on the report next week that might be an opportunity for buying and locking in some prices. I wouldn't do copious amounts of it just because. If we end up having good growing seasons next year we could see instead maybe six dollar corn rather than seven or eight dollar corn. But it might be a point to do something on the set back because if it ends up that South America is bad, then price is really going to go skyrocketing a lot higher.
Pearson: All right. That kind of wraps up my questions. We are just going to sit and wait until September 12th. Do you have anything that you would like to say before we go?
Blohm: You know not at this time. Good luck with harvest. Be safe and hopefully your yields are a little bit better than what you are expecting.
Pearson: All right. Thank you Naomi. We appreciate you being here.
Blohm: Thanks for having me.