Pearson: This is the Friday, November 10, 2017 version of the Market Plus segment. Joining us now is Brian Roach. Brian, welcome back.

Pearson: We did not get a chance to discuss cotton and you are a Florida boy, you travel quite a bit. Georgia got hit hard by Hurricane Irma. Texas got hit hard by Hurricane Harvey and yet USDA thinks there is a pile of cotton out there. How realistic is that?

Roach: I think you have to run with the USDA numbers on whatever they report because that is what makes the market. Whether it is real or not doesn't really matter, but I think they do a great job of their estimating. The cotton number was kind of quiet. The US Stocks numbers came up, the world numbers came down but that's all on domestic consumption and I have talked about this before that all the world economies are all in growth mode. We are not talking about anybody having problems. We are talking about inflation. Is that an issue? So, I think cotton probably has some good markets ahead of it. The question will be is does that mid-south area grow cotton over soybeans and what does those ratios looks like? If you look at the kind of ratios we had last year, we got a little more cotton, not a lot and bean numbers were pretty solid.

Pearson: Yes. Yes, last year I heard growers switching from corn to cotton, not necessarily beans to cotton. Is that something you think we might see again this year unless corn can bounce out of this trading range?

Roach: The mid-south, the soil types, the weather type is not a great corn growing area. So with high price corn it made sense and now I think you are going to figure out what the real ratio is between cotton and soybeans and that will really be the picture for the mid-south.

Pearson: All right. Now let's get to some of our questions here from our followers on social media. This one is from Travis on Facebook. He is in Elk Creek, Nebraska. We are talking about huge corn carryout numbers. Travis wants to know aside from perhaps two consecutive years of 1988 or 2012 type draughts, what would or could change the tide of low grain prices?

Roach: Well, it would have to be a pretty big weather event whether it is in the Northern Hemisphere which includes China or the Southern Hemisphere or Europe and so you have major growing areas and those are all except for Europe major exporting countries and so that would probably be the type of event we would have to look at.

Pearson: You don't think we can just rely on increasing demand slowly whether it is ethanol weather, it's livestock consumption, that's just going to take too much time to really turn the prices around.

Roach: Those aren't going to create big enough moves that change corn prices from a step function standpoint. I think what we have is we have a corn market that wants to - the USDA's range was 280 to 340/350, futures market moves says 340 to 440 and I think we have that type of market. Growers just have to be able to make those kind of numbers work in their marketing and execution and so I think we have that kind of market going forward. Do we have something north of that? Not without a problem. But every year the market is going to be concerned about production when demand numbers are as large as they are.

Pearson: You bet. That's something we have seen I think especially pronounced in the soybean market. That is one where demand has been so strong that even though production has been quite phenomenal we are still getting a little nervous about it and we get the nice little pops. `

Roach: Same scenario in beans, I mean we have nine dollar market that has run 1050 to 1080. It is almost a two dollar swing and board price and so I think we have those types of markets to look forward to and possibly more in the bean market. You look at - China has an import requirement, they continue to go up. Their swine herd a couple years ago was knocked down quite a bit and now they are beginning to rebuild that, but that has created a net need for more pork, more protein and so we are going to benefit from that even though we just coming off of being crops in South America and the U.S.

Pearson: All right. Now R.L. in Nebraska on Twitter @sevendollarcorn, R.L. is an optimist, wants to know what should be he doing with his overrun bushels that have been delivered to the elevator? Let's talk corn first of all. Do you pay commercial storage this year?

Roach: A lot of guys are not doing that and I understand why and I'm working with them to manage that. With the carries in the market commercials cost have inched higher. The three to four cent number is I am hearing is five and six and so when you talk about those kind of numbers the elevator has big carries. They can make a lot of money on that. Storage costs are going up and I think the farmer has to look at maybe cutting bait on some of those costs, using it in extended prices contract of some sort to retain ownership through the elevator but don't get married to it. There is still a job to do on the futures side of that once you - once it is time, not when you want to deliver it, but when it is time.

Pearson: On the soybean side, you mentioned there is some optimism there in that market if I have got additional bushels of soybeans sitting around. I have got my ten days left at the elevator, pull the trigger, put the cash in my pocket here or soon for cash flow or might it be worth paying a little storage on soybeans given the demand picture that is out there.

Roach: I think for beans the cost for bean storage relative to the value of a bushel of beans makes more sense. So, we have been recommending growers put it in commercial storage with the plan that we are going to have it marketed through the first quarter of '18. So, our plan is not to roll that into the summer, this wouldn't be a summer marketing plan, this would be - we are going to make decisions between now and into March or before on what we put in commercial storage. So, I think that makes more sense.

Pearson: Putting it in their budgeting three to four months storage on those beans.

Roach: This isn't a long term play. Last year the best - there were three big rallies last year. Two of them came in the front part of the year and if that were to repeat itself this year we are going to move those bushels.

Pearson: All right. Finally we have kind of touched on this a little bit but I think we can go a little bit deeper. Tye in Washington, Iowa @TyeRinner wants to know with such a big crop and plenty of old crop yet around if China or any country bought a lot of corn would it be enough to move price upward?

Roach: Yes. Yes, you have to remember the futures market is terribly efficient. Very efficient at forecasting what might happen or transpire as result of an event or a trend and so I think that China is inching down their ending stocks. They have gone from three years ago 110 million to 100 to 79 and so they are slowly working off those stocks if those are accurate and they are growing more beans than corn and so that situation may rectify itself faster than we think and there is still an unknown about how many of those bushels they are sitting are good. Will they end up in the ethanol business that they've cranked up as well here recently?

Pearson: And that is the other story, we do see China moving to a 10 percent nationwide blending rate for ethanol. Can they meet it? What are your sources in the market telling you? What is the chatter? Can China do that domestically or will they be buying American and/or Brazilian Ethanol?

Roach: I think they will do both. I think that if especially if they are going to allow non-Chinese companies to build these plants or somehow you use the technology that is already out there but I think they have the capability to start up ethanol plants like anybody else. I think that they will figure out how run them and make it work and that will a big deal on the corn market over the next three or four years.

Pearson: Yes. Could we see a repeat of the ethanol boom that happened in this country '05 to 2010 in China?

Roach: Yes.

Pearson: Would have a similar price function on corn?

Roach: Well, I think it just puts more demand into the picture that we don't have today and if you look at the U.S. balance sheets going back ten years, I mean ethanol played a major role in driving demand up and if China were to do the same thing, they have a bigger population, more cars being sold over there, bigger car inventory, their demand picture is far bigger than the U.S. So, I think it would have a huge upside to it.

Pearson: Now before we let you go, you mentioned crude on the program. You talked about the economies globally, ticking right along. We are seeing record values in stock markets around the globe. How high can crude climb before we really start to aggressively move rigs back into place and crank production right back up?

Roach: You know the rig numbers actually climbed and they have kind of tapered off. This week we picked up nine, I think in today's report. So, you got to think that the shale production in the U.S. will come online very quickly, that they are well capitalized; they are better capitalized than they were before, so as we get into the high fifties here we are going to drag crude into production but I will say demand numbers are good. World economies that use crude are doing well. I think that is what you have to look at. Gasoline demand and crude are both running big counter seasonal moves here at this time of year where they would normally be selling off were actually up making higher prices and so I think that is a positive and that is a result of what you are seeing with economic news around the world.

Pearson: All right. Brian Roach, thank you so much for taking the time to talk to us today.

Roach: Thanks Mike.

Pearson: We are still seeking your questions on the basics of trading or trends in the market place. Join in and send us your questions in video form, you can direct message us on Twitter or send an email to markettomarket@iptv.org for details. Join us again next week when we will get a slice of Americana in the land of Lincoln and Mark Gold will sit across from me at the Market to Market table. Until then thanks for watching or listening. I'm Mike Pearson. Have a great week!