This is the Friday December 28 2018 version of the market plus segment joining us now is tomm pfitzenmaier Tom, welcome back
Thanks. Flame Tom. We teased it pretty well right there at the end of the show
We've got to talk about the lean hog market or continue to talk about it why the top of the choppy trade lately?
Well, we just got a lot of hog numbers coming out I think
people
are assuming that China is eventually gonna buy some pork and I think if they do that'll be
Supportive and like I said on the show, I think I think the hog market is trying to bottom out. It's very oversold
Really really in need of a correction, which I think is going to happen. However
If we break out through the bottom of this thing and that and these lows don't old. Yeah
Then I think then I think you got you got
Some real negativity in the hog market, especially if there's not any big significant Chinese buying that comes in here
I mean here your daily hourly about the swine flu and the impact it's had in the
Devastation from that and everybody in their mind keeps thinking. Well, that's kind of eventually
Feed into our demand for pork and it has to some extent but I don't think it has to the degree that it
could have or maybe should have so
That's kind of where we're sort of teetering on that edge here and and having said the markets oversold
It is but sometimes in a bear market you can stay oversold longer than you really would it would seem like reasonable. So
I'm trying to be optimistic at these levels
You know low 60s in the fehb contract
And for a bounce back up around 65 and then I'd probably be turned back into a seller again
The thing that we can't really predict right now is export sales numbers aren't going out
So we don't even know if China is or isn't buying us pork
Is there any other way to see any indicators and that's I well I mean there's privates that are
doing
Have better knowledge about that and then probably you or I would have so there there ders
there are people who know that that's going on but
Yeah, it's again
Transparency through the through the USDA and the government is really kind of crucial for this
For the man on the street, so to speak. I'm trying to make decisions on that
In any of these markets, we've got a question here from Jim in Worthington, Minnesota
I think you've pretty much alluded to this, but just to throw it in here for Jim
He said will we see a hog rally after the holidays are over again? We're just depending on that teetering line. Yeah III
I'm in the camp that thinks we're going to okay, so
Absolutely could see it never know for sure. No
Let's talk a little bit here about cotton. We lost 99 cents on the week from last week
What's going on in the cotton mark is anything to get excited about for 2019 Oh God, I mean gets 90 cents
Last one 99 cents last week, but no we will drop from what high seven he's down to 72
I mean in a fairly rapid period here I
Mean I think it relates back to everybody thought China was going to buy cotton to and they just haven't any significant degree
And so the optimism from that collapse the cotton market now, I still think you're gonna see cotton
March cotton moved back up into that 20-day moving average up around 77 77 and a quarter. So I think there is a
$5 or so bounce here in the cotton market. Yeah
Having said that if you get up into those levels
I'd certainly turned back into a seller in the cotton market so much summer dogs when you get those nice little rallies you
Got to be a seller against those resistance levels out of the four main
They're not all grains. We've got cotton is obviously soft but corn soybeans wheat and cotton
Which of those four has the best story acreage wise for 2019?
III don't know what the cotton producers I had thought cotton was going to get a nice share of the of the bean business
I'm guess. I'm not sure what the break we've had in gotten that that's necessarily going to be true
I
Don't know. I guess I'm still a little bit optimistic about wheat
So I you know some of those some of those northern producers it's they've historically been wheat growers
so I would guess they were they're gonna attract some acres out of a lot of cotton so I mean out of
Out of soybeans. I'm sorry out of soybeans into wheat. Yeah, absolutely
The other big story we've still got going on then we have to talk about is of course, of course
The oil markets are the crude markets reversing. Are we still continuing them to had lower from here? I don't know
The reversing is the right word may be stabilizing it
You know
we came up Russia came out this week and said that they're not going to
they're not they have no intentions of changing their production going into
2019
The Saudis apparently are going to continue to produce obviously the frakkers in the US have been pumping out oil like crazy now
Everything I read says when you get crude oil under 50
the fracking thing doesn't work as well as so maybe you'll start to see that back off a little bit as we go through the
Winter and that's going to be a stabilizing force, but there's a slaughter oil being produced in the world
And and and I'm guessing we're gonna stay in the trading range here of 43 to 53
widely, and
And then you get in the mix is the world
the global economic problems gonna affect the demand for energy
You know are we gonna have a global recession or is the u.s. Going to go into recession next year?
I don't think so, but it's probably go
There's pretty obvious that the economy's gonna cool a little bit which is indicated by the feds
Saying they're probably not going to raise interest rates in 2019. Exactly and and so, you know, all that isn't is a negative
On the energy side. So I you know, I don't we're gonna have a corrective rallies and bounces, but I don't
Having said that I don't think we're going to 35 either
I think you're going to stay in that, you know that church rate bouncing either side of 50 dollars. So if I'm a
End-user a producer a hall or etc using oil using gasoline
How far out should I be looking to lock in those fuel needs? I guess I'd be looking at on these heartbreaks
I'd be looking to lock in fuel needs certainly for spring planning in the summer your summer needs
I don't know if I'd get in a big hurry about going all the way out to harvest nice, but
Spring needs. I think you need to look at it. All right, absolutely
Tom we've got kind of an interesting question to end on here a social media question Taylor in Appleton
Minnesota said what's the future like for computerized high-speed trading?
There's been some rumors trickling around that maybe that's why Wall Street has been so volatile the past couple of weeks
Well, I don't think there's any reason there any question that that's been the reason there's you know
high frequency trading the
Algorithmic trading computer trading as all I think exaggerated the moves now
You know those those
Algorithms that they've developed and then based on you know
Somewhat on human emotion and the way humans react to so it's not like when humans were running things we didn't
overact on stuff toots, I think there's some rule changes they can make
The uptick rule got eliminated. I wouldn't be surprised to see some talk come back about that
so that shorting the markets not quite as as easy as and
And it can't be quite as aggressive doing that with with your computer programs
So I yeah, I think people are going to start taking a look at I don't know
There's no way in this day and age. You're gonna go away from it or eliminate it
But maybe you can do some things to sort of moderate its effect a bit. So
from the past couple of weeks
You said we absolutely have seen computerized trading playing some impact in
What's been going on in the stocks and equities market? How much of an impact really though? Does that have?
Yeah, I don't know how you quantify. Okay, I think I just said
Just as you observe that there the markets have done stuff that I don't think human
Human run trading programs would probably do
it so, you know that they've got
Things set up that if you trigger certain
Certain things happen make new lows away, you know, whatever there
Algorithm is plugged into
continues to make the market go and and and so, you know, the guy that's willing to step in and and and maybe
Test the market see if there's lows are in or if the market is going to stabilize. He's standing back on
I I'm not going to get in front of that
So III guess it. Like I said, I think it exaggerated s-- the moves just my opinion
I'd I don't have any way to and you know quantify it but it appears that way. Yeah, absolutely
I'm gonna give you one last final question here. It's kind of a softball question for you, but looking into 2019
What's a couple factors are a couple things that you're following that producers should be following as well?
I'm scared to death in the soybean market a
billion bushel carryout with the South Americans producing a record crop with
Demands as soft as it is in the US the the shifting of acreage and how farmers are going to handle the these high
Carry-outs and beans, it looks to me as a big problem
If we don't have Chinese buying you're gonna see $8 or less bean prices
So you better be aggressive and start getting these beans covered if you're planning on growing beans you better use rallies to take advantage
So that's the big one for me if you're going to do a lot of switching
You better start looking at selling some new crop corn to cover that. Yes on any rallies that come along
So those are the two big Biggie's for me
I'm just a little uneasy about the AG economy
If we don't get this thing straightened out in the next few months as I'm sure many people sitting at home are as well
Tom thank you so much. All right. Thanks
Join us again next week when we'll look back at the year
That was 2018 in rural America and sue Martin will join me at the market to market table until then
Thanks for watching listening or reading. I'm Delaney Howell. Have a great week
You
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