Pearson: This is the Friday, September 1, 2017
version of the Market Plus segment.
Joining us now is Sue Martin.
Sue, welcome back.
Martin: Thank you, Mike.
Pearson: Hard to believe we're already into
September.
Martin: I know.
Pearson: While we're coming into September we
have seen lean hogs on a pretty aggressive selloff
here for the past several weeks.
Sue, do you anticipate us getting a bounce here
before too long or are we looking at last year's
lows again?
Martin: Well, I think what has caused the market to
have, first off, the market came in with a big
discount to the August contract.
So then when you got the August off the board on
the 14th, the October was so discount that I think
it just had to do a little bit of alignment.
Then it kind of fell apart because 71 was a pretty
good ticket, we thought maybe might get to 74 but
wasn't sure about that.
And then of course you also have the selling hit
in the cattle, which kind of helped drag it down
too.
And you've got more poultry, chick placements
are up, hog numbers are expected to be up, you
have a quarterly hogs and pig report at the end of
the month, that is expected to really confirm
that there is more numbers and expansion.
And so the whole gamut I think has weighed on the
hog market and kind of kept a lid on it.
Pearson: Demand hoping going to pick up?
Have you been seeing any indication?
Martin: Well, I think export demand will pick
up.
I think that you look at around the world and even
overnight the PMI's that were coming out were
really good over in Europe and into Italy and so I
think that's all good signs.
But I also think that when you look at the hog
industry yeah we're probably still going to
push a little lower but the killing capacity has
been ramped up and the dollar has been on such a
demise that maybe we weren't getting as many
hogs coming into the U.S.
as we could have if the dollar had been stronger.
Now, we've had a bounce this week in the dollar
but I kind of think the hog market is going to be
held at bay a little bit.
Pearson: We're facing some headwinds.
Well, now I want to turn over to our questions from
our followers on Facebook and Twitter and encourage
all of you to send in a question.
Whenever you've got one just shoot it over to
Market to Market.
But this first one is from Jared in Mattoon, Illinois
and Jared references last week's episode when Darin
Newsom was on and he says, Darin was very bearish not
only on the corn market but on wheat as well.
And Jared says, if he understood him correctly
he encouraged planting fewer wheat acres.
Jared in Illinois says, for those of us in corn
and bean country trying to avoid a saturated bean
market like we're seeing in wheat, what do you
recommend?
Martin: Well, for one thing farmers always have
a tendency to market their beans and hang onto the
corn.
And so I don't see supplies that aggressive.
The one concern I would be, I would have is that
the yield, okay F.C.
Stone increased their yield on the beans, and
the Pro Farmer Tour kind of told us what they've
seen out there to kind of fall in line with the
USDA, so if the USDA was to just come in and push
that yield up a little bit, remember that yield
that they came out with in August was as of August
1st when they didn't even know squat what was out
here.
And the weather in August has been not hot and dry
but cool and maybe some showers, it seemed like we
did pick up a little more shower activity.
So it would have the feel that beans should be doing
better, maybe there's a lot of disease out there
too from what I'm picking up, but regardless what is
out there right now is perceived to be better.
You've had crop condition ratings start to inch up.
So I think the USDA will raise the bean yield.
I think they'll lower the corn yield but they'll
raise the bean yield and if they do boy it wouldn't
take anything to have a carryout on new crop that
could all of a sudden jump over 500 million bushels.
So we need good demand.
Brazil's exports were record high.
It is estimated they have exported about 56.9
million metric tons so far from January through
August.
It was estimated they'd export 63 million metric
tons this year.
So they're kind of getting on the downhill slide of
it.
The U.S.
is very competitive against Argentina and
Brazil so we look to be in the market of favor.
But boy when you look at our export sales we're
running behind on corn and soybeans.
Wheat has caught up pretty close to the five year
average.
But the corn and soybeans is running decisively
behind.
We need to see this pick up continue and of course
record exports in corn as well out of Brazil.
So the farmers, not only in the U.S., but in Brazil
and in Europe are so frustrated with the cheap,
cheap prices that they're hanging on.
That might give you a little bit of support to a
market temporarily but it also says competition is
looming down the horizon.
Pearson: Right, any bushel not sold today is a bushel
that can be sold in the future on any kind of a
rally.
Martin: But then we have dirt cheap prices.
So, if we're going to see prices coming down in the
future over the course of this winter and what have
you I would have to say it's because of carrying
charge markets just dwindling and lining up.
I think we're seeing the worst.
Boy with wave 4's and then corn close to a wave 5 at
the $3.40 level, very close and the response we
got was very typical of coming out of something
like that on a wave 5.
But we need to see a little more proof and,
like I say on the show, I'm just, I'm not sure I
trust everything just yet.
Pearson: Right, need the combines to roll.
Martin: Exactly.
And when I talked about the 84 year cycle low
coming due in August, what is that saying?
It's saying I expect the market to go down, it is
to be a low.
So the markets have to fall to fulfill that.
And we've gotten that, now we need to see it
stabilize.
But again, boy beans are acting awful lackluster
and they are the better price of everything.
Pearson: Right.
And that leads right into our next question from
Dustin who is in Andover, Iowa.
He wants to know, what does your strategy look
like for managing unpriced bushels that will need to
be sold this fall in the corn and the bean markets?
Martin: Well, that's a tough one.
I would retain ownership if that's the case and
you're moving that grain.
I would come back and try to have some call option
strategies.
Maybe you sell some out of the money puts and then
turn around and own some calls back knowing that if
the market breaks down you could be exercised on
those ones that you sold that are below the market
but then that lets you be long from a cheaper price.
And then of course your calls that you bought
didn't pay as much for but they're going to be worth
less, they aren't going to be worth anything.
But that's one way, that's one way to maybe work
yourself in to have a cheaper price in case the
market breaks and if it doesn't you're going to be
happy because you've got the calls on to help you
protect.
Pearson: Move it to the upside.
Martin: Yes.
Pearson: Our next question comes up from North
Dakota, comes down from North Dakota I should say.
This is from EZ$ in the Red River Valley of North
Dakota.
Martin: I like that name.
Pearson: Exactly.
He's on Twitter @bankerfarmer1.
He wants to know, what is the cards for diesel fuel
prices this fall with Harvey's impact on the
Gulf Shore?
Do you expect short-lived gauging hysteria?
Or could this be a longer-term impact?
Martin: I think diesel prices could have a
longer-term impact here.
Yeah, it's expected you might push the price
higher because everybody is going to need to get
stuff loaded, or taken in and I think a lot of
people didn't think about booking with Hurricane
Harvey coming in and Hurricane Harvey was way
worse than they expected too, going off shore,
coming back on, they just kept getting hammered.
Pearson: Hitting all the crude oil refineries.
Martin: Oh my gosh, yes.
And so I think that that is going to cause some
shortages maybe temporarily.
But here's the kicker, corn is behind.
If we get a frost or we stay abnormally cool now
the next thing is going to be it's still going to be
slow to come around, we very well may have a crop
that you have to dry down this year and that's going
to put a little added demand in there too.
So I'm thinking prices of diesel could hang in here
a little longer than you think.
Pearson: Alright.
Well, Vance in Nebraska City is trying to find
some positives.
Vance is on Twitter @Proverbs2_6Dad.
And he wants to know, is the price we're at, an 84
low in soybeans, is that low enough or a wave 5 in
corn to reduce expansion of acres in Brazil?
Martin: I've heard talk that acres for corn is
going to drop down a little bit.
Bean acres I think they might try to hang in
there.
Bean acres are expected to be pretty decent again.
But the bottom line is it is thought that the
production could drop back this year.
Now, we're looking at right now a forecast for
Brazil as being warm and dry, some areas almost
drought like.
And then you look at Argentina and Argentina
may be, some areas up to the north may be a little
bit on the warm and dry but the rest of it almost
too wet.
So we'll see what happens as we go in, Brazil
doesn't start planting until at least the middle
of September because of Asian rust.
If they're warm and dry they may not have a
problem with Asian rust.
And they didn't have a major problem this last
year either.
But they always spray ahead of time because if
they wait until you see it, it's too late.
But if it turns wet they might have more of a
problem with Asian rust than they've had and that
could knock the yields a little bit too.
It just depends on how good those fungicides are
going to hang in there.
Those crops could mutate, you never know.
It just depends.
But we'll have to watch the weather.
I think we'll see a little bit of a pullback.
But they've got the acres, it's going to go to
something.
We've been seeing CONAB do the subsidizing to farmers
in Mato Grosso, about 28% of that crop has been
getting subsidized already.
That is helping those farmers out a little bit.
So it's going to be an interesting year ahead.
I still tend to be an optimist for the next
year.
Remember, it's a year of an 8, years of an 8 tend
to be more price positive and the USDA raised prices
a little bit here in a recent estimate.
So that's a good sign.
So they must be thinking, let's put it this way,
they raised farmer income.
Now, how do you do that unless you're thinking
prices are coming up?
Pearson: Right.
Gotcha.
Now, our final question from our viewers comes
from Shelby in Decorah, Iowa.
Shelby is on Twitter @Cornelius_1993.
And he wants to know, will we see Harvey impact our
commodity markets, corn and beans, as the farmers
in the South take the hit from this hurricane?
Martin: Well, it would have to be because of
wetness slowing up harvesting.
Beans don't like wet feet, that sort of thing.
And they are going to get some of that.
But so far the market hasn't really cared.
It's just like I say, the market has got a funky
feel to it.
It's just negative.
But then that's everything.
You look at politics, it's negative.
The media is negative.
The attitude towards market, negative, or
watered down on reactions.
So I think that we're going to have to let this
market play its hand here a little bit.
It would be wonderful that we've just sort of
coincidentally had another again.
I just am not sure I believe it.
I think we're going to have to get those combines
rolling and have it proven because there is another
wave 4 on beans at $8.90.
Pearson: Okay, that could be in the cards.
Martin: Yes.
Pearson: Alright.
Well, Sue, before we let you go we want to get our
final question from an Iowa State student.
And before we get to that, I want to tell our
audience that we are at the end of our stockpiled
questions from Iowa State students.
So now folks, it's over to you.
We are looking for long-term questions.
What are you thinking about the future of
commodity prices that you want our analysts to
answer?
If you have one of those questions DM us on Twitter
or send an email to markettomarket@iptv.org
and we'll work out the details about how we can
get you on Market to Market in the Market Plus.
So Sue, for you we have a question from Craig up at
Iowa State University.
Here it is.
Craig: What is the biggest hurdle for someone
starting out?
Martin: The biggest hurdle for someone starting out
in farming?
Money.
Pearson: Money.
I was going to say, it's a big question but it has
kind of got one answer.
Martin: Yes, but there are some really good
incentives for a young farmer getting started
where if your net worth is $600,000 or less the
person who rents to you can get, in the state of
Iowa, can get I think it is 7% off their state tax,
the same is true with someone helping you out
with equipment, sharing equipment with you, they
have tax benefits as well.
It's a two to five year program.
There are things out there.
But I think one, a student out of Iowa State, you
know they've got to be taking marketing and
that's a step in the right direction because
marketing is one of your biggest hurdles in
farming.
Pearson: Yep, you don't make any money growing a
crop, Sue, you make it selling a crop.
Martin: That's right.
Pearson: Well, Sue Martin, thank you so much for
taking the time to talk to us this week.
Martin: Thank you for having me.
Pearson: Join us again next week when Don Roose
will sit across from me at the Market to Market table
and we'll explore the battle for GMO oversight
in Oregon.
Until then, thanks for watching or listening.
I'm Mike Pearson.
Have a great week.
Không có nhận xét nào:
Đăng nhận xét