字幕列表 影片播放 列印英文字幕 Pearson: This is the Friday, September 23, 2016 version of the Market Plus segment. Joining us now is Sue Martin. Sue, welcome back. Martin: Thank you, Mike. Pearson: While we were on the program I rudely, Sue, and I apologize, had to cut you off as we were discussing the pork market. You had led in by saying October is pork month, we have a ton of animals being processed here over the next six to eight weeks or a year, depending on how you look at it. Can the demand soak up all of those critters? Martin: Well, I think we have good demand and the retailer continues to use pork and poultry to feature, to draw, and cheap price to draw in the consumer and while he's in there then the hope is he buys a little bit of beef. That is being kept pretty much at the same price or not much less. So the retailer is making good margins, the packer is making good margins on both pork and beef. And I think that when I look at the pork market, this seems to be an old fashioned traditional kind of a year where we have so much protein, just so much protein, even eggs, just huge. But on the same token of course like I say the retailer is moving it as far as the pork and he's moving the poultry too. But the cold storage report showed supplies down, which was a good sign. So that might help us be a little firmer as we start the week. But the bottom line is what rally we get I don't think lives because I think ultimately we will move back down into November. So October is pork month, that might help us a little bit, get a little reprieve. Usually the beef choice select does better usually through the last week of September on through the third week or so of October. So in general we might get a little bit of a lift here and part of that also comes off of the fact that producers are busy, hopefully, combining corn and beans and so we'll see. But of course any more so many hogs are integrated that when they're ready to go they just load them up. And so I think that we have a market here that still tips back down into November. Pearson: How far down? Sue, as I was on the road I hear people getting nervous that we've taken out, we're now in, I believe we're back into life of contract lows as of Friday. Are we looking at the same setup we saw in '98 where we run out of capacity? Martin: No, I don't think so. I think that we're using this beef and pork industry, we're using the production that we're getting, and the poultry. The one thing we have to keep in mind is we have a good Hispanic population that we didn't have back in '98 and on top of it we may be having other populations coming in as well. Pork and poultry are products that they like and therefore the Hispanics are big users of pork. And so I think -- and they use cuts that we wouldn't maybe normally have used. So I think we're going to use it. Our export market this past week was down, which was a little disappointing. My biggest concern would be China, if China becomes the world's largest exporter, which it seems like they're trying to gear towards, and yet they also are a little tight supplied right now for supplies of protein or meat for their consumer. They're in the process of making huge changes in China and they have a huge sow herd now that we're under the understanding that by the middle of next year they'll have their full cycle complete and be full swing into production. But they're trying to gain back the consumer confidence. Things have gone on in China that probably weren't the best. So now they're in the process of cleaning up their act and getting things better but they're also talking about becoming the world's largest exporter of pork. That would not be a good thing for us. It makes you wonder why Shuanghui bought Smithfield. Pearson: Well we've got a couple of other questions here. This one is from Scott in Barrington, Illinois. Scott wants to know, if we plant 3 million less winter wheat acres how do we plant less corn acres next year? Martin: And he's right on that, although sorghum could pick up some of those acres, and milo. Beans I think pick up some of those acres. It depends on the price too. Right now you've got your producer thinking about next year's acres and laying the groundwork for that. But we also know that the farmer, I believe the farmer is in better shape at this time than he would have been back in the mid-80s. I don't think we have producers in trouble like we had back then. Yeah, they're not making money and they're strapped a little bit, but on the same token it's not like, you'll have some who maybe go out of business, you have that always where it's an efficiency thing. But the bottom line is, I think that it depends on how bad the price is. And with us putting in an 84 year cycle low I still say you're going to have something better next year than what we're looking at. I'm not sure a year of a 7 tends to be usually dynamic, they don't seem to be over history, but we'll know for sure when I finish my research on that. But I think that when I look at corn prices they're more intensive, input intensive, that might be something that helps make these decisions because this is not your first year, this is going into at least your second year of pork prices and that might be what plays a hand in that. Pearson: And it's interesting you mention that, I was speaking to a group of lenders and they had all, not all of them, but a lot of them had talked about how maybe they've done a refinance or a restructuring already with some of their borrowers and that one was okay. They had the equity, they had the working capital, they had the business in decent enough shape to do it once. Their concern is can we do it again? And that's the answer that I guess we'll be getting as we get into December and January and renewal season. Martin: Yes, and I'm kind of concerned too because we still see piles of corn that never moved at some of these larger elevator groups and that has to be farmer owned corn and that's a concern. Pearson: They're just hanging onto it. Now, this time we've got a question from Phil in Ontario, Canada. He's got a couple of questions. He wants to know, why does the USDA consistently overestimate soybean stocks? Or, another way to look at it is, why do they underestimate soybean demand? Martin: Well, first off, demand in any market is usually hard to really quantify. It seems easier after you look backwards and you see what we've done. If you look at our exports, we're running behind the five year average, and even China's imports for the month of August was down about one and a half percent, or one and a half million metric tons I should say, from what it was a year ago. So it seems like we should be -- and yet we've seen good demand. But it makes you wonder are they front end loading? And they might be. But on the same token, if they're going to cut or try to dissuade DDG imports of corn that competes against soy meal, well then that would say that they're probably going to have to have more soybeans or soybean meal down the road. That would be a little bit supportive I think underneath the bean market. When I look at the beans, if you look at the production we continue to do and yet our carryouts, yeah they're growing, but they don't get burdensome, so to speak. It doesn't seem to take long if the right things happen. And we're the only game in town between now and February to March. So that's a lot of time. And the one thing that I will say is, yes, weather in Brazil is very important. But I also think Argentina is the country we really need to keep an eye on. Argentina is very dry right now in the western and northern part of the country. So that's an area like Santiago del Estero, Cordoba, those are areas that are big producers and we need to keep an eye because their planting is not going to take off real nicely as it should timely for corn and what have you. Their wheat crop also in that area is struggling and being stressed. So Argentina in a La Nina year and the southern portion, southern half or whatever, at least the southern third of Brazil, that area usually tends to turn more hot and dry in a La Nina. And while they say that we don't really have a La Nina yet even in a weak one I'm looking at Argentina's weather and it doesn't look real spiffy. And if you look at the bean, they haven't lowered the taxes for that next five percent -- Pearson: And they decided they weren't going to, is that correct? Martin: The government has been talking that and the farmer is not real pleased about that. And that's why he's tilted more towards more corn and wheat acres because there's zero taxation and he's going to hang onto his beans. And so I think that you give a weather issue to the corn and the wheat in Argentina, keep in mind Argentina is either second or third largest exporter of corn and we have to keep that in mind, where Brazil oversold their hand and so they need to rebuild their supplies for their livestock industry. I think the corn market has a story underneath it. I think wheat might too. Pearson: When do you think we'll start shipping corn to Brazil? Martin: Well, I think that we already have started to send some in. I think we were unloading as they were shipping some out just a week ago. And so I think that we already have. Of course Argentina is going to be the main one sending stuff. But I think that when I look at South American weather the northern side of the country should see ample rain and better crops than they did this last year. But that's going to be a big market player as we go down the road. Pearson: Alright. Well, Sue Martin, thank you so much for taking the time to join us this week. Martin: Thank you. Pearson: Oh, we've got one final question for you, Sue Martin. Forgot about this. Martin: 30 seconds, Mike. Pearson: Yes, 30 seconds. So we've got, we ask our analysts to define terms that are used a lot and you used this one today. What does it mean when a market is oversold? Martin: Oh. When a market is oversold it means that a market has been prolonged to the downside, pretty much most of the fund money is tilted to the short side, for example, and when a market is oversold you don't seem to follow through to the downside because as the market moves down who is left to sell it, everybody is already bearish and short. So as that happens, and what will happen, like for example in the wheat market, is that as you get negative news and you think the market should break, the funds are going to use it to cover shorts and work their way back up so you never really break apart. Pearson: Okay. Alright. Thank you, Sue. So that wraps up the Market Plus. And I thank you for taking the time. Martin: Thank you. Pearson: Thanks to all of you for sending in your questions via Facebook and Twitter. Please continue to do so and we will get expert analysis right to you. Thanks for watching. Have a great week.
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