Market Plus with Sue Martin

Market to Market | Clip
May 3, 2024 | 11 min

Sue Martin discusses the commodity markets in a special web-only feature.


Paul Yeager: Welcome back and into the Friday, May 3, 2024, installment of Market Plus. Joining us now, Sue Martin. Sue, something has shown up on the set here. Is this off from all the times we've seen Ted bring a corn hat, you feel like you have to bring a prop, but this prop is unique. What is it?

Sue Martin: Well, it's a bull and a bear, and they're fighting, but it has a crystal ball above it.

Paul Yeager: Is this from the office?

Sue Martin: Yeah, because, you know, sometimes if we're really bullish, we need to turn it around to our advantage. And if it's bearish, we can turn the bear around. But it kind of comes back from when my office in early years used to be in a stockyards and I don't even I can't even remember how I came across it. But I found a crystal pig. And inside the crystal pig was another one with little babies. Now, somehow that disappeared off my desk, but we got to talk about it, so we decided to bring this. And I'm trying to decide, should the bull be towards you, Paul?

Paul Yeager: Well, here's what we'll do. Pull that thing a little bit closer to you here in a moment, because you can point whichever. We're going to use this as a prop like with Ted and the dry erase board. I make them write stuff. You can point bull or bear how you feel about things. So let's start with pigs, with hogs. That's where we left off on the TV show. So let's start with our first question. And this one is from Scott in Wisconsin wants to know, are hogs forming a bottom? You feel bearish about them?

Sue Martin: Yeah, I think I look at the hog market and I say they've failed miserably here. You know, from what I'm reading, demand at the grocery store seems to be not as good for pork. Why? I'm not sure. Because if you have high priced, high priced beef and you're concerned about it, pork's usually a good stand in. But, you know, we're at a time of the year where you're going in towards grilling season and everybody's looking at grilling hamburgers and steaks and and, you know, of course there's brisket, but I and ribs.

Paul Yeager: Know, keep going because it's all good that you're mentioning.

Sue Martin: Yes. But I think the problem is that the market has been disappointed in seeing the export sales. We haven't had China in our market. We need them. And, of course, you know, their hog industry is turning around. The crush industry is doing better right now. So, you know, we just need to see some Chinese business and we aren't seeing it.

Paul Yeager: I want you to put a little pin in hogs for a minute, because I think it might determine a little bit of how we ended the show and what our next question is here. And this is Kurt in Iowa. And he wants to know, with all the volatility of late in the live cattle market, what can we expect for fall prices in quarter three and four? And the reason I say what we talked about at the end of the show, you mentioned these three indicators, two of them negative in your research and one not. But what does that mean for third and fourth quarter and then tie back to hogs?

Sue Martin: Well, when I look at the cattle market, you know, here's you know, we've got weights, heavy weights and a record. And so you look at the weights, those are heavy and sold. And then we're feeding cattle a little longer. And so that's causing more tonnage or meat production. The Packers been amazing in holding as strongly as they have, but there's been other years they've lost money. And the other thing is, is that we look at our exports and they've been good. That's a positive. But my concern is and partially it's leaned with the technical side that this cattle market, I hate to say it, but my indicators are so vulnerable that I'm a little apprehensive. What I've been recommending to people, be it rather it's on the radio or it would be here or talking to clients is, I would suggest, getting some put spreads on. And I know that the options are expensive because of the volatility. But you can buy puts spreads. Got to manage them. You buy one at the near the money and then you sell further out one. And as the market breaks, you roll that bottom one down and walk the market down with it. At least then you got a floor under you just in case. Then if the market goes up, you're going to be really happy that you went up and you'll be able to sleep at night. Concern because we've had so much volatility in those markets.

Paul Yeager: Several questions are very similar. So get ready to point to bull or bear on these next questions. So we'll pull out and allow you to point a little bit to this next. So let's go William, ask the majority of this question. Sam kind of had the back half of this question the same thing. Is there going to be a 16 billion bushel corn crop this year? Certainly seems like ideal growing conditions ahead. So does this mean $3 corn? Sue Martin, is corn bullish or bearish right now for you? Why?

Sue Martin: Well, I'm bullish. And here's the thing. You know, I feel we're in that election year rally again. You've got four corn less acres. And on top of it, you know, yes, the USDA always has to start with trend line yields. The best. You have to have the best expectations. But again, I have too many weather services talking about a hot, dry summer and that's not going to be good. And especially when in July we turn hot and dry. And if our evening temperatures are not like in the lower seventies, we're going to not have the crop we had last year.

Paul Yeager: But the thing is with last year, I go back to two. Last year it was not hot and dry until after pollination and then it got really hot. But there's plenty of people say, Paul, we were hot through the majority of the summer and still raised trendline.

Sue Martin: Yields, but they can say hot. But did they have the triple digits? No, we didn't have triple digits in Iowa. And I look at less acres and I think our yield is going to ratchet down this year. So I don't see the 16 billion bushel crop this year. We'll see at the end of June when we get the final plantings, will we actually, because I don't think one thing we will see is I don't think we'll see a lot of prevent plant this year. I think we'll get that crop in the forecast is turning start in about mid-month. It's starting to turn where this wetness moves back to the delta which there are so saturated in wet already.

Paul Yeager: But farmers have told me that they didn't even turn a wheel much before May ten last year. And we still had a good crop. So, I mean.

Sue Martin: That's because of that cloud.

Paul Yeager: Cover. Yeah, because of the cloud cover that you mentioned. All right. We did talk about trend line yields in corn and beans and the price. Let's move. And I did ask you about how soon before we hit beans in the teens. Let's do Glen in Ohio. Question now, because Glen is in that area where it had been raining and then it kind of stopped raining a little bit. I'm not sure I forgot to ask Glen what he's doing on crop planting right now. Maybe he'll tell me on Twitter. Excluding weather related issues and historical tendencies, what are the three main influences to the commodity markets that we really need to be watching this summer?

Sue Martin: Well, unfortunately, it's weather that's the key. I would say that's probably the biggie. And then it's it's you know, in corn, it's the demand for ethanol and usage. And, you know, some think there's a gap at five or two on December corn and some think, well, it's not going to get there. I think it's going to get there and I think it's going to go past it. If you look at the July to the DIS, there's about $0.19 difference for decent premium over that. Now, if July can even just make it up to 490 or for 83 or 85. Well you're this is going to because I don't see that narrowing. It's going to hold that. And in the meantime, our carry out looks to be on the new crop.

Sue Martin: Looks like we're going to see an opportunity or if we do get a hot, dry summer, we're going to see that narrow and that carry out could go south. Corn may actually have you look globally. Look at Ukraine. Exports are expected to be down sharply this year. You know, look at the weather in Russia. Not that they're a big exporter of corn, their wheat. But then you look at Argentina, China. Well, yes, they're going to have a better production than a year ago, but still down quite a bit from where they started. And then you look at Brazil and they're production on staff. Rina isn't going to be what it was a year ago. So it looks to me like the global side of things is kind of contracting, but you have war going on and I believe we're in the process of building reserves. And of course, especially like with India coming back into the market and is going to import, you know, I think India and they're talking about a big crop production. But I think what's going to happen is we're seeing countries with war popping up, interest rates looking to come up a little bit or have already letters of credit are more expensive. And then you look at the dollar. Now, granted, the dollar fell back this week, but it's more expensive for foreign countries to buy. And when you look at the interest rates where they're at, foreign money is going to come into the dollar and invest because we're a safe haven.

Paul Yeager: And you could make a case, the Fed news of you know, they've been looking for cover to lower interest rates may have received it on Friday. Yeah with that unemployment rate but it also could be a blip because the last two months been a blip. All that equity money, though, flooded the market on Friday, pushed the the outside markets to commodities higher. Do you see any of that money coming into commodities?

Sue Martin: Yes, I do. I think raw commodities are very important and I think that when you look at interest rates this year, it's my opinion. I don't think we'll see interest rates lower this year. I think they'll stay status quo. God forbid if they raise them, those markets will crater. Then the stock market cratered.

Paul Yeager: Well, this Market Plus is anything but status quo. So with your crystal ball.

Sue Martin: Over the bull in the bear.

Paul Yeager: Bull in the bear. Right.

Sue Martin: Do I tend to like the bull? Yeah, I do. Yeah.

Paul Yeager: Well, we needed some sun today. And you arrived as did the sun outside. Good to see you again, Sue. Thank you.

Sue Martin: Thank you.

Paul Yeager: All right, Sue Martin, everyone. Next week, we are going to take an in-depth look at planting progress, and we'll have the commodity market analysis of Dan Hueber. Thanks for joining us. Have a great week.

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