Market Plus: Sue Martin
Sue Martin discusses the commodity markets in a special web-only feature.
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Yeager: Welcome into the Friday, February 18th, 2022 market. Plus back with us Sue Martin, Sue, when we've had you on, uh, I'd say in the last couple of years, I mean, I always go back to that July appearance that we had, where we were remote. If you remember, I was in the hotel room, you were in your office. And it was so gloom and dooms that day and it flipped. And I've talked about it with everybody whose come in over the last couple of years, since that time in 2020, there's been some stars that have aligned, that have continued to align. What are those things that have all kind of come together that maybe we're just not knowing. We clearly see weather issues and we understand trade, but have there been other things out there?
Martin: Well, I've always been positive towards the 20s and, um, and of course the frosting on the cake was the pandemic coinciding with other things, the demand around the world, production global stocks, while you hear they're supposed to be so good. And of course I alluded to China and their fuzzy math in their, um, granaries, and uh, in fact there was several, um, how do you wanna say it prosecutions in the last half of last year? Uh, because of this, I think they're finding out that the grain's just not there, but the thing is along with it is you come through this pandemic and you have the, um, uh, inflationary move all the money that's been not only in the U.S., other countries did it too, uh, giving money to people to keep 'em content, happy, whatever. And, and then on top of it, our immigration look at our immigration, what over 2 million and most of those are young men. So it's a demographic of where they eat more than a woman or a child and that's protein. And
Yeager: So you're talking domestic demand is,
Martin: Is, well, that's our domestic, that's
Yeager: What you're talking about. Yes.
Martin: Okay. But then you look at, of course, south America, weather's added all, all of this, but also on top of it, a huge inflation and the pandemic was like the frosting on the cake, as we awaken from it around the world, right. And supplies are tight, very tight.
Yeager: We have a question from Dan in Prairie City, that I meant to ask during the program, but it's exactly about what you're talking about. He wants to know how much of this corn and soybean rally is strictly because of inflation in the last 12 months. He's asking for math, what percent because of inflation and what percent because of everything else.
Martin: Well, I'm gonna do a WAG guess. Um, first off I think the inflation kind of started to kick in a little bit here this week on the soybeans. Soybeans have always in the past been, uh, you back in the 70s, they were used as an inflationary hedge. You look at Argentine farmers, they hold on to soybeans because their inflation is outta sight. It's just crazy. So they hold on to soybeans. And, but this week there was another market that came on the scene that I think, yes, it could have been part of a, on the big geopolitical. I don't think so. I think it's more, inflation starting to kick in and it was gold. And the gold, our, our indicators on gold are just set up beautifully. Uh, we came up over 1900 on, um, June or March and April contracts. But the kicker is, I think last year's highs are coming out. You set up a low last year than you did in 2020. So I think that high is coming out and then we're gonna go after the, uh, high of 2020. And, um, I, I think you've got gold on a mission and everything. I look at every indicator I've got was beautifully aligned this week, late last week, actually. And they're just getting started now the daily, of course, those move fast. Yeah.
Yeager: With gold.
Martin: And gold, but that's gonna be supportive to beans. It's gonna help soybeans. Um, but there are so many other things coming in fundamental, you know, the supplies are tight, we're tight. And in the meantime, you look at what's happening in south America. Who's the soy producer in Brazil, but then you've got Paraguay who has not normally been, um, importing beans. They usually are the ones that Argentina goes and tries to get some beans. And they're having a, they're looking at a 60 percent loss. They're gonna be importing. In fact, they did for the first time ever this past week,
Yeager: That's who I thought you were gonna mention was the, the surprise was the Paraguay. You don't really read much about Paraguay. So no, you don't. All right. We've avoided this. We've held it. We've teased it long enough. A year ago, you sat here and, and said a question and, uh, I want to ask it again. Jeff and Oshkosh Wisconsin, uh, is asking a lot of people are wanting know here. Sue, last year when Sue was on the show, she predicted in 2023, beans would be at $30. Corn would be at 18 and wheat would be somewhere 42 to 45. Do you still stand by these predictions or would you like to revise them?
Martin: I still stand by 'em. The wheat might take a little longer, you know, back in the 70s, you kind of walk through different markets, but I could see beans and corn this year into '23. Corn could even take us into early '24, depending on how we lay it out. Um, but I think, yeah, my glass half full, I have not changed my opinion one bit. So
Yeager: The, the star, I, I alluded to it in the beginning that I's kind of where I wanted to go. What are the stars that need to align? Naomi Blohm has said a couple of things. What do you see, is it have to be, I mean, the South American lack of a crop that we needed them to produce to contribute to the world, is that a factor?
Martin: Well, it is, but that was kind of like a, a bonus. You know, because as these countries start to come alive and come un- you know, off of COVID restrictions, what have you, get factories running again, you're gonna have inflation, you're pulling on commodities, but it's food, major food around the world that is in such demand. And when you look at, um, and prices have escalated and I don't think that's done, I still think we're gonna escalate more. Last year was, um, we were wakening up coming out of the lows of 2019 into 2020, and nobody believed it was possible. Kinda like if you'd have gone back to 1970 and told people when beans were trading around two bucks, that they were gonna go to $12.90 and '73, in June of '73,
Yeager: A huge percentage bump that would've been. Yes.
Martin: Yes. Now think what that percentage is. I went back and looked at it that percentage would equate the $37 beans in this next year. If, if that we were gonna do the exact same percentage, when people say, is it possible, oh, they're all squirt around the, the circle and say, oh yeah, it's possible. But is it probable? No. Well, guess what, if you look back at history and the percentages of even just in ordinary times from a low to where the ultimate high was off those lows, 250 percent, 300 percent. I mean, they don't do their math and this is if you could have any perfect storm, we've got it. You know, the, the frosting on the cake was the pandemic and the locking up of people and contracting and not food out on time through ships. And what have you, um, hungry people will fight, but here was the kicker. And this was part of my, my thought process too, is that back in the 90s, we went away from countries having reserves on hand and went to just in time inventory, because the U.S. was so good at producing about every even numbered year, we put records on the table and all of a sudden, everybody thought we don't have to, you know, store all this stuff. We'll just buy it as we need until this pandemic hit. And now all of a sudden they've found this isn't so sexy anymore. They're so you're seeing countries around the world start now, here's the kicker. If it is true. And I, boy, I wouldn't underestimate it at all, that China's, granaries, aren't as full as they thought they were because of all the fraud and see they made the mistake of paying these guys.
Yeager: Yeah. Rotten grain, which was the story a couple years ago, too,
Martin: That too. But keep in mind into 2020, they finished getting rid of all of that old crop grain reserves that were so bad. So they, they weren't abundant then. And then they have the flood of 2020, the floods of '21. And here we are. So you get all of that. And everybody, in fact, the USDA started separating out China from the WASDE numbers for global. So you start getting those numbers separated and you look, and you say, 'Gosh, China owns the major percentage of the grain in the world.' Yeah, really? Well, guess what if that's, if that's been poppycock watch 'em because they're gonna, they're gonna tell you they're gonna be buying because they know it will put fear. And you're at a time when the rest of the world needs food and they're competing now against China, the big elephant in the room. They're not, they're gonna find sneaky ways to get it out the door and believe me, they're getting it done.
Yeager: All right. Let's, uh, let's wrap up with live cattle because I didn't quite finish. We got a little bit of cattle and I'm gonna be negligent if I don't. Uh, you talk about the grocery store in your newsletter. You know, it's like there's been meat. There's some things that are there. We've, we've shifted the report on retail prices was we bought more in the stores, not at the restaurants. All these restrictions are being lifted across the country. We could see an onslaught at the restaurant industry. Again, what's that mean for the cattle market?
Martin: Well, should demand is good. Anyway, demand is very good and, uh, exports are excellent. We've been shipping beef over to, to China. Uh, Mexico of course is taking large amounts of pork. You know, China might come back in, by the way, uh, the, uh, Central American Free Trade Agreement. We're gonna be sending a lot of pork down to that, to those central American countries. But, um, in the beef industry, you know, we went through because of the dryness. We liquidate a lot of cow-calfs. So you've got a lot of calves lightweights in the feed, lots. Now, next week on Friday, there'll be another cattle-on- feed report should show heavy placements again. For the month of January, we get into March. It'll show it again in February. But the thing is the, you get these cattle into the feed lots. They're getting a lot of corn, but along with it is that we've got a demographic of more young men coming into the country. But what else happened through that pandemic people in the cities who used to just stop on their way home and pick up something from the locker or the, the,
Yeager: The "just in time" purchase.
Martin: Yes. And that's no longer, they, they bought freezers, started putting food in the freezers to have on hand. That's a, that's a change. That's not gonna go away.
Yeager: I, well, my freezer, I had to purge a little bit in December and January and it is empty, but I do need to restock it. And I know I'm not alone in that. So that's right.
Yeager: Finish up your thought cuz then we have
Martin: To, but speed market, I think, is going to be really good and know we've got all these animals in the feed. Lots that in time will come, but it's gonna take a little bit. And then as we, if we stay hot and dry, whatever areas that still are out there surviving and the cow calf herds, and then it's dry there again, because you look at Nebraska, uh, parts of South Dakota, Nebraska, Kansas. Oh, I tell you they're bone dry,
Yeager: Very little snow cover.
Martin: And if you start pushing more, by the time we get into next year into February of '23, I think we'll be amazed at how high cattle is. And the cattle producer is the only one left that has not enjoyed a nice increase in prices. $142, $148? That is nothing. It's the best prices in cash market. Since 2015.
Yeager: We're gonna have to do another segment called Market Plus Plus.
Martin: I know I'm just so excited. I just can't help.
Yeager: I wish you'd stick your neck out. Sue. You just don't. You're not saying anything. I appreciate it.
Yeager: So Martin, everybody, thank you so very much for your insight. We are entering that time here at the public TV stations that we are asking for your support. If you value the work of this program or the station in your area, please consider making a gift of support right now. Next week though, the first indicator in the winner of the looming acreage battle and Ted Seifried join us to analyze the markets. Thank you for watching and have a great week.