Pearson: This is the Friday, April 15, 2016
version of the Market Plus segment.
Joining us now is Mark Gold.
Mark, welcome back.
Gold: Nice to be back.
Pearson: Yes, happy day after Tax Day to you.
We do have a lot of great questions from our viewers
here on Twitter and social media, but I wanted to get
your thoughts first on the cotton market.
We saw it hold $60 this week.
Where are we going from here?
Gold: Well, you know, we really need to draw some
acres into cotton.
We've got a lot of cotton out there, which is why
we've had such cheap prices and such a struggle
to get out of here.
But the fact of the matter is when you talk to folks
down south, cotton is the last thing on their mind,
which tells me that the market is going to want to
draw some attention to it.
And the way you do that is through higher prices.
So is there some hope particularly as this
soybean market rallies to rally that corn to keep
those acres what they've got there?
Yeah, I think there's some hope there.
So I don't want to be too bearish the corn down
here.
The weather has been real iffy in the south.
You've had a lot of rain eastern Texas into
Louisiana.
Can that make a difference?
I think that's one of the reasons why we're kind of
staying firm.
But, again, when you tie that in with the soybeans
I think there's a chance in this cotton market.
I wouldn't be overly bearish, not this time of
year after everything it has been through.
Pearson: Okay.
Now you mentioned on the show we haven't seen this
soybean rally pull any acres from corn yet.
Do you think it has changed any of these
cotton acres to beans?
Gold: That's a possibility.
A lot of guys, from what I understand you want to go
buy a cotton planter down south, there's plenty of
them.
And certainly the higher priced beans is going to
attract some attention.
And that could be an issue.
And, again, the more we drive it out of cotton
into beans the better the chance the cotton has to
really out here.
Pearson: I want to get to our questions here.
I wanted to start with we talked on the show about
Brazil's troubles.
We've got them possibly impeaching their President
or her resigning, we've got the real strengthening
on that news, which is bizarre.
But we've got a question here from Marty in Buxton,
North Dakota, @SatMonstor on Twitter.
He is wondering, what percentage of beans are
sold in Brazil?
At this time in the year where would we be on their
sales?
Gold: I think it's really hard to get a good number
on that.
But could they be 40%, 50% sold?
I think so.
The interesting thing about Brazilian exports
right now, I've got a very good friend who is in
touch with these markets all around the world and
maybe one of the greatest grain traders that has
ever been around and I'm hearing word that he
expects to see demand pick up in the U.S.
in the summer months kind of unexpectedly because he
believes that Brazil is going to stop exporting
and wait to see what happens here.
So maybe we're still several weeks away from
that happening but that could be a push towards
U.S.
exports and that, again, could help the beans.
Everybody is hoping that it's a La Nina rally in
the beans, well maybe it will be something else out
here.
So I think it's something to keep an eye on, whether
Brazil really does start to shut off as we head
into May and June.
Pearson: And would they shut off just because they
can in the hopes of higher prices?
Gold: Yeah, they understand this weather
game as well as anybody.
Do they want to be selling $9 and $10 beans if we're
about to have a problem here and beans are going
to spike to $12 or $14?
So are they going to try to keep something in
reserve?
Yeah I would think so and it makes some sense.
So could we pick up a little bit of export
business unexpectedly?
Let's hope so.
Pearson: Okay.
That is something to keep an eye on.
That would be a welcome gift for a lot of these
guys who have been watching bean prices be so
stagnant for so long.
Now we also talked about this corn rally we've got
going on.
And Chad in Randalia, Iowa, @hort4cy on Twitter
is wondering, regarding this corn rally, why?
How long will it last?
And what is the upside potential?
Now you talked about that on the program, probably a
two week here of potential for upside.
What tripped this market?
We saw beans take off six weeks ago and corn just
flobbled along.
What kicked it off here?
Gold: Short covering by the funds is the only way
to say it.
They were short over 200,000 contracts.
As of tonight they're short about 150,000
contracts, maybe a little bit less because the
numbers are about a day or two behind.
But the fact of the matter is this has been a short
covering rally.
We don't need corn prices to move higher and
encourage guys to plant more corn out here with
93.6 million out there potentially.
So I've always said, we want to take advantage of
the funds before they take advantage of us.
So now if we can get these funds to rally and get
them kind of even in this market, over the next
couple of weeks and we maybe put another 20 or 30
cents under this market, as a marketer and a risk
manager, do we want to do something with that rally?
You bet we do.
And either by moving our puts up, making cash sales
along the way, looking at different levels,
absolutely because all we're going to do is
encourage guys to plant more corn.
If there isn't a weather problem then we're looking
at corn coming out of our ears this fall.
And, again, this may be the one marketing
opportunity in this next couple of weeks.
Now, maybe we get another one in June and July if we
do get hot.
Well let's make sure we get at least a third,
depending on where we go even maybe up to a half of
our guaranteed bushels priced on a nice rally out
here.
Pearson: Now, as we take a look at this 93 and change
million acres that USDA has floated, with decent
weather, as you mentioned, corn coming out of our
ears, we're going to see pretty big basis
implications, particularly in the Corn Belt.
Would that change your thinking to make cash
sales versus sales on the board?
Or how would you handle that decision when we get
this rally continuing?
Gold: Well, we like to look at the basis when we
do get rallies.
Sometimes they'll bleed some of that out of it.
If the commercials are sensing that there could
be some shortages, I can't imagine why they'd think
that at this point, but maybe we can get a bump in
the basis out here.
I would probably be inclined, if the basis is
realistic, and what is realistic here in Iowa,
40, 50 under, I'd probably go ahead and do some cash
sales and just be done with that part of it.
But if we do get a rally in the basis, certainly
between now and July, that is when you want to start
looking at doing some basis contracts, 30 under,
20 under, and locking in that basis and making sure
that if we wind up with a big crop and basis goes
back to 60, 70, 80 under that you've gotten that
taken care of as well.
There's two markets we always have to focus on,
the cash market and the futures market.
Pearson: You bet.
Now we've got a question here from Chris in
Minnesota, @cswenson13 on Twitter.
He's wondering, where are we at in the cattle cycle
in regards to price?
Are we near the bottom or is there a long ways yet
to go?
Gold: Well, again, I don't like trying to pick
bottoms in these markets, particularly where we know
that the bottoms can be in the cattle market and we
know that production has been steadily increasing,
not only in the numbers of animals that were calved
this spring, but in the weights as well.
And as we mentioned on the show, the stock market has
been incredibly strong, which should be a good
indicator of demand, but the cattle market has
slipped back.
That is not a good sign.
IF we start taking out those lows, which aren't
terribly far away, then we could have significant
downside risk out here.
So, again, I think there's still more risk in this
cattle and in the feeder cattle market.
Pearson: Okay.
Yeah, and just thinking live cattle we're trading
close $122 and change on Friday, that low is only
at $115 and a half in there.
If we were to breach that from a technical
perspective, Mark, what is the downside?
Gold: I hate to say this but I think it's $89 to
$90.So there is still quite a bit of risk out
here.
Pearson: And feeder cattle if we break through that
$130s?
Gold: Then I think you're probably looking at $100,
$105, somewhere in that range.
But I think it's worth spending some money here.
If you don't want to spend $5 or $6 on a put, fine,
spend $2 or $3, get something on so you've got
a little bit of comfort level not only for
yourself and your family but for your banker as
well and let's not turn this thing into a
disaster, let's spend a few bucks to protect a
small loss from turning into a big loss.
Pearson: Sure.
We have the tools out there.
Gold: Right.
And you still have the upside open to you, so if
we do get something good this summer for whatever
reason, grain prices tank and we rally this cattle
market with a lot of people being short, great.
Then we'll go ahead and sell some cattle.
Pearson: Now, speaking of selling some cattle and
finding some demand, on the export news, this
strong dollar has been just a headache for all
the protein markets.
We've seen pork respond a little bit better.
Have we weakened this enough going into the
summer to be able to find better export markets for
beef?
Gold: I don't think we've done it yet.
I think we've got the dollar, we made the lows
just under 94 cents, rallied it back to close
to $95.
We've got to get this dollar down to 88, 89
cents to really get people thinking about it out here
or see a rally in the other sides of the
currencies, particularly in the far east.
If we do that then we can have a better export
demand out here.
But we do have a lot of beef.
We're going to be putting more beef out here.
We've got to see a pick up in demand either
domestically or internationally for the
export market to see the cattle really get
something good here, unless we have an issue in
the grain markets.
Pearson: Alright.
We need mouths to eat this beef and likewise pork as
that herd continues to grow.
Now, a final question for you, Mr. Gold, and you
probably have a different take on this than the
asker is wondering.
This is from Matt in Nebraska.
This is from Twitter.
He says, how many games will it take for the
Royals to beat the Cubs in the World Series this
year?
Now you're a Chicagoan, Mr. Gold, but what are
your thoughts on the Cubs?
Gold: My thought is I hope it's four games that the
Cubs lose in a row because I'm a White Sox fan.
Now in Iowa it's not very popular to say that.
But the fact of the matter, I grew up on the
south side and went to White Sox camp as a kid.
So I've been a White Sox fan.
My sister comes into town and wants to go to a Cubs
game, I'll get her tickets, but don't expect
me to go with her.
I mean, it's just something I don't want to
do.
Pearson: It's in your blood.
Gold: It's in my blood.
I'm a Sox fan.
Pearson: Well, sorry to hear that, Mr. Gold.
But thanks for joining us this week, always
appreciate your insight.
Gold: Good to see 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 and have a great week.