Pearson: This is the Friday, March 3, 2017
version of the Market Plus segment.
Joining us now is Sue Martin.
Sue, welcome back.
Martin: Thank you, Mike.
Pearson: Really excited to have you, a lot going on
in the markets today.
One of the stories we didn't talk about on the
program was the fact that cotton was higher this
week, Sue Martin, first time in oh gosh, three
weeks probably.
It's been a little while.
Martin: Yes it is.
In fact, the July got to $79.95.
Pearson: Ooh, so we're pushing up against that
80.
Are we going to take it out?
Martin: Well, we certainly could.
I recommend to producers that I would look at
making cotton sales because wave four on the
July contract is $83.55 or something like that, maybe
$83.85.
Pearson: Okay, so we're just a couple of bucks
shy.
Martin: Yeah.
Pearson: And so when you're looking at wave
counts does that couple dollars, does that still
fall within, like if we break 80 would you
consider that as achieving a wave four?
Martin: I'd call that more a psychological.
Usually to get in the window I would say you
need to be around that 83 area.
Pearson: Okay, so we might have a couple dollars to
the upside but still -- Martin: These are good
prices and way better than it has been.
Granted the weather is key, exports are up on
cotton.
China has been an importer of cotton.
And it's also an oil seed though, we have to keep
that in mind.
Pearson: Even if the USDA doesn't recognize it as
such.
Martin: Absolutely.
Yes.
So, but no, and I looked at Dec cotton and I think
Dec cotton has already met a wave three and is
working towards a wave four.
So in fact, actually around 75 cents I think
I'd be selling some, I think I wouldn't even
hesitate.
Pearson: Okay.
One of the other topics we didn't get a chance to
discuss on the show because we had so much
grain news was the feeder cattle market.
We talked about the potential as we move into
grilling season to at least lend some stability.
Would that be a fair way to put it on the live
cattle side?
Does that translate into stability for feeder
cattle?
Martin: Well, the feeder market I think we need to
kind of keep an eye on it.
It has been kind of nasty this week.
But there is a seasonal pattern for feeders that
you buy April feeders and sell June fats usually
around Monday of this month and you hold it
until the 1st of April.
But I will say that the market to me on feeder
cattle, we've got to get these deferred contracts
higher on the fats where they're paying too much
for their feeders.
But the demand has been really good for feeder
cattle.
So I think that if I'm right on the fat market, I
don't see feeders going down and April fats going
up so I think the market is going to find some
support here.
It might be that we start the week lower and then we
catch our turn.
But I think we're going to see something where the
market tries to appreciate a little bit.
And there is, I didn't look so much at the feeder
chart, but the fats, April fats have a huge based
head and shoulders bottom, huge.
And that cant' be, if we fulfill it and we need to
get up through this $119 now I think then of course
the $120 is fair game and it comes out then you've
got your market moving.
That should be very price positive.
But then as you go towards June numbers pick up and
you're processing and that can be kind of negative
and maybe even the August you sell August and buy
December fats.
Pearson: Sell August feeders or fats?
Martin: I would say fats in that light.
But the thing is, the pattern is that you tend
to, from an April high, you start eroding and you
erode all the way into late August, something
like that.
So I would be hedging cattle on a rally.
If I'm right on these Aprils, I so hope I am,
but if I'm right on these April cattle that is
giving us the opportunity to get these cattle hedged
for the rest of the summer on into early fall.
Pearson: Right, at prices that really historically
aren't too bad, they're just bad looking back at
our recent history of $172.
Martin: Right, we always remember the most recent.
Pearson: Yes and it just is too bad they're such
painful prices to remember.
And so you said on Monday you'd be buying --
Martin: April feeders and selling June fats.
Pearson: And hold for three weeks?
Martin: Yeah.
Pearson: Alright.
Now we've got some questions for you, Sue
Martin, questions from our fans and followers on
Twitter and on Facebook.
We encourage all of you to submit your questions to
us every single week.
The first one comes from Glen in Bryan, Ohio and
he's asking us a question about how the market is
changing.
He wants to know, do algorithmic trading models
benefit or hinder the true impact of fundamental news
in world markets?
Martin: I don't think it hinders.
I think it probably enhances because I'm
obviously of the opinion that you always turn
markets from large supplies and nobody can
understand why but it does and they all get bearish
up at the top but the stories know, corn would
be a good one for that, wheat too.
But then as you get going and you get those turns
moving the market knows ahead and artificial
intelligence takes many things into account,
things that you and I don't do on a normal
basis.
And it can be looking at stocks that refer back to
the commodity, it can be currencies involved in it,
and therefore it sees things and then it starts
moving and it moves with the trend.
So it just is a way of kind of getting you there
a little faster.
Pearson: It amplifies kind of the fundamental market
news.
Interesting.
Martin: The fundamentals are your trend.
It's the technicals that catch the turns for you.
Pearson: Gotcha.
Well, okay, speaking of fundamentals, we've got a
question here from Phil in Ontario, Canada.
Phil notes that with November soybeans
averaging $10.19 as our insurance price this year
versus $8.85 of last year, it's hard to believe that
was just a year ago we were $1.50 under today.
He says, the incentive to plant soybeans is huge.
Will it happen?
Will we see this 88, 90 million acres of beans,
Sue?
Martin: I think we will.
I think we will.
And you know what's interesting, the only
time, now my data goes back to 1960, the only
time going back to 1960 on my data that we've seen
bean acres exactly equal or higher than corn was in
1983, the year of the PIC program.
Now, ironically the market is following dates pretty
close to that year.
And on top of it you had a market that surprised you,
we ended up going down hard into I think we
rallied maybe into early April and then we went
down into the end of June and then all of a sudden
we were out of there and moving.
Now, I looked at the acres that year and acres
declined from the March prospective plantings for
beans as they did corn as well because that PIC
program didn't come out before the March
prospective plantings.
So all of a sudden I think what they looked at is
there was a huge setback in bean acres from what
they originally thought but the corn acres
definitely took the huge hit.
I think we lost almost 9 million acres that year.
So when you turn around and you look at that then
what else happened?
Weather kicked in and we had a very warm, dry July,
August.
In fact I can remember on our farm that we had corn
the last week of August mature in three days.
We had three days of 100 plus temps and the corn
was brown by the end of those three days.
Pearson: And it's not a great situation for
soybeans to have 100 plus in August either.
Martin: That's right.
Pearson: So is that going to be an analog where we
all talk 90 million and then see acres get
whittled away throughout the year do you think?
Or if we say 90 are farmers going to do it?
Martin: Well, I don't know as if farmers will do
that.
One thing I think we have to also keep in mind is
how many acres are going to shift back into CRP, I
know ultimately we're losing 3 million acres
estimated out of CRP, but there's other programs,
there's the wetlands and then there's also the
pollinator program and those are paying I've
heard some pretty good cash rents on those.
Pearson: I've heard producers basically
negotiating against Uncle Sam on some of this
ground.
Martin: Exactly.
Pearson: Or bidding against I should say.
Martin: I had one client this week tell me that
wetlands, he was getting $360 an acre and on
pollinator $316, $317.
That's not bad for these when you're looking at the
times where we're at.
So I'm wondering just how much are we going to see
shift that way?
And could that also be ground that was corn that
should have never really been probably corn that
went into corn the last few years, three or four
years, maybe that shifts back.
Pearson: Okay.
And if you can get $360 an acre on ground that
shouldn't have been in corn in the first place
I'd say that's a home run.
Martin: Don't look a gift horse in the mouth.
Pearson: Exactly.
Next question for you, Sue, from Rodger on
Facebook.
Rodger wants to know, we've kind of talked about
this a little bit, but let's get you a little
more specific, Sue Martin.
Where is the grain market going to go between now
and planting?
Let's talk corn.
Are we going to break this corn market any further
before we get to March 31?
Let's talk planting intentions before we start
rolling the planters.
Martin: You could.
We might get a little setback.
But if you look at the corn market, new crop
corn, for the last ten years every year you've
touched, what, $4.20?
And I think we'll do it again.
The market keeps pushing at that $4.04 area, the
next level will be $4.14 and then the $4.20 but
actually the next level will be around that $4.37
mark, $4.39.
But I think the market is winding up.
We can kill a little more time in here but I think
this market is winding up for something better.
And of course my vision goes clear out into 2018,
the middle of '18 where I believe you're going to
see corn much higher than where we are today.
So I pray for a setback.
And I'm telling end users, you get a setback in this
market in the next two or three months, lock it up
because I do not believe our yields are going to be
this year what we've enjoyed the last three.
Even if they're trendline, yes, you can still have a
pretty good carryout but will we be trendline?
We've been blessed.
Pearson: And so when you say lock it up, Sue, are
you talking get long December and into 2018?
Martin: Yes, yes.
I would recommend they get their feed usage, if
they're an end user for feed, get it protected, if
you're a processor of corn get it protected.
Soybeans because if we do see El Nino come in,
remember, Brazil had their worst crop in an El Nino a
year ago.
Pearson: Alright, Sue, now one of the things you have
talked about repeatedly both on the program and
here in the Market Plus segment is waves.
You talk about wave three, wave four.
And so our commodity question, the phrase we're
going to ask you to define, is what is an
Elliott wave?
What does it mean when you say wave three or four?
Martin: Well, these aren't Elliott waves that I talk
about.
Elliott waves are projections and there's
rules for it like you'll have two equal legs and
one smaller leg, that kind of thing, and you'll do an
A, B, C correction and all that.
These are different.
These are the rule of 7.
So anyone that is interested in that just
Google it and you might be able to find the
information on it.
I can't believe, you can find everything on the
Internet.
Pearson: Maybe Google rule of 7 commodities because
that will probably take you to some website that,
you know.
Martin: Oh that's probably true.
Pearson: Everything is on the Internet.
Martin: That's right.
Pearson: So that's what you're looking at and so
you use them as a tool to analyze market movements?
Martin: Market movements and also to judge how
much, what should I be doing, how extended is
this move?
And there's, you might meet one level of
projection on it and then all of a sudden you have
to start going to like a weekly or something like
that and looking.
But it's a very good, viable tool and I've used
it for years and it has been very good to me.
Pearson: And does it max out at five?
Is that where you really see the most extreme
change if you're on a wave five?
Martin: You don't see wave fives only but maybe to
the downside.
I've never seen a wave five to the upside.
Pearson: I thought we saw a wave five to the upside
in fat or feeder cattle during that big, but maybe
we just saw it when it came down.
Martin: It was a wave four I think.
But it was a wave five on the downside in December
of was that 2015.
Yeah.
That was a wave five.
I've never seen a wave five on the upside.
Pearson: Something to aspire to.
Martin: I guess.
Pearson: Alright, well Sue Martin, thank you so much
for taking the time to join us.
Martin: Thank you.
Pearson: Be sure to join us again next week when
Ted Seifried will join me at the Market to Market
table.
As you may have noticed, ladies and gentlemen, it
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Until then, thanks for watching or listening.
I'm Mike Pearson.
Have a great week!