Pearson: This is the Friday, March 25, 2016
version of the Market Plus segment.
Joining us now is Don Roose.
Don, welcome back.
Roose: Thank you, Mike.
Pearson: We've got a lot of great questions here
for you from our Facebook and Twitter followers.
And wanted to start it off with Tim in Crookston,
Minnesota.
He says, like the Michigan State basketball team, old
crop beans have broken my bracket.
Should I sell my remaining bushels on this rally?
What do you think?
Roose: Well, I think when you look at it from where
you were just a month ago we've had a substantial
rally.
We've got a market that is overbought, the funds are
sitting long over 50,000 contracts, so most
definitely I think you're an overachiever in beans
between $9 and $9.20 on May soybeans, particularly
ahead of the Acres and Stocks Report, it just
makes sense.
If you still want to continue the ownership do
some risk management with some call-call options.
Pearson: And how far out would you be buying calls
if you're making cash sales today?
Roose: And that's a good question.
I think I'd give myself a chance to go all the way
through the summer and I'd buy September call-calls
at the money and then sell about 60 to 80 cents over
the money.
Pearson: Okay.
Now, we did not get a chance to discuss the
cotton market on the program this week.
We saw a 50 cent move to the upside.
Has cotton found a bottom in here?
Roose: Well, the cotton market is very much like
the soybean market.
It's oversupplied, the Chinese really control the
market overhead, they're trying to liquidate some
stocks so their demand is a little bit weak.
But the cotton market around 55 cents, it seems
like it found some support here, maybe get a little
bit of a rally.
Acres are probably going to be down on the report
that we're going to have out on the 31st.
But still your downside going into the fall is
still there probably below 50 cents.
Pearson: Even with all of this rainfall in the
Delta, just not a whole lot of hope that we're
going to see acres decimated on the 31st?
Roose: I think it comes more from the
profitability on the cotton than anything else.
I think those are already pretty well set just from
you can plant other things that aren't as costly, get
a better chance for some profitability.
Pearson: Okay.
We've got a question here from Jay in Paullina,
Iowa.
Jay is wondering, if a guy is sitting with bins full
of old crop corn yet, what is the best course of
action?
When do we bail on it?
Roose: Well, I think you could take a chance that
the funds are big shorts.
We could have some weather problems here that pushes
it to the upside.
That's possible when they're sitting like this.
But I tell you, if you want to be careful ahead
of the Acres and Stocks Report, if you get a
negative report there you probably lost your
opportunity and you're going to have to wait
again.
Probably what you should do with where the basis is
isn't tremendous but probably gets weaker.
I would probably sell going into the report if
we get a bounce and then reown it with some
September call-calls and is probably a cheaper way
to maintain ownership.
Pearson: And would you do full calls or would you
look at short-dated options?
Roose: There's an argument going both ways on those
but I like the full ones because I think you get
what you pay for, it gives you more of an opportunity
further out and that's where I would be.
Pearson: Okay.
Now, Former Farm Boy in Central Iowa is wondering
something we touched briefly on, on the
program.
He's asking, what is going to happen with the
Brazilian real?
And he's asking about the new pro-reform government
if the government changes down there, what should we
anticipate going forward?
Roose: Of course you know they've got a lot of chaos
down there and so that's the real issue.
The producers right now in Brazil are really us ng
their grain for the most part as a currency because
they're really not sure.
The currency has weakened back substantially and
that has been an issue so they're back where they're
not selling aggressively.
But overall I think a lot of soybeans in South
America and rallies are probably still meant to be
sold.
Pearson: Okay.
Our final question from our Twitter-sphere is from
Schuelke, and I apologize, I've mispronounced his
name before and I will probably do it in the
future, in Groton, South Dakota.
He's wondering, in corn should we be playing our
bets about planting speed before or after the week
of Monday, April 4th.
Roose: Well, I think when you look at it from a
planting standpoint, if the question is really do
we try and plant pretty aggressively early, which
I think it is, I think we're probably better off
to plant early.
Now the question mark is going to be are we going
to get that opportunity.
So far the planting has not been off to a perfect
start, particularly in the Delta in the southeast.
But I think if we plant early I think you'll see
more acres of corn and that's probably what we're
looking at.
Pearson: Looking out through planting season
here, April and May, what have you heard weather
wise?
What are we anticipating from NOAA?
Roose: Well, from NOAA if you look at it short-term
it looks like we are in just a little bit of a
cooler, wetter pattern here at least for the
opening days of April.
But NOAA also issued if you get into the summer
they're looking for slightly warmer but
they're still looking for an El Nino like pattern,
which means we may be slightly warmer but really
no real big huge weather issues, no sustaining heat
or no sustaining long, dry patterns.
So that is what you have to run with right now.
I think you market a crop as if you're going to get
a crop and that's what we're going to look at.
Pearson: Now last year we had some concerns in that
El Nino pattern about growing degree days.
We had cloud cover, we had not a whole lot of super
high temperature.
Could that be a factor again this year?
Or is that just looking out way too far right now?
Roose: Well, I think it's something that you always
look at but we had a lot of issues last year with
the wet weather, but look at the yield we had,
168.4.
So I think the real issue is if we get the crop
planted semi-on time and we get decent growing
weather could we have a yield that goes over 170,
171 and then your ending stocks look even bigger.
So I think that's both ways and I think you have
to remember the genetics and look what happened
last year with yields in a year that was really not
conducive to a bi crop.
Pearson: Much less than ideal last year and still
a lot of corn on the ground and everywhere.
Before we let you go, Don, we saw crude oil
relatively steady on the week, closed up 30 some
cents.
As we look to next week, next Friday, is crude
above or below $40 in your opinion?
Roose: I think say that crude is an overachiever
and I think we're still overproducing.
And so I think the crude oil is probably nearing a
top and I would say you have better chances to be
under $40 than over $40.
Pearson: Alright.
Well, Don Roose, thank you for all of your insight
this week.
Roose: Thank you, Mike.
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.