Pearson: This is the Friday, May
15, 2015 version of the Market
Plus segment.
Joining us now is Naomi Blohm.
Naomi, welcome back.
Blohm: Hi, Mike.
Pearson: We get a lot of
questions every week from
viewers who follow us on Twitter
and on Facebook and we get a lot
of really technical questions.
We have a lot of viewers who
have studied the markets and
focused on them, but we also
have a lot of viewers who are
new to commodities, to futures
trading, to hedging using the
board and using all these tools
available.
So we've got a question here
from Hultgren's in northwest
Iowa, Hultgren's Implement.
What is a good place for a
beginner to learn how to start
negotiating in these markets?
Blohm: An important question.
Thankfully with the huge
availability of online
resources, there is a lot of
great places to start that are
free.
The Market to Market Classroom
is a wonderful place to begin.
And also if you go to the CME's
website, I think it's
cmegroup.com, they have a really
nice resource area also that
different materials you can
download and if you just Google
learning commodity or commodity
markets, that type of a thing,
there's a lot of resources to
get you going.
If you are in a situation where
you have a good relationship
with your extension agent, a lot
of times they have a lot of good
resources.
And if you are a female, they
have Annie's groups across the
country and they're wonderful,
wonderful.
They break things down for you.
And a lot of advisors, like
myself, we offer different
educational workshops.
And so I think if you have
interest in that you could
contact any advisor out there.
I know I'm doing some in
Wisconsin in June, July and
August.
So there's a lot of
opportunities, just have to
start looking for them.
Pearson: You bet.
So if you're in Wisconsin, tune
into Market to Market in the
Classroom, write down some
questions and go listen to Naomi
and get all of your questions
answered.
Alright.
Well, thank you, Naomi.
And now we've got some other
questions as relates to the
markets.
And we've got Eric here from
Twitter.
And Eric is curious, he is
curious about old crop corn.
You touched on it a little bit
on the program.
But he's interested, he's got
local river terminals that are
offering free DP or delayed
pricing on corn and beans.
Is that a sign to dump all his
old crop?
Blohm: My experience with
elevators when they offer deals
is that it can be in their
favor.
So when you have delayed price,
it sounds like this magical,
awesome thing because it makes
you feel good that you're making
a decision and you're doing
something.
But you know what, the thing
with delayed pricing is that now
they have your bushels and now
they have a whole bunch of
farmers' bushels and so they
know exactly what is there.
And so you feel good because you
got your product off to market.
However, delayed price means you
still have to price it.
So now these elevators have
copious amounts of bushels and
they can widen the basis out.
So you're actually better off,
in my opinion, if you can do a
basis contract, if your basis is
attractive right now do that
because then you can at least
have something more tangible.
And if the market, like I said,
the futures price is maybe
probably done going down and
maybe going to start to slowly
turn around higher, it gives you
a little bit more of a silver
lining where you can probably
get a better price.
The bigger issue is that because
there are a lot of, there is a
lot of corn unpriced and there
is a lot of corn out there, that
the basis could widen as people
start to move things to town.
Pearson: Well, and so that was
my next question.
As you're looking at this
potential bottom and low in
these markets with a move
upwards, do you anticipate the
basis widening, cash price
staying relatively flat, given
there is a lot of bushels out
there as the futures price
climbs?
Blohm: I don't know how much it
will totally widen out and fall
apart.
If you look at just our exports
every week, there has been
pretty good demand constantly
because the price is cheap.
The ethanol plants are doing
pretty darn well.
They are, for the most part,
still profitable.
So you probably will see the
basis widen but I don't think
it's going to be those
historical, horrible wide prices
that we had years ago.
I would though, like I said, if
you can take advantage of a
basis contract that's a really
good way to go right now.
Pearson: Get the best of both
worlds, lock in today's basis in
case it does widen.
Blohm: Right.
Pearson: Now, one of the
conversations we did not get to
have on the program was the
conversation over the cotton
market, which has been a
fascinating market to watch over
the past two months.
We saw almost $1.70 move up this
week.
Just rain, delayed planting,
what is driving this cotton
market?
Blohm: Lots of little things.
The rain, the delay in planting,
the acres are down, so obviously
then production is down.
The ending stocks a little bit
tighter and globally the ending
stocks are a little bit tighter
too because the United States
wasn't the only country to say
well we're not going to plant as
much cotton.
Other countries around the world
are doing the same thing.
So we have production down,
economies trying to pick up some
steam so there is demand for
cotton and it has just been one
of those things where those low
prices that we had just grinding
out and it looks still like a
nice, favorable friendly
picture, nothing where we see
the market just shooting higher
and rallying.
I would say just a slow,
grinding uptrend higher until we
know for sure what is in the
ground and how the weather is
this summer.
Pearson: The low conceivably is
in.
Blohm: I absolutely would say
that.
Pearson: Okay.
Now, we've got a lot of folks
here on Twitter who, as we get
into planting our 2015 crop,
they're already looking ahead,
thinking and risk managing out
through 2016.
And Michael in Halstad,
Minnesota is one of those
producers and he is a hard red
spring wheat grower.
And so he is curious, looking at
2016 hard red spring, the best
way to get something done or is
it too early to look?
What are your thoughts on
pricing?
Blohm: I think I'd wait a little
bit.
The wheat market for that crop
might get a little excitement.
There's supposed to be a hard
freeze and frost this weekend
and into early next week.
So a lot of things were planted
early up there so just in
general with the wheat market
how it behaved this week, we
might get a little bit of a
spurt higher yet.
I would be patient but if the
opportunity does come along I
would be ready to price it.
Pearson: Alright.
Now we've got one final question
before we go.
We touched on bird flu on the
program and we've seen soybean
meal really take a tumble
recently.
Is there more downside out there
as this bird flu percolates in
the countryside?
Blohm: My answer is I'm not sure
just because we don't know for
sure how much the bird flu is
going to continue to affect
things.
Seasonally the meal should be
working higher and obviously
it's not and so we've had this
pretty big technical washout on
the futures market, it is
counter seasonal.
I'm hoping we're almost done
with it but I just don't know.
Pearson: Alright.
Well we'll wait and see.
Naomi Blohm, thanks for taking
the time to join us.
Blohm: You're welcome.
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.