version of the Market Plus segment.

Joining us now is Sue Martin.

Sue, welcome back.

Martin: Thank you, Mike.

Pearson: While we were on the program I rudely, Sue,

and I apologize, had to cut you off as we were

discussing the pork market.

You had led in by saying October is pork month, we

have a ton of animals being processed here over

the next six to eight weeks or a year, depending

on how you look at it.

Can the demand soak up all of those critters?

Martin: Well, I think we have good demand and the

retailer continues to use pork and poultry to

feature, to draw, and cheap price to draw in the

consumer and while he's in there then the hope is he

buys a little bit of beef.

That is being kept pretty much at the same price or

not much less.

So the retailer is making good margins, the packer

is making good margins on both pork and beef.

And I think that when I look at the pork market,

this seems to be an old fashioned traditional kind

of a year where we have so much protein, just so much

protein, even eggs, just huge.

But on the same token of course like I say the

retailer is moving it as far as the pork and he's

moving the poultry too.

But the cold storage report showed supplies

down, which was a good sign.

So that might help us be a little firmer as we start

the week.

But the bottom line is what rally we get I don't

think lives because I think ultimately we will

move back down into November.

So October is pork month, that might help us a

little bit, get a little reprieve.

Usually the beef choice select does better usually

through the last week of September on through the

third week or so of October.

So in general we might get a little bit of a lift

here and part of that also comes off of the fact that

producers are busy, hopefully, combining corn

and beans and so we'll see.

But of course any more so many hogs are integrated

that when they're ready to go they just load them up.

And so I think that we have a market here that

still tips back down into November.

Pearson: How far down?

Sue, as I was on the road I hear people getting

nervous that we've taken out, we're now in, I

believe we're back into life of contract lows as

of Friday.

Are we looking at the same setup we saw in '98 where

we run out of capacity?

Martin: No, I don't think so.

I think that we're using this beef and pork

industry, we're using the production that we're

getting, and the poultry.

The one thing we have to keep in mind is we have a

good Hispanic population that we didn't have back

in '98 and on top of it we may be having other

populations coming in as well.

Pork and poultry are products that they like

and therefore the Hispanics are big users of

pork.

And so I think -- and they use cuts that we wouldn't

maybe normally have used.

So I think we're going to use it.

Our export market this past week was down, which

was a little disappointing.

My biggest concern would be China, if China becomes

the world's largest exporter, which it seems

like they're trying to gear towards, and yet they

also are a little tight supplied right now for

supplies of protein or meat for their consumer.

They're in the process of making huge changes in

China and they have a huge sow herd now that we're

under the understanding that by the middle of next

year they'll have their full cycle complete and be

full swing into production.

But they're trying to gain back the consumer

confidence.

Things have gone on in China that probably

weren't the best.

So now they're in the process of cleaning up

their act and getting things better but they're

also talking about becoming the world's

largest exporter of pork.

That would not be a good thing for us.

It makes you wonder why Shuanghui bought

Smithfield.

Pearson: Well we've got a couple of other questions

here.

This one is from Scott in Barrington, Illinois.

Scott wants to know, if we plant 3 million less

winter wheat acres how do we plant less corn acres

next year?

Martin: And he's right on that, although sorghum

could pick up some of those acres, and milo.

Beans I think pick up some of those acres.

It depends on the price too.

Right now you've got your producer thinking about

next year's acres and laying the groundwork for

that.

But we also know that the farmer, I believe the

farmer is in better shape at this time than he would

have been back in the mid-80s.

I don't think we have producers in trouble like

we had back then.

Yeah, they're not making money and they're strapped

a little bit, but on the same token it's not like,

you'll have some who maybe go out of business, you

have that always where it's an efficiency thing.

But the bottom line is, I think that it depends on

how bad the price is.

And with us putting in an 84 year cycle low I still

say you're going to have something better next year

than what we're looking at.

I'm not sure a year of a 7 tends to be usually

dynamic, they don't seem to be over history, but

we'll know for sure when I finish my research on

that.

But I think that when I look at corn prices

they're more intensive, input intensive, that

might be something that helps make these decisions

because this is not your first year, this is going

into at least your second year of pork prices and

that might be what plays a hand in that.

Pearson: And it's interesting you mention

that, I was speaking to a group of lenders and they

had all, not all of them, but a lot of them had

talked about how maybe they've done a refinance

or a restructuring already with some of their

borrowers and that one was okay.

They had the equity, they had the working capital,

they had the business in decent enough shape to do

it once.

Their concern is can we do it again?

And that's the answer that I guess we'll be getting

as we get into December and January and renewal

season.

Martin: Yes, and I'm kind of concerned too because

we still see piles of corn that never moved at some

of these larger elevator groups and that has to be

farmer owned corn and that's a concern.

Pearson: They're just hanging onto it.

Now, this time we've got a question from Phil in

Ontario, Canada.

He's got a couple of questions.

He wants to know, why does the USDA consistently

overestimate soybean stocks?

Or, another way to look at it is, why do they

underestimate soybean demand?

Martin: Well, first off, demand in any market is

usually hard to really quantify.

It seems easier after you look backwards and you see

what we've done.

If you look at our exports, we're running

behind the five year average, and even China's

imports for the month of August was down about one

and a half percent, or one and a half million metric

tons I should say, from what it was a year ago.

So it seems like we should be -- and yet we've seen

good demand.

But it makes you wonder are they front end

loading?

And they might be.

But on the same token, if they're going to cut or

try to dissuade DDG imports of corn that

competes against soy meal, well then that would say

that they're probably going to have to have more

soybeans or soybean meal down the road.

That would be a little bit supportive I think

underneath the bean market.

When I look at the beans, if you look at the

production we continue to do and yet our carryouts,

yeah they're growing, but they don't get burdensome,

so to speak.

It doesn't seem to take long if the right things

happen.

And we're the only game in town between now and

February to March.

So that's a lot of time.

And the one thing that I will say is, yes, weather

in Brazil is very important.

But I also think Argentina is the country we really

need to keep an eye on.

Argentina is very dry right now in the western

and northern part of the country.

So that's an area like Santiago del Estero,

Cordoba, those are areas that are big producers and

we need to keep an eye because their planting is

not going to take off real nicely as it should timely

for corn and what have you.

Their wheat crop also in that area is struggling

and being stressed.

So Argentina in a La Nina year and the southern

portion, southern half or whatever, at least the

southern third of Brazil, that area usually tends to

turn more hot and dry in a La Nina.

And while they say that we don't really have a La

Nina yet even in a weak one I'm looking at

Argentina's weather and it doesn't look real spiffy.

And if you look at the bean, they haven't lowered

the taxes for that next five percent -- Pearson:

And they decided they weren't going to, is that

correct?

Martin: The government has been talking that and the

farmer is not real pleased about that.

And that's why he's tilted more towards more corn and

wheat acres because there's zero taxation and

he's going to hang onto his beans.

And so I think that you give a weather issue to

the corn and the wheat in Argentina, keep in mind

Argentina is either second or third largest exporter

of corn and we have to keep that in mind, where

Brazil oversold their hand and so they need to

rebuild their supplies for their livestock industry.

I think the corn market has a story underneath it.

I think wheat might too.

Pearson: When do you think we'll start shipping corn

to Brazil?

Martin: Well, I think that we already have started to

send some in.

I think we were unloading as they were shipping some

out just a week ago.

And so I think that we already have.

Of course Argentina is going to be the main one

sending stuff.

But I think that when I look at South American

weather the northern side of the country should see

ample rain and better crops than they did this

last year.

But that's going to be a big market player as we go

down the road.

Pearson: Alright.

Well, Sue Martin, thank you so much for taking the

time to join us this week.

Martin: Thank you.

Pearson: Oh, we've got one final question for you,

Sue Martin.

Forgot about this.

Martin: 30 seconds, Mike.

Pearson: Yes, 30 seconds.