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John Roach's DAILY GRAIN MARKETING PLAN

Overnight Trade

May Corn up 4 1/2

May Beans up 15 1/4

May Wheat up 13 1/2

Sell Signals

Today beans will be in their 5th day of a Roach Ag Sell Signal. We want to wrap up sales on this Sell Signal. We are recommending making sales of an increment of beans in the bin and an increment of the new crop that you cannot store on the farm. We expect at least one more bean Sell Signal during our Selling Season, so calculate your sales increment accordingly.

We also want to buy November bean puts on this Sell Signal.. You will find that November bean puts are very high priced as they were on the last Sell Signal. Yet the $9.00 to $12.00 strike priced bean puts purchased on the last Sell Signal increased in value from 300% to 500% when bean prices dropped.

The extended corn Sell Signal ended 3 days ago but is threatening to resume. We expect at lease one more Sell Signal in corn and will wait until the next market peak to make additional sales.

We continue to buy corn puts to bring coverage up to ¾ of the new crop corn you plan on storing unsold.

Wheat markets are struggling in their effort to go higher, but the chance of a late season frost in Western growing areas gave us the boost yesterday. We will wait for the next Sell Signal to make additional sales.

Markets

The Asia-Pacific stock markets all closed higher today except for China (-3.07%): Japan +1.92%, Hong Kong +1.59%, Taiwan +0.27%, Australia +0.89%, Singapore +1.26%, South Korea +0.72%, Bombay +1.46%. The European markets are trading slightly lower with the European DJ Stoxx 50 down -0.12%.

Export sales out this morning. Net wheat sales of 129,200 metric tons were 72 percent below the previous week and 54 percent under the prior 4-week average. Net sales of 179,200 MT for delivery in 2008/09 were also reported.

Net corn sales of 868,900 metric tons were 83 percent above the previous week and 36 percent over the prior 4-week average. Net sales of 53,600 MT for delivery in 2008/09 were also announced.

Net soybean sales of 477,000 MT were down 18 percent from the previous week, but up 21 percent from the prior 4-week average.

To read FCStone’s latest wire from Brazil, click here.

Cody from Illinois said, “I am new to your reports which I love to read. I am a young farmer just graduated from college, and I have some of my own farm ground outside of my family operation. I bought a Dec. 08 Put at $5.20 strike that covers my unsold grain. What do you have to say about buying additional puts just to try and capitalize on a potential drop in prices?”

When I am at a social function here in Florida the topic always gets around to “what do you do?” When someone finds out I am a commodity broker they frequently want to know what will make them some money in commodities. I tell them my favorite speculative trade is to buy puts on corn and beans every spring because it makes money more often than it loses. That normally kills the conversation because that was the last thing they wanted to hear. Buying gold, energies, or currencies is much more exciting.

You are dependant upon prices being high enough to make your new business successful for the rest of your life. The biggest risk you have is prices fall too low to make a profit. Buying enough puts to cover part of your 2009 and 2010 crop makes very good sense to me. If new crop 2008 prices fall, my bet is the next two year’s crop prices will fall too, so buying extra new crop 2008 puts is legitimate hedge against 2009 and 2010 prices.

Kyle from Iowa asked, “What are your thoughts on Soybean basis, now through summer.

We have most of our remaining old crop beans sold HTA for July to Cargill in DSM.

Basis has been tightening & is now 59 cents under. (even with the futures currently rallying) Do you think this will continue to tighten as the old crop supplies are used & we move more into summer? Or is this about as good as it will get?”

I would be fixing some of the basis on my HTA beans now.. Basis could get better if prices move lower but I would not wait on all my bean HTA contracts. I remember when that Cargill basis was over $1.00 and if futures go higher, basis is likely to head in that direction.

Joel from Iowa said, “Thanks for answering questions on your daily grain page. Often these q’s are some that I have. “And for some humor” some times I know the answer and its encouraging to some days feel smarter than your other subscribers…... With your help I’m sleeping much better and have made some better sales these past few years. I’m amazed at how many times I felt you were wrong and went ahead and made a sale only to see the market rally and my sale was way out of the money, or didn’t sell and then took a lower price ‘cause I needed the money. I’d rate you right up there with the JD 4020,”” not for sure we could farm with out it””.

Thanks Joel! Writing a Daily Grain Plan is all worthwhile when readers let me know that I am really helping them with a difficult task.

These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. This commentary is written as a daily marketing tool to help farmers sell the grain they raise. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Commodity trading involves the risk of loss, and you should fully understand those risks before trading.