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John Roach's DAILY GRAIN MARKETING PLAN

Overnight Trade

July Corn dn 6

July Beans dn 17 1/2

July Wheat dn 7 3/4

Sell Signals

We changed the months we use to determine Sell Signals to the July delivery where the greatest volume of trade is occurring. Minneapolis wheat Sell Signals will come from the September delivery.

Beans are no longer in a Sell Signal and threatening to break down through their green line 20-day moving average. After this wash out we expect at least one more bean Sell Signal during our Selling Season and will wait for it to make additional sales.

The Sell Signal in corn ended and corn broke down through its green line 20-day moving average with power two days ago and accelerated its decline yesterday. After prices wash out we expect at lease one more Sell Signal in corn and will wait for it to make additional sales.

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

Wheat prices continue to slide lower with increasingly larger crop estimates coming from almost all major world wheat production areas. We will wait for the next Sell Signal to make additional sales, hoping the prices will be higher than today when it comes.

Markets

The Asia-Pacific stock markets today closed mostly higher: Japan +2.38%, Hong Kong -0.64%, China +0.76%, Taiwan -0.47%, Singapore +0.37%, South Korea +1.64%, Bombay +2.42%. The European DJ Stoxx 50 is trading with a solid gain of +1.67%.

Yesterday’s grain market break came from a general commodity wash out stimulated by a stronger U.S. Dollar. The delay in corn planting continues to be talked about, but traders are talking more about planting getting underway in the East and the West with decent progress next week.

The news out of Argentina continues to be headed toward a bad situation. This is scaring export demand to the U.S.

Brad from Iowa said, “It appears to me that two things are beginning to unfold. First, there are signs that the USDA will be forced to lower demand/use for corn and soybeans at some point due to the cattle and hog liquidations and the number of ethanol and biodiesel plants that were scheduled to get built, but have been pulled or delayed for the unforeseeable future.

Then on the other side of the coin, it appears that the world wheat supplies will get replenished in 2008 to the point of excess, which will drive the wheat price down. If this happens, it will free up more acres in 2009 to plant most likely more profitable crops such as corn, beans, cotton, etc.

The combination of the lower demand and high supply can not be good for commodity prices in 2009 and 2010. Yet you are about the only analyst throwing out words of caution. Even FC Stone’s own Doug Jackson (according to Market to Market) is all bullish for 2008 and beyond to the point of recommending no sales. Most analysts are calling the acreage battle for 2009 to be at least equal to this year if not worst. Barring no catastrophic midwest drought, I am starting to fall into the camp that 2008 could be the peak in commodities prices. The question is, when is a good time to start locking in 2009 and 2010 prices while we still can.

However with that said, both Elwin Taylor and Bob Wisner are calling for below trend line yields in 2008. History has proven that these two individual predictions are usually within 3 bushels of the final yield. If they are right again in 2008 and we do only get trend line yields or less, how will this effect commodity prices and your outlook?”

Brad, I like how you stated your view of the grain markets. You are a very good writer! I agree with your observations about the grain markets and sometimes feel all alone. I am not sure why others are so willing to assume that somebody will buy all our crops at prices higher than where they are trading for harvest 2008.

Part of the optimism felt by everybody in the market comes from the pace of increasing world wide food demand. Grain and meat demand has been surprisingly strong this year but both were undervalued. I know everybody has to eat but there are lots of foods that are cheaper than the cost of animal protein when each animal dines on $6.00 corn.. What will the price of meat be and how much demand will we get at the higher prices? What will it cost to manufacture a gallon of ethanol and can we sell it? I don’t know the answers to these demand questions and they worry me.

Another reason to be optimistic is lousy planting weather. This was a cold wet winter in much of the country and it is just dragging on forever. On the plus side the driest South East area of the country got a lot of relief but the West got dryer. The following cool web site shows the U.S. drought snapshots in a slideshow: http://www.drought.unl.edu/DM/12_week.gif My view of the weather is that it has been cold all over the world this year and that doesn’t seem to be changing. This summer could be cooler than normal potentially offsetting the normal yield losses caused by late planting.

I think everybody is too conservative on their yield estimates. I know that weather can give us below trend-line yields, but if we don’t have a regional crop problem area like we have for the past 3 years, look for record yields. Every farmer is doing their best ever to make it happen, regardless of the weather.

Even if I didn’t have these concerns about the supply demand tipping back toward adequate carryovers, I would still have you selling corn, beans, and wheat during our Sell Season on Sell Signals. I would still have you well sold on the cash grain and the cash grain contracts you wanted to get on the books and with a bigger than ever put position on nearly all of the grain you didn’t want to sell. I would have you buying harvest 2008 puts to cover as many 2009 crops and beyond as you wanted, and encourage you to buy more. This is our plan, it has been successful for years and it will allow you to bank record profits.

The difference between what we do and others is we help you make good business decisions and don’t worry so much about how high prices might go. Nobody knows what the market will do and good business decisions always win in the long run. We help farmers establish a solid marketing plan for their farm, make adjustments when necessary, and help them execute on their plan during Sell Signals – frequently encouraging sales in the face of overwhelming optimism.

I am never sure what the grain markets will do but they normally print their high during our Selling Season. It looks to me like wheat and beans did it right on cue. If corn planting finally gets underway, the corn chart will likely be similar to the other two markets.

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.