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John Roach's DAILY GRAIN MARKETING PLAN

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Travels

We are down to our last 2 seminars. We still have space for the public seminar in Kokomo, Indiana tonight and for the round table discussion tomorrow in Lebanon, Indiana.

Call our office at 800-622-7628 if you would like more information or to register. Our Midwest tour has been very successful and we thank all of you who have come out to see our “road show!”

Sell Signals

We are in day three of a soybean Sell Signal but it is slipping. With yesterday’s lower trade the market backed away from the Sell Signal in corn.

Beans are still trading well above the green line 20-day moving average which should encourage trend following speculators to reduce their short positions and accumulate long positions. On the other side the U.S. Dollar is inching higher causing other spec traders to sell all commodities.

Selling strength during Sell Signals is always the right thing to do, but should we also be selling when prices turn down like yesterday? I am reluctant to sell lower prices but I am certainly disappointed in the grain markets’ performance.

Warren from Nebraska asked, “What is the deal with soybean sell signal? On Jan. 5 the price was $10.68 you had no sell signal or I just remember one. You said hold on the price is going to get lower but it will come back. Now the price is $9.65 and you send out a sell signal. Why didn’t we have a sell signal when the price was over a dollar higher? The price has come back but not to the early Jan. levels and now you say sell. Why sell now and not then?”

Our Sell Signals are determined by a math formula. The price charts we show each day plot the results of that formula with a blue line and red line on the bottom of each price chart. By definition, both lines (or numbers if you look at the raw data) must be above 75 to trigger a Sell Signal. On January 6th the lines peaked at 78.92 and 74.02, just short of a Sell Signal. We didn’t quite get a Sell Signal before China tightened their lending standards and started prices lower.

We really wanted to make sales in January and talked a lot about getting comfortable and having solid 2010 sales on the books. But we never got the numbers we needed to issue a bean Sell Signal in January. We had been very aggressive on our sales earlier and thought we could be patient waiting for the lines to get over 75. In hindsight, we should have broken our rules and issued a Sell Signal without the numbers being met. But, we didn’t and then the USDA gave us a negative report and the rest is history.

These times when things don’t go as planned keep us humble. At least we had you thinking about selling and not buying. And I have been told by many subscribers during our trip that they made sales even though we never issued a Sell Signal phone call.

We never know what the markets are going to do and never know if the next Sell Signal will come at a higher or lower price than the last one. We don’t believe anybody is smart enough to forecast where prices are going to be in a month or two. We use our tools as best we can knowing that sometimes they won’t give us the Sell Signal we want. And other times the Sell Signal will last longer than normal.

Remember our Sell Signal is just a tool. As prices move near to a Sell Signal, feel free to go ahead and make sales that make sense on your farm. The more anxious you are about getting sales made, the more willing you should be to start a little early. You have the management responsibility to adapt all the marketing ideas you follow to your own business situation. We personalize our service and recommendations for our consulting customers, which is a service you might consider, but we stick close to our marketing plan and rulebook in our Daily Grain Plan.

Meanwhile, we do have a Sell Signal in beans today. Look for opportunities to sell something.

How will the prices we have available today look in the rearview mirror? Most years sales made in the first half of the year look pretty good by late summer.

Markets

The U.S. Dollar continues to move higher putting pressure on commodities. European debt worries continue to fuel the strength.

Argentina’s Ag Ministry estimated the 2009-10 corn harvest at 19 to 21 million tons yesterday, its first production estimate of the year, and nearly 50% larger than last year’s 13.1 million ton output. Planted area is down 7% this year to 3.25 million hectares, but yields are much higher. The Ag Ministry’s estimate is the largest of the current range of estimates which run from 17.2 million tons (the current USDA figure) up to 19.5 million tons.

French analyst Strategie Grains raised their 2010-11 European Union soft wheat crop estimate by another one million tons this morning, now at 134.7 million tons, up 4 percent from 2009-10. They left the door open for as much as a 5 million ton increase given favorable weather conditions throughout the crop cycle. Corn production for 2010-11 was shaved by 100,000 tons to 57.7 million tons, still 2% above the 2009-10 crop.

January NOPA soybean crush came in at 162.4 million bushels yesterday, slightly above the average trade estimate of 161.8 million bushels and well above 139.1 million bushels from last January, but down from 164.4 million bushels in December.

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.

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Front Month Futures

Mar ‘10 Corn

Mar ‘10 Beans

Mar ‘10 Wheat

3.58 1/2

- 1 1/2

9.51 3/4

+ 1/4

4.92

- 2 3/4

New Crop 2010

Dec ‘10 Corn

Nov ‘10 Beans

July ‘10 Wheat

3.95 1/4

- 1 1/2

9.32

+ 1/4

5.19

- 3

World Markets

S&P 5001,099.51+0.42% Europe DJ Stoxx2,757.62-0.16% Japan10,335.69+0.28% Hong Kong20,422.15-0.54% China3,251.280.00Taiwan7,441.840.00Australia4,654.76-0.28% Singapore2,769.19-0.89% South Korea212.55-0.42% Bombay16,327.84-0.62% Libor0.25+0.25%

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