John Roach's DAILY GRAIN MARKETING PLAN

We have recommended fill in type sales of corn and beans and the sale of an increment of 2012 wheat on this Sell Signal and think it makes sense to dribble a few bushels of the 2013 crop as well. The weekly charts as well as the daily charts indicate solid up trends are in place, there is no reason to sell in fear. Space out wheat sales on strength.

My idea on using your net worth estimates to offset the emotional and cash flow impact of this ongoing drought stimulated Mark from Minnesota to write,

I haven’t forgotten the 80’s. I started Roach Ag in 1978, just in time to participate fully in the farm crisis. Those were certainly difficult times but guys who kept their wits about them are some of the most successful farmers today. That is what I was calling for yesterday. Looking at their net worth will hopefully help some producers to think a bit more balanced.

Each day I read every email I receive and Jim from Illinois warmed my heart with his note. I hope it speaks to you. Jim said,
Me too. Thanks for sharing Jim.

Grain markets are bumping up against or pushed through (on wheat) the highs posted Wednesday following the USDA crop report. We made corn and bean sales on this Sell Signal and will wait until the next one to recommend further 2012 corn and bean sales.

Keep an eye on 2013 crop prices and be willing to pull the trigger on a few bushels on strength. Selling a few bushels of next year’s crop now and on each of the next few Sell Signals will get you a small base of sales at good prices for next year’s crops. I wish it didn’t taste like cod liver oil to make sales for next year but beginning sales at the best prices in 2 years is a good thing.

When prices are high and farmers tell me they can’t sell any more of this year’s crop, selling a little of next year’s is usually right.

Another alternative is to do something in the options. I know your emotions are screaming to buy calls, but you will need to be very nimble to get into and out of calls profitably. I would rather see a farmer buy puts with the plan of liquidating them on the next Buy Signal. “As a former loan officer, I shuddered at your net worth advice. Telling people to figure their net worth and the inflation in land value will offset operating losses, is reckless to say the least. This is equity lending style, what got us into the farm crisis and the housing bubble. Please rethink this for financial advice. Makes me think you forgot the 80s.” “John, I commend you on your attempt to talk producers through the emotions of this market. Panicking rarely pays off & realizing you missed the market on call ownership or outright futures length $2 into the rally is difficult to take. My instincts told me to own $7cz2 calls @ 6-8 cents but we were a 2” rain & 1 technical probe away from a jab below $5 potentially sending futures much lower. I wish I had followed my gut but I didn’t & trying to re-own here is more than likely a mistake as I couldn’t pick the bottom so how am I going to pick the top?

The most difficult aspect is accepting that we have no control over the weather or prices. I liked your comment that “God decided it was not to be”. I am a believer also and my faith is what is helping me deal w/ selling a little corn way too cheap and the knowledge that at some point we will receive the rain we need & not when we want it. God is always good & his plan is always perfect. He is a much better leader than I am a follower.”
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The USDA reports this week got everybody’s numbers much smaller than anybody figured they would be one week ago. This week’s continuing drought stimulated analysts to cut production estimates even further. Weather was the key this week and will dominate markets until damage quits occurring in the fields.

The U.S. GFS weather forecast calls for some rain, but the market action indicates traders have little faith in it. FCStone’s weather guru calls for a little rain in some areas but dry and very hot for most.

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Today’s close will be dictated by the afternoon forecast. Right now traders on the CBOT floor this morning are debating if corn will hit $8.00 today or early next week.

Markets will continue to be volatile moving higher most days it is hot and dry. But we expect it to get slammed after the 1st meaningful rains. Keep your eyes on the big picture of net worth and pray for rain. This too shall pass and will be much less difficult than the 80’s were.

FCStone Research

Chinese crushers bought a much higher percentage of domestic supplies offered by the government this week, purchasing nearly all the 394,500 tons at the state auction, as import prices from the U.S. skyrocket. However, the total soybean volume sold in this year’s state auctions is only around 1 million tons.

Paraguay is looking to increase soybean plantings to a new record this coming season, up 10% from the previous high to nearly 3 million acres (7.4 million acres); if yields were to rebound to 2010-11 levels (back up from last year’s drought), production would set a record at 8.1 million tons, compared to 7.1 million tons in 2010-11 and 4.4 million tons in 2011-12.

The HGCA sees British wheat planting rising 2% this season to 2 million hectares, the best since 2008; total grain planting is up 3% from last year to 3.8 million hectares. However, poor crop weather there in recent weeks (high rains and low sun, ironically from this country’s point of view) has created concerns about yields.

Russia’s Deputy Prime Minister this morning said that there will be no limits on the country’s grain exports, according to Interfax…

CBOT July deliveries: bean oil 180 contracts and 7/12/12, wheat 27 & 7/9/12.

Click here for the monthly average futures prices for Corn

Click here for the monthly average futures prices for Soybeans

Click here for the monthly average futures prices for Chicago Wheat