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John Roach's DAILY GRAIN MARKETING PLAN

Overnight Trade

Dec Corn up 2 3/4

Nov Beans up 6

Dec Wheat up 4

Sell Signals

The corn and bean meal markets’ Sell Signals are in buy territory and we have wrapped up our 2nd increment of feed buying. We want to space out our buying because there should be at least 1 and likely 2 more times to accumulate feed inventory on weakness between now and November.

Grain producers should know that we are seldom interested in selling any grain at this time of the year especially when there is no a Sell Signal. We will likely get another Sell Signal before harvest, but I wouldn’t plan on selling much on it. For years, sales made during August through November have been made at the season’s lowest priced months.

I would rather get storage lined up for all the bushels you haven’t sold and plan on making sales during March, April, May, and June on Sell Signals. March through June sales on Sell Signals have a record of being made at the highest prices of the year. We expect the spring of 2009 to be just as exciting as the spring of 2008 at least until we can be assured an adequate supply of new crop production.

Markets

Asia-Pacific stocks today closed mostly lower: Japan -2.11%, Hong Kong -1.61%, China +0.02%, Taiwan -0.02%, Australia -2.02%, Singapore -0.18%, South Korea -0.92%, Bombay -0.78%. The European DJ Stoxx 50 this morning is trading -1.06%

Traders braced for potentially shocking USDA reports yesterday must have been disappointed. The U.S. corn crop was raised by a larger than expected 573 million bushels (14.5 million tons) and global coarse grain production was raised by 20.1 million aided by world barley production being raised 4.2 million tons. Still world ending stocks are expected to be tight one year from now as you can see from the graph below. Corn prices didn’t fall very far before buyers took everything that was offered.

The U.S. bean crop was close to what was expected yet it is barely enough to go around when you look at the U.S. ending stocks graph below. The world stocks are not nearly as tight but traders were quick to buy beans on the opening.

As you can see from the table below, corn (and you can be sure it is the same with beans) yields can still change quite a bit depending on weather. Weather will continue to be watched closely by traders, especially as the first killing frost nears.

The only crop that has increasingly adequate supplies is wheat. The USDA increased world production again; this time by 6.5 million tons in yesterday’s report. Global wheat ending stocks were projected at 136.2 million tons, up 3.1 million from last month and the highest since the 2005-06 crop year or the 2006-07 crop year when figured in days of supply, as you can see on the graph below.

We all needed yesterday’s reports because we simply had no idea how many acres were lost and how much yields had been impacted by the unusually late and wet growing season.

Traders will use the USDA reports as a baseline with adjustments next month caused by August weather. So far August weather will go down as beneficial in most growing regions. We will hear lots of discussion about ear weights and maturity dates but the majority of users will breathe a sigh of relief after seeing today’s reports.

Since there was not a lot for traders to get excited about on the USDA reports, the outside markets should have influence on price activity in the week ahead. Look at the DJ-AIG Index, crude oil, and the U.S. Dollar Index; none are positive to the grain markets, yet prices rallied. That tells me grain prices are too cheap and the markets will correct their oversold condition.

As I said yesterday, I think grain markets will rally.

Final Yields versus August Crop Estimates

This chart from Daily Livestock Report (http://www.dailylivestockreport.com/subscribe.asp ) shows that final crop size can vary quite a bit from USDA’s August estimate even when crop ratings are very good on this date. If you are not subscribed to this free livestock report, you should.

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.