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Market whispers

The market recently has been whispering things to us. Have you been listening?

Are you a "market whisperer" (similar to the often talked about horse

Wheat prices have been tumbling lower, while winter wheat crop conditions
have been slowly improving (vs. normal) until Progressive Ag yield models
are actually suggesting we now have an above average winter wheat crop
coming. Cool weather is ideal for wheat development, and so far weather
all across the country has been cooler than normal since Mid-March - an
abnormally long time. That's ideal wheat weather, and winter wheat has
responded positively. Although behind normal development, so far that has
been nothing but good for the crop. HRS wheat planting, after a slow
start, is also ahead of normal planting progress now. Dry HRS wheat areas
in the western Dakota's and Montana have had rain recently (as has dry
western HRW areas), and things are looking up. USDA (although 1 bu/acre
low in their May yield estimate vs. Pro Ag yield estimates) is estimating
US stocks will double after this year, and world stocks will also increase
significantly after a record shattering world crop. Wheat prices are
tumbling lower, in a constant downtrend. Anyone who sold in the past 2
months is far ahead in the marketplace. The inverse in the market for HRS
is $2/every 2 months going forward to Sept (a projected $4 loss in 4


Corn planting was far behind normal recently, pushing corn prices above
$6.50 Dec08 for the first time in history. Basically, wheat is priced
almost cheaper than corn as a feed grain, and certainly with a 50% hike in
SRW some will be fed across the country. However, corn planting has
advanced rapidly the past week, with over 24% of the crop planted in
virtually 3 days of planting across the Corn Belt. Now, forecasts show a
window of perhaps 5-6 days of planting in the next 7 days across the
northern and western Corn Belt. It's likely progress will be rapid on
corn, and a good start on soybeans in many areas. Things are changing in
a hurry, and the recent 50c premium added for planting delays is quickly
evaporating. It looks like most or all of the intended 86 million acres
will get planted, maybe even more, if the weather holds. Corn prices are
starting to drift lower. While at one point, the soybean/corn price ratio
had narrowed to 1.8, today it has widened out to 2.15 - a sharp change in
this ratio in just a week or so.


The soybean/corn ratio mentioned above has increased in the past week or
so from 1.8 to 2.15. Soybeans have been gaining fast, and corn has been
fading - both at the same time. The market all spring has been screaming
economically to Corn Belt farmers to plant more corn. First of all, the
March 30 report indication of 86 million acres of corn wasn't enough,
everyone thought. We needed more corn acres. Then planting got delayed
from wet conditions in the Corn Belt. Corn gained even more relative to
soybeans, and peaked at about $200-$300/acre profit advantage over
soybeans for much of the corn belt. This was even more favorable for corn
during planting in 2008 than 2007, when we attracted 15 million more acres
(what was called impossible in Jan07)! Certainly, for those who could
shift to corn in 2008, there was plenty of money to pay for it - even with
expensive fertilizer!

Now that corn might be 80% planted next Monday (and
early seeders could have added more corn acres - ie HRS wheat growers who
watched HRS wheat drop $4 in April, and corn rise $1 or so), corn is
fading fast. USDA also reported that soybean ending stocks will be much
tighter than anyone thought even with a March intentions huge rebound in
soybean acres. Instead of 280 mb carryout or more, USDA is projecting 185
mb - and that is if no soybean acres are switched to corn. Argentine
farmers are mad about a new government tax scheme to rob soybean
producers, and many are talking about CUTTING 2009 soybean acres. In the
meantime, strike threats are slowing Argentine exports and expanding US
exports - at a time when we have no soybean stocks to lose.


Have you been listening to the market whispers? Sometimes, it's not in the wind,
or rain, or storm of market information which is typically heard by everyone
(and repeated often by reporters and traders) that provides the clues to better
marketing. Sometimes it's in the market whispers that come ever so softly over
the ticker, and unfold over a long enough period of time that makes it
imperceptible to most except those listening most closely. Have you been
listening closely to the market whispers? More importantly, are you a "market

The information contained, while not guaranteed as to accuracy or
completeness, has been obtained from sources we believe to be reliable. The
opinions and recommendations contained are based on our judgement and do not
guarantee profits will be achieved or that losses will not be incurred.
Recommendations should not be construed as an offer to buy or sell
commodities. There is substantial risk of loss in trading futures and
options on futures.

Ray Grabanski is President of Progressive Ag, a marketing and risk
management firm for farmers located in Fargo, ND. For questions or
comments, or if you are interested in more information about Progressive Ag
services, call 1-800-450-1404.

The market recently has been whispering things to us. Have you been listening?

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