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The Grain Markets Rally!

Published on: 14:20PM Mar 03, 2010
Today’s rally has helped lift everyone’s spirits. You can almost hear the bulls panting waiting for a bullish report next week so they can jump into the corn and soybean markets and lift them to the heavens. Their argument is: "let’s face facts, it’s March and there is snow on the ground, planters will want to move in less than three weeks, and nothing is going to get planted on time."
 
My objective is to get producers to sell their crop; I hope the market can catch this bullish attitude and indeed push prices back to the pre-January report highs. If this would happen, based on USDA cost data, U.S. producers should be offered a profit level that has only been exceed by the 2008 and 2009 price events that I believe were an exception rather than the rule.
 
Conclusion: Let’s now hope that we get a bullish report next week and everyone gets bullish about spring weather. It will give producers a great chance to make “catch-up” sales at levels that we all know present an excellent selling price for expected 2010 corn and soybean inventory.
 
Contracts being monitored for input cost control: The 10-year T-Notes remain firm in the March contract right under 119. I still suggest this is the last strong drive up for all interest rate instruments. Focus on being a scale-up seller from this point forward. The big problem I see now is what happens when the March contract goes off the board. There is already an exceptional difference between the lead month and deferred contracts.  
 
May natural gas has stabilized at a price decline that started back in December. While this may be the low, I am in no real hurry to suggest buying before the seasonal low time period in the summer months.  Again, remember buying natural gas is used to offset future nitrogen cost exposure. The objective right now is $4 or lower, if possible.

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