MORNING COMMENTS
Thursday June 26, 2008 US WEATHER- click QT Weather Site
link at www.qtweather.com For a look at the drought monitor, see
http://drouut ght.unl.edu/dm/monitor.html
Rainy in the cornbelt next 2-3 days. Then about a week of dry
weather followed by another round of moisture in early July
In the Midwest corn and soybean belt, it was practically a
repeat of the previous night as heavy rains fell overnight across
far southern Iowa, northern Missouri, and western Illinois.
Additionally, Tstorms fired up across eastern South Dakota,
southwest Minnesota and northwest Iowa. Totals were .5-4.0"
with the heaviest totals in Iowa. As for the forecast, there is a
change today which involves week #2 of the forecast - the first full
week of July. and now expect a continuation of active conditions
through the first full week of July. As for temps, readings next
week and into the first full week of July will be climbing to warmer
than normal levels but no problematic/extreme heat is expected.
The Plains hard red winter wheat belt is now getting out of
the wet pattern of late allowing harvest activity to improve through
month's end and into early July. In Australia, moisture coverage
across SA/Victoria/NSW looks lower this morning
Across
Europe, dry conditions starting today across most of Europe will
last through Tuesday of next week. Western portions of the FSU
will see a turn to above normal temps as the trough of low
pressure moves onshore across Western Europe next week. In
the China corn, spring wheat, and soybean belts, Heilongjiang
remains the focus of attention especially with the rain opportunity
during the next 24-36 hours. Significant rainfall is needed across
this area since dry/warm conditions will be returning next week.
.
2/12/2016
Pg 1
survey being taken now---as well as any USDA actions post
Report!!!!
SMS SUMMER CONFERENCE: Beaver Creek, CO July 9-11,
2008. at the Park Hyatt in Beaver Creek Room Rates are $169
for Single & Double Occupancies -call 800-233-1234 and
reference that you are with Strategic Marketing Services.
Conference fee is $495 per person including registration and
banquet, $250 for extra family members or business guest. Extra
banquet seating $55; children $35. Email Jamie at
jwasemillersms@aol.com. or register at www.jerrygulke.com
CONFERENCE AGENDA
Wed 9th PM Commodity Fundamental Outlook—
Roy Huckabay , Linn Group
Kennedy & Coe---2008 Farm Bill Implications
Evening Banquet
Thurs 10th AM Dr Vince Malanga (economic/inflation outlook),
Mark Russo(weather—July/Aug, Sept)
Gordon Linn Commodities Overview ---Money
Flow , Index and Spec Funds
Silveus (crop insurance status review—GRIP
status—what about next year ? )
Fri 11th AM— USDA Report Review—J Gulke
Roger Wallace—“Promises Un-kept”
(Livestock, ethanol, general markets )
Technical Analysis –Jerry Gulke—
June 30 Stocks Est
Wheat
Corn
Soybeans
Average
0.275
3.894
0.663
Highest
0.461
4.000
0.720
Lowest
0.247
3.550
0.615
USDA June 2007
0.456
3.533
1.092
USDA March 1 2008
0.710
6.859
1.428
.
June 30 Acreage Est
Corn Soybean AllWht SprWht Durum
Average
85.661 74.257 63.808 14.306 2.628
Highest
87.399 76.000 64.000 14.500 2.700
Lowest
83.500 72.000 63.530 14.000 2.505
USDA March 2008 86.014 74.793 63.803 14.333 2.630
USDA 2007 final 93.600 63.631 60.433 13.297 2.149
PRE REPORT THOUGHTS : an experienced trader once told me
that producers should be covered going into a major report and
specs out of the way of the market--- we have such coverage
now---may have to fine tune that tomorrow or during Mid-Day
observations---- If there is a concern I have, it would be that the
report on Monday would indicate demand falling already in this
marketing year for both feed, ethanol and exports combined to
yield carryout this year up 200-250 mil-bu by Sept 1---USDA will
NOT be reporting Supply and Demand changes Monday---but
implications will be pretty strong after we get the June 1 stocks,
the hog report AND the update on acres in the special phone
IMPORTANT NEWS ON BILL HERRING: Long time SMS
associate Bill Herring has been diagnosed with a re-occurrence of
the renal cell cancer that he dealt with a couple years ago. He
will enter the hospital this morning for pre-surgery tests and
procedures and will be having major surgery on his spine this
Friday and most likely be in ICU for 3 days and in the hospital for
at least a week (Baptist Memorial Hospital, 6019 Walnut Grove
Rd, Memphis, TN, 38120). Our thoughts and prayers go out
to Bill and Gloria and the rest of his family.
SMS MORNING COMMENTS
2/12/2016
Page 2
MARKET COMMENTS: Above is the market estimates for the June 30 Stocks and Acreage Report---note the average guess has the corn
planted acres down 400,000, with soybeans down 500,00 There is a hogs and pigs report as well a stocks report as of June 1 which will
update usage through the third quarter of 2007/08 marketing year. Based on recent export sales report, including the disappointing report
today, one may conclude that higher prices have affected future shipments---(see freight matrix below as well) with a disappointing report
today as well . Export sales are disappointing today but fickle weather, with maps varying past 24 hrs, now has significant rains called for
over IA/MO again totaling from 4-8 inches with significant coverage over a lot of the corn belt then again first week of July--- which is another
change in models from ridging to wet flow--- flip flopping as usual as we go from spring to summer ---it happens every year----those trying to
trade on weather alone are in for a wild ride---- However one has to conclude that we are a long way from seeing normal weather or trading
for some time. Using options the safest bet--- an experienced trader once told me that producers should be covered going into a
major report and specs out of the way of the market--- we have such coverage now---may have to fine tune that tomorrow or during
Mid-Day observations---- If there is a concern I have, it would be that the report on Monday would indicate demand falling already
in this marketing year for both feed, ethanol and exports combined to yield carryout this year up 200-250 mil-bu by Sept 1---USDA
will NOT be reporting Supply and Demand changes Monday---but implications will be pretty strong after we get the June 1 stocks,
the hog report AND the update on acres in the special phone survey being taken now---as well as any USDA actions post Report!!!!
 Export Sales: Corn : 402,900 (171,600 – 08/09), est. – 500,000 to 750,000 Wheat : 503,300 (4,300 – 08/09), est. – 350,000 to
550,000 Soybeans : 2.02 mil (-268.1-07/08, 2289.4 – 08/09), est. – 1.90 mil to 2.25 mil Meal : 73,000 (38,400 – 08/09), est. –
75,000 to 150,000 Oil : 20,200 (0.0 – 08/09), est. – 0.0 to 10,000. Analysis: Corn : net sales of 231,300 down 33% vs. last week,
down 51% vs. 4-week ave, Meal : net sales of 34,600 down 63% vs. last week, down 78% vs. 4-week ave, Beans : net reductions
by China offset any new sales for a negative(reduction) of 268,100. 08/09 sales to China were 2.240 mil.
 Fundamentals - Middle of wheat harvest with huge yields being reported in soft wheat. Sure there are some problems in hard
wheat harvest but US wheat is so far from competitive that we will continue to lose out on export trades. Egypt bot Black Sea
origins overnight at $18 to 19 discounts to US offers? Corn inventories will be so tight that the need to feed wheat goes up---this
rally in wheat/corn relationships does not help? Note freight origin to destination matrix below:
Wheat…Black Sea undercuts others, as seen in recent sales to Egypt. Optional sales based on BlkSea.
Beans…PNW enjoying less advantage due MUCH narrow Gulf-PNW freight spread. Perhaps part of why Gulf
prems strong lately. China interest in US beans off the PNW continues.. China oil futures were quiet today as beans and meal rallied
sharply. Indonesia will raise the export tax on palm from 15 pct to 20 pct starting July 1. China has impounded 75 TMT of palm oil?
Corn…BlkSea feed wheat should be working to Korea, displacing some corn---key item to watch..
CNF
Corn to S.Korea
Aug Sep
US PNW
392
US Gulf
405
Brazil
397 399
Arg
394
B.Sea Fdwht
368
Oct Nov Dec
394 393 392
404 401 397
400 396
365
365
Jan
392
395
Feb
392
394
364
Beans to China
US PNW
US Gulf
Brazil
Arg
Aug Sep
660
658
678 644
662 627



Oct Nov Dec
326 328 330
303 304 305
294
262
262
Oct Nov Dec
68
65
62
98
93
90
102
98
95
102
98
95
103 102 100
30
28
28
Jan Feb
60
58
88
85
93
91
93
91
95
93
28
27
Oct Nov Dec
660 659 658
679 676 672
676 670 670
Jan
658
670
Feb
669
Jul Aug Sep
590
582 577
560 567 566
544 549
Oct Nov Dec
592 594 596
578 579 580
568 572
Jan Feb size Jul Aug Sep
598
55
76
75
70
581 582 55
108
76 102
55
118
77 110
55
118
78 110
gx-pnw 32
1
32
Oct Nov Dec
68
65
62
98
93
90
102
98
95
102
98
95
30
28
28
Jan Feb
60
58
88
85
93
91
93
91
28
27
Jul Aug Sep Oct Nov Dec
101
96
92
88
83
80
121 118 114 110 105 100
101
96
92
88
83
80
55
53
50
47
44
42
122 120 117 113 108 105
54
52
51
50
48
47
all values fob/cnf/frt are usd/mt
Jan Feb
77
75
95
93
77
75
40
40
103
97
45
45
Wheat
Aug Sep
376 380
463 455
469 465
378 377
349
Jul Aug Sep
322
300 302
280 285 290
277
260 260
FREIGHT
mt
Jan Feb size Jul Aug Sep
332 334 55
76
74
70
306 308 55
107 105 102
55
117 114 110
55
117 114 110
50
108 108 105
gx-pnw 31
31
32
Beans
Wheat to Egypt
US srw
US sww
US hrw
French
Arg
Bl.Sea
FOB
Corn
Oct Nov Dec
387 397 399
462 463 459
463 464 461
377 378 377
Jan
400
456
460
377
347 346 345 344 346
cnf dates are arrival
Feb
401
460
378
Jul Aug Sep
275 284 295
342 337 348
368 369 371
323 324 327
295
295
Oct Nov Dec
309 316 320
353 354 356
376 378 380
331 333 335
Jan Feb size
324 327 55
55
383 385 55
338 342 25
25
295 295 296 299
25
fob dates are time of load
DEMAND: Demand may have started to subside during this quarter---the extent of which may or may not be reflected in the
June 1 stocks next week. The extent of any livestock cutbacks is debatable. Ethanol continues profitable for existing with most
cancellations being by those in planning stages not current plants in operation or under construction.
Technically--- The markets seemingly are dodging a bullet as just in time, markets rallied to thwart off a convincing sell signal
headed into the report
USDA JUNE 30 REPORT Next Week: Will have significant implications --- USDA re-surveying by phone some of the original
participants of the June 1 survey to get an update--- USDA needs critical acreage estimates refined along with yield estimates to
help make decisions post June 30 Survey.
This copyrighted report is intended for the use of clients of SMS, Inc only and may not be reproduced or electronically transmitted to other companies or
individuals, in whole or in part, without the prior written permission of SMS, Inc, Strategic Marketing Services. The information contained herein has been
taken from trade and statistical services and other sources we believe are reliable. SMS, Inc. does not guarantee that such information is accurate or
complete and it should not be relied upon as such. Opinions expressed reflect judgments at this date and are subject to change without notice. There is risk
of loss in trading futures and options and is not suitable for all investors. Please carefully consider your financial condition prior to investing.
MORNING COMMENTS
2/12/2016
Pg 3
STRATEGIES/POSITIONS
Watch for Mid-Day Update
GENERAL: Markets tough to trade here--- ignoring normally reliable technical signals and in wheat basic fundamentals
of improving harvest conditions and increases in world supply.
CORN: for end users long coverage into 2009 first qtr—Long call spreads (Sept) option spreads---—exited 40% of any excess long
spec positions a week or so ago. Market seems very supportive going into report.
End users if long our recommended 100% usage into first quarter of 2009---buy the Sept $7.20 puts and sell the $6.50 puts for a net cost of
about 30 cents---or roll out of 50% of long futures and buy the $7.20 and sell the $8.20 CU calls for a cost of 33 cents net---if you are
planning to feed your locked in corn---it is not the next 30 cents that will kill you ---it is the next $1 or so----at $8 corn you might want to just
sell the corn and the feeders?
Producers: We sold an additional 5% in the futures Monday night/Tuesday --- in addition bought put insurance on another 15% of your
production for 2008 in the CU $7.20/$6.50 CU Put spread--- added another 10% hedge this week at $ 7.52 –$7.54 Dec
Today: Use late day sell stops late in the day below last night’s low of $7.42 to get caught up and to begin hedging 10% in 2009
and 2010 production----End users have upside coverage while producers using long put spreads and limited futures hedges. Our
recent Dec hedges carry about a 10 cent risk---a close above $7.75 will be cause for another bullish leg higher---SOY COMPLEX: 100% long meal for remaining 2008--- Producers sold another 5% in SX futures this week–--TODAY: Exited 50% of long BO and the long side of Aug spread---continue to hold remaining long BO against short SX futures----pending mid day--- Meal has the best looking chart with upside significant with risk at this week’s lows thus far--WHEAT back to 70---80% covered
TODAY: wheat looks the weakest fundamentally---increase coverage to 70-80% if wheat is trading lower 10 cents by after
12:30 noon –a close over 9.13 today in July will force us to re-evaluate futures coverage! Wheat is defying fundamentals!
HRW, SRW, French, BlSea usd/mt Delivered Egypt
500
480
460
440
420
400
380
360
340
320
300
Sep
Oct
Nov
Dec
Jan
Feb
US hrw
472
471
473
474
474
474
US srw
387
391
401
404
407
409
French
375
375
377
377
378
379
Bl.Sea
347
346
346
345
Interesting that Blk.Sea wheat is holding steady while US values are rising, putting US soft wheat that much further
out of the running. Where are we going to sell our srw? This is why fundamentally traders are so bearish wheat,
but of the moment the momentum is moving against them.
Cotton: Specs are long again. Use stops below 78.80 to exit. Producers should start hedging at 78.80 as well.
Rice: Use a move below 19.00 in Nov contract to begin hedging.
SMS MORNING COMMENTS
2/12/2016
Page 4
Natural Gas and Crude---- No positions--Lcattle Continues stronger last week---may have bullish COF discounted???
Update—we are basically flat with no positions---we’ll cautiously watch the trade for now--- breakeven now likely $120 for 2009 take a
look at far out 2009 prices---getting near breakeven---Cautious here as LC momentum slowing! Hedge 20% of 2008 in Oct 08 or Dec 08
and for 2009 in April 09 and June 09 on straight sell stops 80 pts lower from yesterday’s closes!
Hogs: hedged 25% or less for third quarter---still concerned that there is a lot of pork to move! --- 2009 futures hedged 20%
June 2009 96.75.
This copyrighted report is intended for the use of clients of SMS, Inc only and may not be reproduced or electronically transmitted to other companies or
individuals, in whole or in part, without the prior written permission of SMS, Inc, Strategic Marketing Services. The information contained herein has been
taken from trade and statistical services and other sources we believe are reliable. SMS, Inc. does not guarantee that such information is accurate or
complete and it should not be relied upon as such. Opinions expressed reflect judgments at this date and are subject to change without notice. There is risk
of loss in trading futures and options and is not suitable for all investors. Please carefully consider your financial condition prior to investing.
MORNING COMMENTS
2/12/2016
Pg 5