MORNING COMMENTS 3/10/2016 Pg 1 Wednesday March 26 , 2008, US WEATHER — Check for details on our QT Weather Site link on www.jerrygulke.com For a look at the drought monitor, see http://drouut ght.unl.edu/dm/monitor.html . Look for showers and snow to start in the Dakotas and northern NE in a few days. This system moves slowly south and east with a lot of rain forecast for the southern cornbelt over the next 10 days. MARSHALL, MN SEMINAR DVD You may order using their toll-free number to order 800-260-0970. SMS ONLINE BROKERAGE ACCOUNT FORMS: https://www.ghco.com/GHCOAccountForms/1_A.aspx?IBID=10 Call Jim Riley or Nate Smith or Jamie in our Chicago office at 312-896-2090. SMS brokerage clients can call the Penson night desk for evening trades at 312-356-6333 Chicago SMS Conference, Monday March 31st, 7:30 am to 4:00 pm: Conference to coincide with USDA Planting Intentions Report. Held at Sheraton Gateway Suites Chicago O'Hare. Call 1-847-699-6300 to reserve a room for Sunday night. Rate is $119 if you mention you are with Strategic Marketing Services. To reserve a spot at the conference you must call Jamie at 707-365-0601 or email him at jwasemillersms@aol.com. Cost is $150 per client. Space is limited so contact Jamie ASAP and remember to book your room. Mark Russo (weather/Ngas commentary) and Gordon Linn scheduled to speak. MARKET COMMENTS AND STRATEGIES Grain Markets moving with ease it seems with yesterday another strong day and overnight firm to higher with corn up 9, beans 45 SN and 10 in SX, RS up 14, BO up 1.22 with wheat up 8—dollar taking a hit again! Wheat put in another volatile and erratic day yesterday—if the world wheat crop comes in, it seems wheat is very overpriced but we will have to see the wheat first I guess? Demand Surfacing Rumors about 450,000 tonnes beans and 200 meal moving to the US and showing in sales this week due to Argentine strike. Meal going to Europe and Reuters story talking mil tons of beans and 5 cargos soy oil exporting out of U.S. making the rumor rounds as well with a possible 90 mil carryout expected to show up in US S/D balance tables which has kept SN/SX hot and of interest again. Cash oil up $80 overnight in China and our markets responding with meal up 100-150 yuan and oil up 200-300 with cash corn weak in China. The world may have stepped back to watch how the US handled its economic situation hoping perhaps for an economic meltdown to affect commodities further, but action and reaction by the Fed and US Gov may have put those hopes aside and the focus on acres and running out of food back on the burner again—certainly grains are making a startling reversal that can not be ignored---nothing fundamental has changed per se, and the report next Monday will likely be a barn burner!!! Expect choppy trade today with trade focusing on tomorrow’s export sales report on the supposed bean and meal biz last week—overall path of least resistance looks to be higher with technical picture turning up again--Soy Oil Brazil oil market all bids with no offers to sell. Shipping 125m tons of u.s. oil to china would mean over 10 % of carryout projections vanishing in diminishing crush market. Oil has been strong as has RS should be a market today and the charts appear to look just like they did when the “oil story” began. Our exports for soy oil are wide open and unrestrained at this time and the exporter has all the cards and could take advantage of the situation –---and then when the Argentine strike is over, will also have the upper hand in a dramatic downswing, if/when it happens---making price volatility huge---but nevertheless, we can not ignore what is happening! Wheat Market to be hedged with short put protection at these high volatilities or just keep size small and be short, with some long corn and soy oil against it for cross hedging. Corn: This is an acreage story in a backdrop of what appears to be demand rationing taking place and the unknown of what policy adjustments will be made should our acreage be correct--Position Adjustments: . We had no choice yesterday but to get out of the way of this market and re-adjust our positions accordingly—exiting short calls, and expanding coverages via long calls ahead of report, especially for end users--- The soybean futures market has made seven limit-size moves (3 up and 4 down) since the beginning of the year. Five of those 50-cent daily changes have occurred in the past five sessions. Get ready for more! NEWS: Ethanex Energy Inc. to file bankruptcy Having failed to raise $1.5 million in interim financing, Ethanex Energy Inc. plans to seek bankruptcy court protection, according to a posting Monday with securities regulators. The Basehor, Kan., ethanol company, which at one point announced plans to build three plants, said it had ceased operations and ended an agreement to buy a small ethanol plant in Nebraska. It also dismissed three of its six officials, according to the filing with the Securities and Exchange Commission. It is rumored that two more plants in NE considering shutting down. . Margin Calls: Things getting tighter in the industry as many firms now requiring bank wires for any call over $10,000. As volatility worsens we will see more of that, meaning keeping positions smaller and manageable a key to staying viable. Seed Supplies: Seed Corn prices dropping significantly—apparently oversupply catching suppliers by surprise! Energies responding to colder temps in the NE helping Ngas with CNBC reporting that Gartman (newsletter) expects NG to rally 25% this year---- T-Bone Pickens suggested yesterday that presidential candidates haven’t a clue about the energy SMS MORNING COMMENTS 3/10/2016 Page 2 situation and he doubted crude will stay below $100 for long if it could happen. He said the volatility in the market was too much for him to handle (a billionaire). Felt Ngas was the viable alternative as alternative fuels as we know them to be, won’t make much of a dent in our energy needs. The amount of money moved to world energy suppliers is staggering and will get worse and we must keep those dollars in the US. Ethanol is a help short term, but is not a long term solution. Acreage Estimates: Rumors floating around that major commercials firms are in the 87 mil-ac corn area with soybeans 73— 74 million acres --- further ideas that previously expired CRP acres intended for soybeans. Apparently ADM doesn’t have any formal survey as I could not get info from my contact there! Monsanto has also been elusive formally with concerns of a corn debacle privately it is rumored? If you have any further comments on acreage—drop me a note smsjgulke@aol.com ADVICE AND STRATEGIES:--MID DAY LIKELY WITH CHART UPDATES CORN: Long $5 May puts on 20% of 2008 production Adjustments: Producers: If short CN 5.60 buy July corn one futures for each short $5.60 calls! Hold puts for now. End Users: Exit balance of any short CN $5.60 calls, hold long $6.00 May calls – make sure your coverages is at 75% of usage for calendar 2008 preferably in long May calls to get through the report ---remember the first quarter of the year is gone and usage completed so 75% is really 100% of 2008 needs SOYBEANS: Covered short $14 calls with either long SN futures one-to one—or took losses on the short $14 July calls --Hold the long $15/$17 May call spread for now Exit any short Rapeseed ==hold long soy oil if you have it --If not, cover any short SX futures with long SOil May 2 bean oil against one short SX futures---no short SN -- SN/SX a viable spread again WHEAT : Sold WN $12 calls (about 84 cents) on 20% of production ---Bought the WN $10 puts and sold the $8 puts for a net of cost of about 70 cents on another 20%. and 20% for 2009 production. Hold put spread for now---no short calls—too risky--- but coverages is needed so keep short futures at a minimum with long puts and put spreads. Ngas—----total short 3-4 now –needs to return to a pullback soon or we will need to get out as NG isn’t moving much now Hogs: Short LHZ $73.90 an additional15% or one unit—sold another 15% $72.50 sell stop Friday. Technical picture turning positive so hogs need to see a setback –hold hedges at 30%--cash versus futures spread doesn’t make sense –too much meat but China news and money thinking livestock the next story driving livestock it seems Lcattle and Fcattle Sold one unit of FCV (Oct) $109.50 sell stop yesterday before rallying 100pts — Exit any short April FC only if trading higher by 65 pts after 11:30 am Cotton: We’re long again at 77.20 as this market reversed after the March selloff. We’ll risk a penny on the longs, adding to them every .50 higher. Rice: Reversed with a couple gaps higher in a row, charts are still short, if you go long, go lightly and we’ll add at 19.50 and 19.80 if we get a chance. The US Dollar –too volatile to trade---weaker today making buy signals were questionable yesterday—down hard today 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 3/10/2016 Pg 3