Market Data, Inc. - A Farm Profit Enhancement Service PO Box 90 Oberlin, Kansas 67749
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Review of 2004 2004 Soybeans 2004 Wheat 2004 Corn and Milo

2004 Wheat Advice

MARKET DATA, INC. – SUMMARY OF MARKETING ADVICE FOR 2004

 

FROM GREG’S GOSSIP – WEEKLY ADVICE – ON K.C. WHEAT:

 

JANUARY 15, 2004: Move cash sales to at least 80% on OC 2003 wheat crop at $4.00 MAR K.C. futures. Move to 100% price protected or cash sales with $4.30 MAR K.C. futures. NC wheat pricing should start at $4.00 on SEP 04 futures for NC hedging or make cash sales at $3.50 a bushel on 10% to 20% of the bushels you feel you will harvest - or on the non CCP covered bushels up to 30% of your expected production. The lower planted acres and dry weather could cause the futures to move back over the $4.20 level on SEP futures. IF SEP futures move above $4.20, look to move to at least 50% price protected with the use of PUT options and/or cash sales.

 

The above advice was further supported on the following dates:

 

March 18, 2004 GOSSIP: NC wheat pricing should start at $3.95 on SEP 04 futures for NC hedging or make cash sales at $3.50 a bushel on 20% of the bushels you feel you will harvest. Use the $4.20 level on SEP futures to be at least 50% price protected with the use of PUT options and/or cash sales. Look to buy $4.00 to $4.20 K.C. SEP or JUL puts for a cost of $.18 or less to move to at least 50% price protected on your expected 2004 NC production.

 

March 25, 2004 GOSSIP: NC wheat pricing should move to 40% with $4.15 SEP 04 futures for NC hedging or make cash sales at $3.70 a bushel on 40% of the bushels you feel you will harvest. Use the $4.30 level on SEP futures to be at least 60% price protected with the use of PUT options and/or cash sales and/or the MIN/MAX plan mentioned under the Futures and Options section of this letter. Look to buy $4.00 to $4.20 K.C. SEP or JUL puts for a cost of $.18 or less to move to at least 60% price protected on your expected 2004 NC production if you do not want to do the MIN/MAX plan.  OR do the MIN/MAX plan where you "BUY a $4.30 SEP K.C. PUT and SELL a $4.80 SEP K.C. CALL for a net cost of $.10 to the buy side". Be sure to have 60% price protection in place with SEP 04 K.C. futures at $4.30. SEP futures traded above $4.72 just 1% of the time in our similar years.

 

RESULTS:  K.C. SEP futures had a high closing price on April 2, 2004 of $4.315 a bushel, which hit our target where producers should have been at least 50% price protected.  This compares to a July 1, futures price of around $3.60.  This means that those that sold 50% of their crop pricing under our plan should have been at least $.50 higher (10% priced at $3.90, 20% at $4.10 and 20% at $4.20 = $4.10 avg.) than the July 1 price or $10.00 per acre better assuming a 40 bushel per acre wheat yield.

 

If a producer followed our advice on 50% of their crop, they should have netted a $10.00 per acre higher return than the price available July 1, 2004 (or any date since).  Assuming their cost for our service is $.50 an acre ($400 base cost for one commodity divided by 800 acres planted to this commodity) then they had a 20 to 1 overall return on the cost of their service.  Added return of $10.00 per acre, divided by a $.50 cost = a 20 to 1 return.

 

For more information look us up at www.marketdatainc.com or call 1-800-867-8289.