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

 

FROM GREG’S GOSSIP – WEEKLY ADVICE – ON CORN and MILO:

 

JANUARY 15, 2004:  We are beginning to look at 2004 and want to start pricing 10% to 15% of your 2004 crop with DEC 04 futures in the $2.65 area and move to 30% (to 40%) price protected at $2.80 on DEC 04. The USDA crop report was BULLISH to corn.

 

MARCH 18, 2004:  We are starting 2004 NC pricing on 30% of your 2004 crop with DEC 04 futures in the $3.00 area and move to 50% price protected at $3.20 on DEC 04. Look to use options or a MIN/MAX strategy as outlined above to move to 50% price protected when futures are at the $3.20 level on DEC 04 and MAR 05.

 

MARCH 25, 2004 HEADLINE: PROFIT ALERT ON CORN AND SOYBEANS - GET 50% TO 70% PRICE PROTECTED NOW!

 

OUR CORN MARKETING ADVICE FOR ADDING PRICE PROTECTION TO REACH THE 60% TO 70% LEVEL ON IRRIGATED PRODUCTION AND 40% TO 60% ON DRYLAND IS: We are recommending the use of a MIN/MAX options trade to price protect up to these levels. This INCLUDES any dryland producer who has CRC or RA+ crop insurance - even IF - you do not feel that you will produce a crop. There is an opportunity to lock in a higher level of insurance coverage with a minimal cost. Place orders to bring the combination of cash sales, short hedges or put option protection up to these levels with a MIN/MAX plan as follows: Place an order to "BUY a DEC Corn $3.00 PUT option AND SELL a DEC Corn $3.50 CALL option for a net cost of $.07 to the BUY side" or do this same strategy with a $3.10 corn PUT and a $3.60 corn CALL for a cost of $.09 to the BUY side should the market rally to where DEC 04 futures are in the $3.20 area. This added price protection leaves the top open to the price level where the CALL was sold while moving your insurance floor up to around the $2.90 area on corn which is an added value of $10 to $15 per acre on irrigated corn CRC or RA+. Dryland producers see a $4 to $5 increase per acre in coverage on the MINIMUM side of the equation to as much as five times this amount on the MAXIMUM side of this marketing strategy. Be sure to NOT use this strategy on anything OVER 90% of your CRC or RA+ projected bushels on irrigated and on no more than 75% of your dryland insurance bushels. Figure your insurance bushels by taking the level of coverage times your APH times your share of the crop times the number of acres to be planted. For example a producer with 200 acres of irrigated corn times an APH of 180 bushel times a 75% coverage level times a 100% share of the production from these acres has 27,000 bushel of insurance coverage bushels but most likely is looking at a harvest yield of 180 bushel or total harvested bushels of 36,000. This producer could move to 25,000 bushel of price protection using this (and any earlier price protection already in place). This would make them 70% price protected on their expected 36,000 bushel of production. WHY ARE WE promoting this strategy? The DEC corn futures trade above the $3.55 level just 2.4% of the time in our similar years AND the $3.50 futures price level MAXIMUM is very profitable to ALL producers we have run reviews on. Remember "IT NEVER HURTS TO SELL AT A PROFIT".

 

APRIL 8, 2004 – GOSSIP HEADLINE:  PROFIT ALERT on CORN and SOYBEANS - Get 50% to 70% PRICE PROTECTED NOW!

 

Funds are holding a dangerously high level of net long positions and with the 30 day RSI right at the 70 level we look for a quick ($.15) to ($.25) price correction even with a slightly friendly April USDA crop report that was released today.

 

There is an opportunity to lock in a higher level of insurance coverage with a minimal cost. Place orders to bring the combination of cash sales, short hedges or put option protection up to these levels with a MIN/MAX plan as follows: Place an order to "BUY a DEC Corn $3.20 or $3.30 PUT option AND SELL a DEC Corn $3.70 or $3.80 CALL option for a net cost of ($.10) or so to the BUY side". This added price protection leaves the top open to the price level where the CALL was sold while moving your insurance floor up to around the $3.10 to $3.20 area on corn. The DEC corn futures trade above the $3.55 level just 2.4% of the time in our similar years AND a $3.70 futures price level MAXIMUM is very profitable to ALL producers we have run reviews on. Remember "IT NEVER HURTS TO SELL AT A PROFIT". To run a MIN/MAX review go to the website, select Special Reviews and enter your figures into this worksheet.

 

DEC 04 futures closed at $3.36 on 4-7-04 - up $.10 on the week. We then want to use options strategies on anything over 40% of your expected production. Our similar years show that DEC 04 corn futures are above the $3.52 price level just 3.2% of the time. Be sure to move to 60% price protected on NC production with $3.20 DEC 04 or MAR 05 corn puts costing around $.20 or less.

 

We are moving 2004 NC pricing on 40% of your 2004 crop with DEC 04 futures in the $3.20 area and move to 60% (dryland) to 70% price protected at $3.30 on DEC 04. Look to use options or a MIN/MAX strategy as outlined above to move to 70% price protected on irrigated corn or milo. OC futures are over priced at these levels and once the market feels certain that it has bought acres away from spring wheat and/or beans prices may fall ($.25) or more.

 

APRIL 15, 2004:  CORN prices dropped ($.30) from their recent highs on fund selling but have rebounded back $.09 of this on buying related mostly to the soybean price improvement. Funds have decreased their net long positions but still may hold a significant level of long positions. Weather will be the key to the NC corn price as two weeks of open weather could allow for added acres of corn to be planted in the eastern corn belt due to their good moisture conditions.

 

CORN or MILO MARKETING ADVICE: IRRIGATED production should have 30% to 50% cash sold or short futures hedged then add 20% to 40% of coverage using the MIN/MAX options trade as follows: Place an order to "BUY a DEC Corn $3.10, $3.20 or $3.30 PUT option AND SELL a DEC Corn $3.70 or $3.80 CALL option for a net cost of ($.10) or so to the BUY side". This added price protection leaves the top open to the price level where the CALL was sold while moving your insurance floor up to around the $3.00 to $3.20 area on corn. The DEC corn futures traded above the $3.54 level just 2.7% of the time in our similar years AND a $3.70 or $3.80 futures price level MAXIMUM is very profitable to ALL producers we have run reviews on. Remember "IT NEVER HURTS TO SELL AT A PROFIT".

 

The DEC corn futures price on October 1, 2004 was around $2.05 a bushel.  Potential returns to our clients from our advice would have been:

 

Pricing 10% of your crop with DEC corn futures in the $2.70 level, 10% at $2.90 and 10% at the $3.00 level and 10% more at the $3.20 level equates to an average on 40% of the crop priced at $2.95 a bushel or $.90 a bushel higher than the October 1 price.

 

If a producer followed our advice on this 40% of their crop, they should have netted at least a $20.00 per acre higher return on dryland corn than the price available October 1, 2004 (60 bushel times 40% times $.90 a bushel) and would have had around a $60.00 per acre better return on irrigated corn (180 bushel times 40% times $.90).  Assuming the cost for our service is $ .50 per acre ($400 base cost for one commodity divided by 800 acres planted to this commodity) then they had a 40 to 1 overall return on the cost of their service on dryland production. This is figured as a return of $20.00 per acre divided by $.50 an acre MDI service cost equals a 40 to 1 dryland return and a 120 to 1 return on irrigated corn with this same level of pricing done.

 

We did allow the USDA - CCP program - to take over price protection on those bushels covered by a CCP payment, which started at $2.60 on DEC corn and some clients took profits on bushels covered by the CCP or CRC or RA+ crop insurance with DEC futures in the $2.70 to $2.80 area.  This is why this review only looks at the 40% level as a return vs. the 50% to 70% coverage level desired in the profit alerts.  Most producers had crop insurance coverage bushels equal to around 60% of their expected production.  Those that did take profit on the price protection initially put in place above the 40% level netted an added $.25 to $.35 a bushel return on these bushels as well as the 40% coverage returns.

 

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

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.

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

 

FROM GREG’S GOSSIP – WEEKLY ADVICE – ON SOYBEANS:

 

JANUARY 15, 2004: We are looking to begin making sizable sales or taking profit on call or futures positions with MAR soybeans in the $8.30 area. Move to at least 85% of your 2003 OC price protected or sold. Remember that IT NEVER HURTS TO SELL AT A PROFIT so check your target prices carefully and enter orders accordingly. If you had replaced any OC cash sales with futures or options positions, it may be a good time to finish taking profits on these positions. Begin NC pricing with NOV 04 futures in the $6.70 area on 10% and move to 30% priced with $7.00 NOV futures. NOV futures traded around the $7.00 level 42.3% of the time in our similar years.

 

March 25, 2004 GOSSIP HEADLINE: PROFIT ALERT ON CORN AND SOYBEANS - GET 50% TO 70% PRICE PROTECTED NOW!

 

Our similar years show that NOV soybeans traded above $8.18 just 3.5% of the time and are currently at $7.84 after hitting $7.99 this past week. Look to get 40% cash sold when NOV 04 futures are in the $7.80 area and 50% priced with $8.00 NOV 04 futures.

 

April 8, 2004 GOSSIP: PROFIT ALERT on CORN and SOYBEANS - Get 50% to 70% PRICE PROTECTED NOW!

 

Move NC pricing to 40% with NOV 04 futures in the $7.60 area and add 10% more with $7.80 and 10% more at $8.00 NOV futures. Our review shows that NOV futures trade above $8.39 just 3% of the time in our similar years by the end of October. You could look to at a MIN/MAX plan of "BUYing a $7.60 NOV bean put and SELLing a $8.80 NOV bean call for a net cost of $.30 to the BUY side" on up to 60% to 80% of your irrigated production or crop insurance bushels and 40% to 70% of your dryland insurance bushels.

 

RESULTS:  NOV futures had a high price in early April, 2004 of over $7.95 a bushel, which hit our target where producers should have been at least 40% price protected.  This compares to an October 1, futures price of around $5.37.  This means that those that did 40% of their crop pricing under our plan should have been at least $1.75 higher (10% priced at $6.70, 20% at $7.00 and 10% at $7.80 = $7.12 avg.) than the October 1 price or $21.00 per acre better assuming a 30 bushel per acre soybean yield.

 

If a producer followed our advice on 40% of their crop, they should have netted a $20.00 per acre higher return than the price available October 1, 2004.  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 40 to 1 overall return on the cost of their service.  Added return of $20.00 per acre, divided by a $.50 cost = a 40 to 1 return. This does not include any profits they may have had on the MIN/MAX program or from buying put options on any part of the crop over 40% as we encouraged them to do.

 

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