Duane Disque or Brian Peiler                             Jon Sperl or Bryce Olson

             1-800-452-7396 or 541-989-8221                           1-800-422-7611 or 541-276-7611

              or Dan Steiner 481-6614 (office), 571-3798 (cell)  graingrowers@centurytel.net

                                                            GOOD MORNING!!!                        

            Below are the best indicated market bids as of:   9:00  on      7/ 16 / 10

***NOTE:  Corn values vary depending on delivery location PLEASE call for updates.

               After some strong rally, futures were due for a ‘breather’. This will specs/ funds a chance to take profits/ and consolidate. We talk about perspective a little later. Talk about specs having control of this market, yesterday they bought 17-20m caks in Chicago alone! OI in corn jumped 35m caks. But there are some other things to also take note of in the structure of the market. As we entered July del’y, we did the math explaining how a long could take delivery of the wheat, turn around and sell a futures position against it 12 months later and ensure a tidy 8-9% ROI (total carry was well over $1.10). Today the Sept to Sept spread is down to .77. NO WAY that dog hunts today! Reduced carry will drastically alter the specs/ funds approach to this market. Carries in the market have been a very useful tool to measure the strength of bull/ bear market, but other factors (like the VSR) are dulling those type of tools. Also there is word from DC that there is movement afoot to reduce ethanol tax credits 20% to .36/ gallon.

               We have known all along that you can’t realistically maintain the high crop scores all over the world forever, so now when the story breaks that there will be production cuts, we need a way to estimate the impact. World stocks have grown over the last 3 years to around 190 to 193 MMT up from 125 to 130. Considering a stable domestic use of around 650 MMT (as last year), it would take a production loss of more than 30 MMT to start eating into stocks---a total loss in production of over 50 MMT would lead to a 20 MMT drop in ending stocks to around 160 to 170 MMT. To put this in perspective---largest world ending stocks since 2003. Another way to view this, the large carryout stocks of US wheat alone could EASILY absorb the first 16 myn mt (587 myn bu) of crop losses. It would merely reduce our carryouts from over 1 byn bu to more normal 505 myn bu or stox to use of about 25%. The cash bids realize this, and that is one of the reasons we are seeing basis numbers getting hacked. A demand driven market (with strong basis) is much more fun. Remember the 50myn mt number. Remember that on 7/9 USDA already took world stocks down 6 myn mt, and best guess today is that we could end up with world stocks down 20 myn mt.

               Overnight SK passed on corn (account of px). They do this occasionally, but always return. When they come back they don’t generally book MORE corn to make up for this passed tender. India’s monsoon has stalled and there is talk that it might not recover to full strength. The key is did it rain in the Ag important regions, or did they get missed?

HAVE A GREAT WEEKEND and SAFE HARVEST!!!

***All bids are subject to change, please call for CONFIRMATION of prices. All information in this letter is from sources deemed reliable, and is for informational purposes only***