Tonight’s Futures Closes:

(Futures contracts highlighted in green were the bull leaders today; futures prices highlighted in red were the bear leaders today.)

Mar 18 Corn $3.7875 +4.25 Mar 18 Soybeans $10.575 +12.5 Mar 18 CH Wheat $5.055 +21.0

May 18 Corn $3.8625 +4.25 May 18 Soybeans $10.68 +12.5 July 18 CH Wheat $5.285 +21.25

July 18 Corn $3.935 +4.0 Jul 18 Soybeans $10.765 +12.25 Mar 18 KC Wheat $5.31 +22.75

Sep 18 Corn $3.9875 +3.75 Aug 18 Soybeans $10.7375 +10.5 July 18 KC Wheat $5.60 +21.0

Dec 18 Corn $4.0475 +3.25 Nov 18 Soybeans $10.38 +5.75 Mar 18 MN Wheat $6.20 +14.0

Mar 18 Oats $2.69 +6.0 Nov 18 Rapeseed $517.0 +1.7 Sep 18 MN Wheat $6.465 +8.75

Dec 18 Meal $370.3 +1.7 Mar 18 Cotton $82.57 +0.92 Mar Dollar Index 90.285 -0.266

Dec 18 SB Oil $33.01 +0.13 May 18 Cotton $81.81 -1.12 Apr Crude Oil $61.19 -0.45

Apr 18 Cattle 123.325 +0.050 Dec 18 Cotton $77.18 +0.07 Apr Gold $1316.9 -1.2

Apr 18 Feeder

146.750 -0.250 Mar 18 Rice $1242.0 +3.0 Mar S&P 2670.00 -44.40

Apr 18 Hogs 66.975 -0.250 Nov 18 Rice $1173.5 +12.5 Mar Dow Jones 24562 -475

Thursday, March 1, 2018

Fresh buying, new highs to start March! The new

drought maps (page 2) triggered more fund “catch

up” buying in wheat, while continued concerns in

Argentina & the strongest US crush margins we’ve

seen in years brought new buyers to soybeans.

Argentina’s Rosario Grain Exchange lowered its

production estimate 3 mt to 44 mt today. USDA will

certainly lower their estimate in the March S&D

Report next Thursday. FC Stone released their

Argentine estimates this AM:

Soybeans 112.9 mt (USDA 112 mt in Feb)

Corn 23.4 mt (1st crop)

62.8 mt (safrinha/2nd crop)

86.2 mt total (USDA 95 mt in Feb)

From Ryan Truchelut w/ WeatherTiger: “Argentina

can expect a modest rain chance to cross the zone on

Monday, but totals will generally be 0.25” or less with

only scattered coverage. The next rain chance is not

expected until the following weekend, but there is a

little more model support for decent totals from this

feature today.”

World Weather Inc suggests that “most of Arg was

dry over the past few days aside from scattered

showers in far northern areas and some isolated

showers in the far south. The two-week outlook says

little rain of significance is expected and yields should

decline steadily in the key 2/3 of the crop areas. rain

is forecast out to March 9-12 but confidence is low

that far out and much of that rain will be light.”

A week from today USDA will release its March S&D

Report. South American production estimates will be

the main focus, as US stocks aren’t expected to move

much.

The big story this afternoon is the US imposing tariffs

on Chinese steel (25%) & aluminum (10%). Investors

are fearful of blowback, as the Dow was off nearly

500 pts as of this writing! This is yet another reason

to use this rally to sell/protect both old & new crop

soybeans.

3/1 – Buy Sept $4.20 calls @ 16 cents

Update on new crop corn strategy: a month and a half ago I outlined a

strategy that I like for this year – buying call options when the market was

“oversold”, making a double-bottom on the December chart, then hedging in

small (10%) increments as the market rose. See the slide above. This was first

laid out in the January ’18 DCIS Revenue Management Update. I suggested

buying September $4.20 calls at 8 cents, since premiums were low due to an

inactive market/low volatility. My first hedging target was $3.95, which was

just below the 200-day moving average (light blue line), and then 10 cent

increments above that. With fewer expected corn acres this spring, coupled

with funds short a near-record amount of corn at that time, I anticipated we’d

get a rally at some point. I didn’t expect it to come this soon! But it’s given us

a great marketing window.

So if I sold as planned, 10% at $3.95 and another 10% today at $4.05, I’d be

20% hedged on December 18 futures. If I bought the calls against those

bushels for 8 cents, I would have profited 8 cents so far, as their value is up to

16 cents tonight. So an average hedge of $4.00 plus 8 cent profit is $4.08. I’ve

suggested that if current carries extend into 2019, & if I have on-farm storage,

we could likely spread December 18 hedges to July 19 and pick up maybe 25

cents, which would then give us a $4.33 July 19 average. This is how I envision

using all the tools available to create a decent price for next year’s crop.

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Diversified Services Marketing Group / Rich Morrison 1610 West Lafayette Ave Jacksonville, Illinois 62650 (217) 479-6012

Drought change

vs last week

miss out. All of these combined have continued to prompt

funds to frantically cover their net short positions in wheat

futures!

Jeff McPike with McDonald Pelz wrote on the wheat market

this AM that, “this appears to be a classic blow-off phase, the

manic response to the past several months of depressive

price action in US wheat futures prices. The US winter wheat

crop is under some pressure, and conditions in the Southern

Plains are not good. Chicago wheat futures have gained over

$36/ton over the past 11 weeks or so, in sharp contrast to the

$15/ton increase in old crop Russian 12.5% protein FOB cash

market values over the same time period. Yes, some

consumers/importers have been caught “short” this market,

while others might now be scrambling to get some forward

coverage…maybe this is just the start of something big,

something major…but we doubt it. Rather, we see signs of a

classic blow-off, end-of-month topping pattern; maybe

futures go higher in the early days of March – the momentum

trades kick in – but barring some major production disasters,

we are not bullish from current future and/or cash values.”

Above are this week’s Drought Monitor, the change vs last week

showing effects of the heavy Mid South rains, the Drought

Monitor laid over concentrated winter wheat acres, the

forecasted change in drought during the month of March, and

the GFS 7-day forecast, calling again for the Southern Plains to