The week that was and the week that is

What a confusing week! Too much corn followed by everyone racing to cover shorts on Friday running corn up 26 cents in the process. We have the trade wanting to lean to the short side of the boat, but we all are perfectly aware of the developing weather/ crop story to our south. Being caught short going into a 3 day weekend in a weather charged market was not something most were willing to do. I know that SA is in need of moisture, some areas more than others. Our global supply of beans is not that great as to dampen a full fledged disaster in the souther hemisphere; however, haven't we all seen this movie before? It is my job to never let us forget that weather rallies in the grain markets are not something to waste, but something to take advantage of. Use this ralley led by the bean complex to sell something. Put in orders with you friendly grain broker, namely Jon Hart and Keystone Commodities, but put them in and let the market have your grain. Use wide scales, by that sell a load every 25 or 50 cents up. There is no way of knowing how far we can run this thing, 12:00 beans? not an impossibility. Just don't let yourself get hypnotized into thinking that this shall last! That is the mistake that all of us make and it is usually very costly.

All of the experts continue to make their 2009 forecasts, acreage estimates, etc. This has to be done and allows us to see where we are in comparison to other analog years and gives one the chance to predict price based on models from other years. That is what we do, evaulate, compare, compile, and predict. I urge you to remember that this is not a normal year and these are not normal circumstances. We are under severe financial duress, unpredicted by almost everyone and not well understood. If Mr. Market gives farmers the chance to sell grain at a profit, please take him up on it. None of us know what things will be like in 9 months or a year, maybe much better, maybe a little worse, but this is not the year to go all in on red in my opinion.

Things to keep in mind as we watch the markets this week. If we are really on a tear to the top side, please come back and reread these again.

• 
  Ethanol profitability remains at not much more than break even for the most efficient plants.- Corn going up and oil coming down adds pain, not analgesic!
• 
  The rally late last week has certainly put red ink back in the picture for pork, beef, dairy, and feathers. Cattle have not been able to rally even with the winter storm this past week that would have normally had cattle prices firming as the cold slowed movement as well as weight gains. Poor feeding margins have slowed feeding, the herds/ flocks are shrinking and most if not all durable rallies must be led my demand, not by fear of a shrinking supply. There is a difference here.....
• The economy that is left continues to suffer. Much more pain to come in 2009 for main street america.
• I believe the dollar will continue to strengthen over this year as we confirm the fact that world cannot fight off the weakness in the US. I do not understand who thought that the world would march on w/o the good of US of A, but the world is flat as Tom F says and that means that when we have a cramp, the rest of the world is chewing down immodium. On this point, Prof. Milton Friedman say years ago that the Euro would not survive the first recession. People ask me how is the dollar so strong in this environment, to that I point you to Europe in a very deep recession and other emerging markets that are sought after by investors for growth and newness, not they are being sold for instability and possible insovency! People are flocking back to the dollar, betting on safety and solvency.

Good luck!

JH