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What's Happening In MarketMaxx?
Feb. 19, 2008
A new combine or a new tractor. Those are the rewards for being the best corn or soybean marketer in MarketMaxx, the marketing game from Corn & Soybean Digest. More than 7,800 players have signed up for MarketMaxx at www.MarketMaxx.net. If you're not yet in the game, go to the site today and test your marketing skills.

As a MarketMaxx player, you will have a simulated 100,000 bu. of corn and 50,000 bu. of soybeans to trade using Chicago Board of Trade (CBOT) futures, options or cash-forward contracts. The player with the highest average selling price of his or her corn and soybeans when the contest ends will take home a grand prize.

Be A Grand Prize Winner
MarketMaxx continues through Oct. 31, 2008. If you're a farmer at least 18 years of age, actively farming and have not served as a licensed commodity broker the past five years, you are eligible to win one of several great prizes provided by our sponsors. Grand prize for the corn contest is a Gleaner R5 or A5 series combine (up to 100 combine separator hours). The soybean winner will receive a year's use (not to exceed 250 hours) of the choice of any PowerMaxx CVT-equipped AGCO RT or DT series tractor.

Second prize for each contest is a complete computer system plus software from Syngenta Crop Protection. Third prize in the corn contest is a complete Leica mojoRTK auto-steer system from Leica Geosystems. Third prize in the soybean contest and fourth prize in the corn contest is a DICKEY-john mini GAC Plus handheld moisture tester.

The www.MarketMaxx.net site can be your main source of corn and soybean market data. There are direct links to the CBOT, Chicago Mercantile Exchange, Kansas City Board of Trade, Minneapolis Grain Exchange, New York Board of Trade, The Brock Report and Cash Grain Bids. There is market commentary on the latest basis movements in your region and others. You can access up-to-the-minute data on corn and soybean futures prices accompanied by price charts and access to major commodity markets online.

This MarketMaxx e-newsletter -- which keeps players updated on the game through a complete top-10 leaderboard in the corn and soybean contests -- will arrive every other week throughout the year to MarketMaxx players. Regular market commentary from leading university and private-sector grain marketing economists and analysts makes this e-newsletter something you will want to review every time it arrives.

Use the MarketMaxx Forum
This player-networking feature helps answer questions you have on your marketing orders and other information from the MarketMaxx Web site managers. You can also get feedback from other players on why trades were made. The site is a great tool for regional marketing clubs to expand their knowledge of how futures and options work and react to state, national and world grain production and usage trends. It also offers a great learning experience for agricultural economics and marketing students.

Go to www.MarketMaxx.net today and start playing the game that can make you a winner in more ways than one. (A complete list of MarketMaxx rules and regulations can be viewed at www.MarketMaxx.net.)

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MarketMaxx Leaderboards
Top 10 Leaders -- Corn Contest (Feb. 15, 2008)
Brandon Thompson, Hutchinson, KS, $5.36.11
Dustin Kempker, Ft. Madison, IA, $5.35.31
Roy Sangmeister, Manhattan, IL, $5.19.11
Christopher Waymire, Yellow, OH, $5.17.97
Ralph Sangmeister, Peotone, IL, $5.09.95
Corey Brandau, Peotone, IL, $5.09.66
Tony Peeble, Lilian, AL, $5.09.48
Roger Brown, Wynne, AR, $5.02.55
Joel Griffin, Hartley, IA, $5.00.2
Seth Taylor, Owensville, IN, $4.99.6

Top 10 Leaders -- Soybean Contest (Feb. 15, 2008)
Corey Brandau, Peotone, IL, $13.50.83
Tony Peeble, Lilian, AL, $13.47.25
Brandon Thompson, Hutchinson, KS, $13.40.15
Mark Kaiser, Seminole, AL, $13.23.75
Roy Sangmeister, Manhattan, IL, $13.15.27
Steve Mercer, Kearney, NE, $12.83.3
Ralph Sangmeister, Peotone, IL, $12.82.65
David Bitto, Elberta, AL, $12.77.95
Charles Bonner, Summerdale, AL, $12.77.95
Arlyn Elsbernd, Calmar, IA, $12.74.6

Market Commentary
The Acreage Question
By Melvin Brees, University of Missouri agricultural economist
Tight old-crop (2007-2008) supplies and strong demand have contributed to record-high wheat and soybean prices, along with near-record-high corn prices. This leads to concerns for the coming year about whether 2008 production will be adequate for meeting growing demand needs. These production concerns will be a factor in the markets for several months because it takes time for production to be determined. USDA's final production estimate won't be released until next January. Until then, production depends upon planted acreage, timeliness of planting, growing-season weather and possibly even harvest conditions before the upcoming year's production is known.

In spite of all of the unknown production factors, market participants continually seek to anticipate production in order to estimate supply/demand balances for the upcoming 2008-2009 marketing year. At this point, production estimates focus on using trend yields and trying to make estimates of planted acreage. This is not much to go on, but it is all that is available at this time. However, everyone recognizes that actual yields and acreage may vary considerably from these early estimates. So, market participants continuously seek better information to base decisions on.

First clues on 2008 production prospects will be from USDA's March 31 Prospective Plantings report. The acreage question is especially important this year due to tight supply/demand balances for all crops. While many of the production questions will still be unanswered, at least everyone will have a better estimate of the acreage side of the production equation. This will let everyone know whether the markets were successful in bidding for acres of crops to be planted in 2008.

A year ago, high corn prices were encouraging increased corn production. Producers responded to the market signals by increasing corn acreage by more than 15 million acres, resulting in total planted acreage of 93.6 million acres. This huge acreage increase along with the second-highest yields ever (151.1 bu./acre), resulted in record corn production of more than 13 billion bushels. Following harvest, this seemed like a comfortable level of production that would lead to a more-than-adequate corn carryover of nearly 2 billion bushels. However, surprisingly strong feed use in spite of high prices, along with continued growth in ethanol production and strong export demand, is now expected to result in total use of just under 13 billion bushels. Corn use will almost be equal to the record production.

In spite of a huge acreage increase last year, USDA's corn ending stocks projections will increase only slightly from 1.3 billion bushels (2006-2007) to just over 1.4 billion bushels for 2007-2008. Ethanol use is expected to grow in the coming year and other corn uses are expected to remain strong. The bottom line for corn acreage is that even after a huge increase last year, corn cannot give up many acres in order to maintain adequate supplies in the coming year.

Much of last year's increased corn acreage came out of soybean production. A reduction of nearly 12 million acres from the previous year resulted in soybean plantings of only 63.7 million acres and production of just under 2.6 billion bushels. However, soybean use is expected to exceed production, totaling more than 3 billion bushels. Soybean carryover is expected to drop from record highs to the very tight recent USDA estimate of only 160 million bushels. To maintain current levels of soybean use, more soybeans must be produced in 2008 and more acres are needed to accomplish this.

Strong wheat demand has depleted U.S. wheat carryover to 60-year lows. Declining wheat acreage in favor of other crops in recent years, along with disappointing production in many areas throughout the world, has tightened wheat supplies and led to record-high wheat prices. This appeared to be sending a market signal for more wheat acres to be planted in 2008. Although winter wheat seedings were up in the January report, the increase in acreage was less than the markets expected. This suggests that wheat supplies will continue to be very tight and signaled that an increase in spring wheat planting is needed. The problem is that spring wheat production areas are some of the some regions that compete for increased corn or soybean production. This adds to the battle for acres among all crops.

Tight world supplies of all crops are adding to the supply concerns. World ending stocks of all grains are declining as strengthening economies in many countries leads to demand for improved diet in those countries. This stronger world grain demand and a weaker U.S. dollar suggest that exports will remain strong. Large crops are needed worldwide and this is why the markets continue to focus on bidding for acres planted to each crop.

It appears that the tight supply situation for grain won't be cured in the coming year and the outlook for favorable prices may continue. However, the balance between crops is critical to meeting demand needs and what happens to prices. Corn acreage cannot slip much from last year's 93.6 million acres. Most early estimates for 2008 corn acreage are in the 90-92 million acres range. With the current expected carryover of 1.4 billion bushels and trend-line yields, this acreage would lead to supplies tightening somewhat and continue to support prices at historically high levels.

It is important that soybean acreage be increased from last year's 63.7 million acres. Most analysts expect something in the range of 69 to 70 million acres. This would barely be enough with trend-line yields to meet demand needs and ending stocks would remain tight. Soybean prices will likely remain at historically high levels.

While U.S. wheat producers may not plant a large increase in acreage, producers in other countries are expected to respond to record-high wheat prices. Most estimates are that U.S. acreage will increase to 61 or 62 million acres, which is up somewhat from last year's 60.4 million acres. This increase, along with slower wheat exports, would allow wheat carryover to increase somewhat from current very tight levels. Wheat prices may decline from record highs, but are likely to remain at historically good price levels.

Although many factors are impacting grain markets, with the tight supply situation the markets will continue to follow new-crop production prospects closely. While weather remains an unknown, the first piece of the production puzzle will fall into place with the upcoming March prospective plantings report. As the coming weeks unfold, watch closely to see if planting intentions fall within the ranges that market analysts are expecting. Any deviation outside of these ranges, higher or lower, could have significant price impact.

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Additional Commentary
Revenue Crop Insurance Extremely Important
Michael Swanson, economist for Wells Fargo & Co., says that with the expected continuation of high volatility in grain prices, producers should look hard at using revenue crop insurance to secure price protection.

"All row crops find their markets linked through the battle for acreage," says Swanson. "Planted soybean acres dropped 11.9 million acres from 2006 to 2007 and yield was a mediocre 41.2 bu./acre. The result was a light production year with 2.6 billion bushels.

At the same time, Brazil only expanded its production by 2 million metric tons (mmt) between 2006 and 2007 -- a relatively slow growth for the agricultural superpower. Clearly, the U.S. needs to plant more acres in a significant manner and Brazil will probably put the pedal to the metal for expansions."

In the meantime, the market continues to test which prices will be needed to ration demand until the new supplies become available, says Swanson. "Clearly, the futures market moves at warp speed compared to the cash markets," he says. "Demand will be affected as the final consumers make their choices at the supermarket checkout, which can take months for price changes to show up in their entirety.

"Producers should be taking advantage of their revenue crop insurance to make some strong sales against this year's expected production. There will be no joy in making those sales initially. It's very unlikely that producers will hit the high of the market for the bulk of their forward sales. This means that they should be prepared to endure some margin calls or psychological stress."

Swanson projects soybean futures prices to be in a range of $8.67-14.25 the next 12 months. He looks for a cash price in the $8.45-13.57 range. For corn, he sees futures prices in the $3.37-5.45 range, with cash at $3.14-5.22.

"I believe that the current USDA estimates for both feed and ethanol usage are too high," notes Swanson. "The lack of profitability will hurt their ability to buy corn. Likewise, ethanol byproducts have been underestimated in terms of their ability to displace corn usage and compensate for corn acres. This represents additional supply that has not been fully factored into the feed sector. Tracking the Minneapolis market's DDGs to cash-corn relationship shows that feeders have become increasingly adapted at using corn byproducts in all animal feed rations.

"The most bullish factor for corn remains the competition for acres. With the historical increases in wheat and soybean prices, corn will find it next to impossible to get the acres that it found in 2007. Add in the punishing increase in fertilizer prices, and soybean and wheat profitability will look even more attractive.

"This acreage uncertainty will keep corn prices high until acreage intentions become more certain. That certainty will be short-lived as weather volatility replaces it both in the planting stage and the almost-certain summer drought risk."

Swanson says the price volatility will be punishing for both sellers and buyers. "Even so, producers need to once again use revenue crop insurance and make some level of sales," he says. "Buyers should buy on a hand-to-mouth basis. Making long-term bets in this environment could inflict serious financial harm on processors and feeders. It would be great to win a big bet, but the consequences of a miss could be catastrophic."

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Other News That Can Impact Corn And Soybean Prices
Farm Bill Update -- NCGA Wants Improvements To House Farm Bill Revenue Proposal
The National Corn Growers Association (NCGA) has called on the U.S. House of Representatives and Senate to make the necessary improvements to the revenue program outlined in the House conference proposal. "We are disappointed that the House farm bill proposal does not include a viable revenue counter-cyclical program for corn growers," says NCGA President Ron Litterer. "This framework does not contain a revenue program growers will view as an option. It simply fails to address the changes in our industry, the realities of today's marketplace and the increasing levels of risk farmers are facing well into the future."

NCGA First Vice President Bob Dickey says the association understands the fiscal realities that House Agriculture Committee Chairman Collin Peterson (D-MN) and ranking member Bob Goodlatte (R-VA) must address. "We applaud them for their initiative and pledge our support to help them arrive at a bill that fits within the proposed increase in baseline spending," he says.

Meanwhile, Farm Press reports that Peterson says he and Goodlatte have developed a farm bill with only $6 billion in new spending that President Bush will sign. He says the new approach is needed so a House-Senate committee can complete a farm bill conference report, have it pass both houses of Congress and be signed by the president before an extension of the current farm law expires March 15.

But major farm organizations say the Peterson-Goodlatte proposal is "seriously under-funded," and contains provisions supported by the administration that were previously rejected by the House and Senate Agriculture committees.

"The Commodity Title has already experienced a 60% decrease in baseline spending," a coalition of the nation's farm groups said in a Feb. 14 letter to Peterson, Goodlatte and Sens. Tom Harkin (D-IA) and Saxby Chambliss (R-GA), chairman and ranking member of the Senate Ag Committee. The letter adds that while the administration is demanding that a bill be written with only $6 billion in offsets, "we believe that providing less than $12.5 billion in additional funding will require the farmer safety net to bear the unfair burden of paying for increases in spending in other areas of the bill."

Agriculture Secretary Ed Schafer told a House Agriculture Appropriations Subcommittee hearing the Peterson proposal's funding limits that they "represent the real reform sought by the administration. They rightfully took the president's concern seriously and the outline was developed in an effort to reach fiscal responsibility."

France Suspends Use Of Biotech Corn Crops
The Associated Press reports that the French government has suspended any use of biotech corn crops in France, pending its request for the European Union to approve a full ban. The order formalized France's announcement Jan. 11 that it would suspend cultivation of Monsanto's MON810, the seed for the only type of biotech corn now allowed in the country.

The suspension order has long been sought by environmental groups and anti-globalization militants, but was opposed by a large farmers group and agricultural companies. Environmental groups were dealt a blow, however, when the French Senate approved a law to curb the involvement of non-governmental organizations in a state agency charged with managing the biotech crop issue.

The European Food Safety Authority says biotech products do not constitute a risk to human health or the environment. But some EU governments -- including Austria, France, Greece and Hungary -- are wary of biotechnology. Under EU rules, the EU's Brussels-based executive commission has final say on whether member states can ban biotech products that the bloc has authorized.

Minnesota Ethanol Plants May Get Tougher Rules
The Rochester, MN, Post-Bulletin reports that new ethanol plants in Minnesota would be required to undergo a more rigorous environmental review, under a bill sponsored by state Rep. Ken Tschumper.

Rep. Tschumper announced the measure at a news conference in Rochester. The Democratic lawmaker says that in recent years, the number and size of ethanol plants in Minnesota has grown significantly while little scientific research has been done as to the plants' potential environmental impact -- especially when it comes to groundwater, air pollution and soil erosion. "There are so many unanswered questions that we need a lot more scientific information about before we allow these ethanol plants to continue," he says.

Tschumper's proposal comes as the Minnesota Environmental Quality Board recently convened an interagency group to examine the impact that ethanol plants have on the state's groundwater supply. Critics of Tschumper's proposal argue that it would hurt the state's biofuel industry and harm efforts to develop the next generation of biofuels, such as cellulosic ethanol.

"This just adds thousands, if not millions, of dollars of cost into the development of that next generation of fuels and I just don't think it's necessary at all," says Rep. Al Juhnke, a Democrat from Willmar who chairs the House Agriculture, Rural Economies and Veterans Affairs Finance Committee.

But Tschumper argues that additional research is needed when it comes to ethanol plants, saying he is concerned about the amount of groundwater used by the plants -- currently 2 billion gallons a year by the 17 ethanol plants in Minnesota. "Our most important natural resource in southern Minnesota is groundwater, and we need to do everything we can to protect that resource," he says.

A dairy farmer, Tschumper says he is also worried about the impact that high corn prices are having on livestock producers. His other concerns include potential for air pollution, increased railroad traffic, soil erosion and fertilizer runoff.

Get Updated Marketing, Farm Bill, Biofuels And Other News At The Corn & Soybean Digest Web Site
Go to our flagship Web site -- www.cornandsoybeandigest.com -- to access up-to-the-minute corn and soybean futures prices, farm bill conference committee updates, daily market commentary and lots of other news you can use in your farm operation.


You can access the current issue of Corn & Soybean Digest, as well as past issues to revisit subjects that can impact your corn and soybean production and marketing. The site's news from across the Corn Belt, other corn- and soybean-production areas and the worldwide markets for corn and beans can help you stay on top of events that can help or hurt prices. Go to www.cornandsoybeandigest.com now and stay up-to-the-minute on the timeliest analysis and other information on corn and soybean production and prices.



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Subscribe To Other E-Newsletters From Corn & Soybean Digest
There are several other e-newsletters from Corn & Soybean Digest.<.i> They include F.I.R.S.T. Harvest Reports, Corn E-Digest, Soybean E-Digest and Crop News Weekly. Check them out at subscribe.cornandsoybeandigest.com/subscribe.cfm?tc=NLSUB.

Thanks for taking time to review this MarketMaxx newsletter. If you have comments or questions about MarketMaxx, e-mail your editor, Larry Stalcup, at beef2lar@suddenlink.net.



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