Grain Market Report


Grain Markets 5/16/16 @ 10:39am

July Corn 0’0 @ 3.90’6

July Beans -5’0@10.60’0

 

Corn – Weather uncertainty and temps falling below 30 degrees in North Dakota over the weekend and heavy rains for portions of the Midwest this week is supportive for corn

 

Beans – nearby struggling on the board of trade, while new crop January beans are up.  It seems there is some additional weather premium being added to new crop beans as we see the spreads improve.  (For obvious reasons old crop in the bin is less impacted by weather premiums).  The bean market is currently inverted, however the spread is narrowing.

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Sneak Peak of my Blog to be posted on www.cvacoop.com

The Power of Basis

 

Grain markets have been very exciting since early March.  Well I guess I should say Soybeans have been very exciting.  With July beans seeing $2.295 rally since March 2nd.  That’s easy to get excited about, until you called for a cash bid and found the cash price to be only up slightly from the previous bid.  Why is this?  I want to talk specifically about processors.  Understanding that processors are the final stop for your grain, it stands to reason why they “set the market.”

 

The function of basis is to act as the knob on a faucet.  The market goes up, grain starts to move and the processor needs to slow down the flow.  So what do they do?  Turn down the faucet (IE Basis).  On the contrary, if farmers are not moving enough grain to keep the processor at production levels they are forced to pay more and turn up the faucet.

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Another consideration is a simple function of business.  If the market rallies $1.00, the processor would consider it good business to keep a percentage of the rally as profit.  For example 5/10/16 the USDA report was released and the market rallied.  Cash bean prices shot up and processors quickly adjusted basis downward.  This is a consideration when marketing.  The chart below gives actual basis numbers and how they responded to the futures market.  Look specifically at USDA report day 5/10/16.

 

Sioux City Bean Processor
Date Futures Average May Basis Spot bid
3/1/2016 $8.62 -$0.33 $8.21
4/1/2016 $9.14 -$0.43 $8.67
5/6/2016 $10.15 -$0.73 $9.46
5/9/2016 $10.31 -$0.73 $9.58
5/10/2016 $10.57 -$0.80 $9.77

 

Cash Price = Futures + Basis

 

So there are two risk factors to consider when pricing your grain.  Futures and basis both are factors.  Since they are usually inversely related, basis is often times best locked in when market prices are down and visa versa..

 

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

 

Today’s Market Report


Markets 12/7/15 @ 10:47am

Dow -167.58
S&P -20.92
Nasdaq -42.96

Oil prices dropped to near seven-year lows today as investors continued to digest the decision to continue pumping crude at near-record levels into an already oversupplied market.  OPEC said at a meeting Friday that it will maintain its current production levels, which exceed the group’s output target of 30 million barrels a day.

 

The US Dollar posted its worst day in six years on Thursday last week dropping more than 2%, seems to bring more interest into commodities.

 

Grain Markets 12/7/15 @ 10:46am

Mar Corn -7’0 @ $3.74’4
Jan Beans -10’4 @ $8.95’4

 

Corn gets a bit of a boost last week from the drop in the U.S. Dollar, but still only by a few cents.  Corn continues to chop staying in the 3.50-4.00 range since January with the exception of the short lived bounce resulting from the USDA Report in June.  So it’s not surprising we sit in the $3.75 area for March Corn.  The funds remain short corn just under 150,000 contracts.  That weather headline I continue to hope for may give us an opportunity.  I also want to again bring up the importance of the U.S Dollar and Crude prices.  At their current levels they seem to directly influence commodities.

 

Beans broke through the $9.00 resistance level last week setting the stage for resistance at the $9.15 area possibly up to $9.34.  The bean market has continued to head up for 2 straight weeks after the key reversal on Monday November 23rd.  Though the markets seems to rally for technical reasons, there are other uncertainties that may be a factor.  A newly elected president in Argentina, Brazil looking to impeach the current president, and of course weather.  Over the last two weeks we have added .65 to the price of beans.  It may be time to reward the rally.  Unless we get some additional bullish news, it’s likely we will see the upward momentum will fizzle out.

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

Market Report


Markets 11/16/15 12:02pm

Dow +100.31
S&P +11.42
Nasdaq +10.73

I am sure you heard of the terrible attacks in Paris killing at least 129 people.  After an initial wobble, financial markets mainly shrugged off the effects of Friday’s terrorist attacks in Paris, underscoring how investors increasingly look beyond these type of events, so it seems.

Grain Markets 11/16/15 12:08pm

Dec Corn +0’6 @ $3.59’0
Jan Beans +2’0 @ $8.57’2

 

With harvest pretty much wrapped up we have little news from the U.S. that can change the markets now.  We know what we have, weather is now not much concern.  Oil continues to grind lower and the US dollar keeps creeping up.  The odds keep stacking against grains.

 

Corn lower on the open despite good exports, good news and the markets doesn’t seem to care.  Corn has not given us too much excitement by way of headlines and with little change from the USDA the only thing to look forward to is a weather story out of South America or some sort of geopolitical event.  As I mentioned in a text last week the tight trade range has got me nervous.  I suspect we will continue to grind lower (lower highs/lower lows) until we receive some sort of positive news.  I think $3.50 in the cards, possibly breaking through and heading toward $3.40.  I hope we find some support or a headline before we head lower.  I will add if oil prices continue to stay low, it pressures ethanol demand.

 

Beans the focus is now South American Production and demand from China.  Also hoping for a weather story out of South America to boost our opportunities for a sale.  The strength in the US dollar is going to remain a variable in export sales.

 

Exports

EXPORTERS SELL 952,500 METRIC TONNES OF CORN FOR DELIVERY TO MEXICO DURING THE 2015/2016 MARKETING YEAR- USDA

EXPORTERS SELL 487,680 METRIC TONNES OF CORN FOR DELIVERY TO MEXICO FOR 2016/2017 DELIVERY- USDA

EXPORTERS SELL 180,000 METRIC TONNES OF SOYBEANS FOR DELIVERY TO CHINA FOR 2015/2016 DELIVERY- USDA

 

Strategy:  When you opt to sell cash grain, it is always an option to buy a call to participate in upside potential.  This in effect puts in a floor with upside.

 

For Fun: So you may recall I mentioned previously that Ferrari (Ticker “RACE”) went public.  For the early adopters it hasn’t fared well.  Opening up at $60 a share, now grinding down to a low of $48.83, the luxury car maker has received a $40 price target from Evercore.  None of this means anything to me, and I don’t know any farmers with a Ferrari, but for $40 my two boys might just get a share for Christmas, why?  Well it’s just cool to own Ferrari, that’s why.

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Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

Market Report


Dow -15.87 @ 17,630.83
S&P -3.83 @ 2071.32
NASDAQ -9.19 @ 5042.17

According to the Wall Street Journal Sales of newly built homes fell in September, suggesting a highly volatile segment of the housing market could be cooling.  Purchases of new single-family homes fell to a seasonally adjusted rate of 468,000 in September, the Commerce Department said Monday, down 11.5% from August’s downwardly revised rate of 529,000.

Luxury automaker Ferrari went public Wednesday, offering investors a chance to buy shares in the iconic brand and giving Fiat Chrysler Automobiles NV cash to help finance its ambitious five-year growth plan.  Fiat Chrysler on Tuesday priced the initial public offering for its luxury unit Ferrari at $52 a share, currently $55.35 and raising about $900 million ahead of the start of trading on the New York Stock Exchange.  So if you have always wanted to own a Ferrari, this is the next best thing.

Grain Markets @10:16am

Dec Corn +4’0 @ $3.83’6
Nov Beans-5’4@ $8.90’0

Harvest progress numbers out later today.  Harvest looks to be gaining momentum and could be as much as 25-30% ahead of last year pace on corn, and 10-15% ahead of last year’s pace on beans.

Corn
Corn remains very range bound with little news or headlines to cause a shift in prices.  I also consider that all the news out there is primarily great harvest progress and plenty of corn.  That said, any news to the contrary could provide an opportunity to reduce some additional risk.  I continue to remain patient for an opportunity north of $4.00.  Understanding we have not been above $4.00 since early August, there is support around $3.72 and then $3.60 and resistance at $4.00.

Spreads have narrowed on corn, with Dec to Mar at about 8 cents.  Our best opportunities to roll were in early October reaching 11.5 cents and have since diminished.  It is my position to motivate clients to make moves at the appropriate times.  I often share my thoughts with everyone client or not.

Blurb from 10/6/15

Corn: I remain optimistic on corn, with plenty of time for an opportunity to present itself sometime between now and July, storage may be the best plan for now.  If you are short on storage, we can use a buy back strategy.  If you have presold or hedged you could consider rolling to the March capturing .11 to .12 cents and putting additional money on that sale.

Beans
Beans have also have continued to be range bound $8.55 to $9.15.  I am inclined to make some sales when the market bounces above $9.00.  Despite great exports, the market continues to hold in the range.  Another consideration, look how quickly we have lost carry in the beans market.  A couple of weeks ago there was 4-5 cents from Nov to Jan.  Friday was even, and this morning we have went to a 3 cent inverse.  If you need to roll, you may have to go to the March just to keep even on the spread.  However I anticipate that becoming inverted as well in the near future.

Weather

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For Fun

With Halloween around the corner, it was always one of my favorite holidays.  I used to go all out to make it great for the kids.  There are now college aged kids that tell me I can remember how scary your house was!  Are you ever going to do it again?

 

You see, a couple of friends and myself went all out, from 100 ft of cemetary fence, 6 fog machines, full skeletons from the “anatomical chart company.”  I built a lot of special affects using pneumatics, and even a full scale electric chair.  But one day……we had children, and trick or treating became all about them.  The whole “haunt” ended for 13 years!  But with my boys reaching an age where “trick or treating is for little kids” it time to break it all out again!  So this weekend we will see how much of it we can get set up, but one thing is for sure…… full size candy bars.

 

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Market close

Dec Corn +3’6 @ 3.76’6

Nov Beans +5’0 @ 8.96’0

 

My Blog this week can be found here

http://www.cvacoop.com/blog/its-too-busy-to-market/

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

Market Report


Dow +300.61
S&P +33.30
Nasdaq +91.76

 

The US stock market made an aggressive comeback this morning gaining back Friday’s losses, and the Chinese market also moved higher overnight easing tension in grains, however, strengthening currency has long term implications to exports.  US Dollar losing some traction this am, and oil down but back above $45

 

Grain Markets 12:00pm

Dec Corn +3 @ $3.66
Nov Beans +13 ½ @ $8.80

 

Macro markets mentioned above have somewhat stabilized, gives us some strength on the overnight session as well as this morning.  I think we all know the markets have been less than eventful, and I cannot give you anything too exciting this week.  Glad to see a bounce this morning in the right direction.  Though grain has proven to be range bound in the beans, and slightly negative each day in the corn, we are likely to see some additional volatility with a short week and a report on Friday.

 

USDA supply and demand report later this week on the 11th.  It will be interesting to see if there are any changes to estimates.  It doesn’t seem like the trade is expecting to see much for a change if any.

 

My largest concern right now is basis.  Once we get into harvest and corn is going onto the ground, we are likely to see basis levels drop, so finding tools to limit basis risk for your harvest delivered crop should be at the top of your list for now.

 

Weather

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Fuel – AAA’s National Average for gasoline is $2.391, compared to $3.438 just a year ago.  Diesel $2.553 compared to last year at $3.796.

 

Nebraska current average for gasoline is $2.528 which is above the national average.  Take a look at the chart below, you can see Nebraska has been at orbelow the national average all year, until mid-July where Nebraska made its way to .137 over the national average.  It would be nice to see Nebraska get back down to average or below.

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The good news is diesel at $2.481 is below the average, and with the downtrend in oil likely to give us another break at the pumps, at some point it may be worth looking at filling on farm fuel storage for harvest.

http://www.fuelgaugereport.com/

 

Strategy:  If the board gives us a rally, a March Corn $4.00 call might yield a 20-25 cent premium which you can add to your bottom line.  Worst case scenario, you have a $4.00 corn sale in February.  Then again, $4.00 sounds nice.

 

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

Market Report


Markets 10:30am
Dow -89.70
S&P -10.30
Nasdaq -20.87
Global stock markets headed lower at the end of a turbulent month that was dominated by concerns over Chinas and the timing of a U.S Interest rate rise. After last week’s big swings across global markets, the Dow finished up 1.1% for the week but was on track for its worst monthly fall since May 2012 on a percentage basis.

Grain Markets 10:31am
Sept Corn -1/4 @ 3.63
Dec Corn-3/4 @ 3.74 ¼
Sept Beans – ¼ @ $8.93
Nov Beans-3 @ $8.82 ½

Month end is upon us, certainly some profit taking to be seen in the markets as funds look to recognize profits for the month.
It’s time to consider your harvest logistics, I am happy to walk through these with you if you have any current sales on. HTA’s we should be looking at setting basis pre-harvest. If elevators begin piling corn on the ground we may see basis slip. If you have storage you might consider rolling your Corn HTA to capitalize on market carry. Corn currently giving 11 cents to roll to the March. Beans are only giving a nickel to January which probably doesn’t justify carrying it. Keep in mind, I am referring to grain sold ahead, not unsold grain.

Weather
We have been experiencing cool temps throughout the Midwest, but that ends today as we move into the upper 80’s and 90’s with chances of Thunderstorms Tuesday and Weds night.

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Corn: Corn continues to be range bound and likely to continue this at least until we receive news different from the norm. Looking to see INFORMA later this week, and if USDA finally lowers their yield estimates we could see a bit of a boost. The next major USDA report is September 11th.

Beans: Last week was really important to the future of bean prices. I mentioned to several folks after coming in Monday morning to see beans down .32 we need to see beans get back above $9 and stay there. Unfortunately that did not happen, and it looks as if we have found the new range for beans. I think it’s going to take a good weather (Freeze), or political story to get beans back above $9 for any period of time. Just be ready to capitalize when the opportunity presents itself.

Strategy: At this point my strategy is to focus on harvest logistics. Basis is likely your largest risk moving forward from now into harvest.

For Fun:
Labor Day weekend is approaching, and we will all be likely be taking a short trip, camping, barbequing, and getting caught up on home projects as we enjoy a long weekend. Some interesting facts from the Dept of Labor:

LABOR DAY: WHAT IT MEANS
Labor Day, the first Monday in September, is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity, and well-being of our country.

LABOR DAY LEGISLATION
Through the years the nation gave increasing emphasis to Labor Day. The first governmental recognition came through municipal ordinances passed during 1885 and 1886. From these, a movement developed to secure state legislation. The first state bill was introduced into the New York legislature, but the first to become law was passed by Oregon on February 21, 1887. During the year four more states — Colorado, Massachusetts, New Jersey, and New York — created the Labor Day holiday by legislative enactment. By the end of the decade Connecticut, Nebraska, and Pennsylvania had followed suit. By 1894, 23 other states had adopted the holiday in honor of workers, and on June 28 of that year, Congress passed an act making the first Monday in September of each year a legal holiday in the District of Columbia and the territories.

FOUNDER OF LABOR DAY

More than 100 years after the first Labor Day observance, there is still some doubt as to who first proposed the holiday for workers.
Some records show that Peter J. McGuire, general secretary of the Brotherhood of Carpenters and Joiners and a cofounder of the American Federation of Labor, was first in suggesting a day to honor those “who from rude nature have delved and carved all the grandeur we behold.”
But Peter McGuire’s place in Labor Day history has not gone unchallenged. Many believe that Matthew Maguire, a machinist, not Peter McGuire, founded the holiday. Recent research seems to support the contention that Matthew Maguire, later the secretary of Local 344 of the International Association of Machinists in Paterson, N.J., proposed the holiday in 1882 while serving as secretary of the Central Labor Union in New York. What is clear is that the Central Labor Union adopted a Labor Day proposal and appointed a committee to plan a demonstration and picnic.

Greg Mockenhaupt
ProEdge Risk Management Consultant
P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O
Oakland, NE 68045
http://www.cvacoop.com

Market Report


Dow +40.88
S&P +4.87
Nasdaq +19.30

 

U.S Loosens the longtime ban on oil exports.  The U.S Government is allowing energy companies to trade oil with Mexico, which is a small step toward lifting the 40 year ban which prevented the selling of U.S. crude.  This looks to give American drillers a new market for their product.  This is potentially positive for oil prices and positive for grain.

 

Grain Markets @ 10:18am
Sept Corn -1 @ $3.63
Dec Corn -1 ¼ @ $3.72 ¼
Sept Beans +2 ¼ @ $9.27 ½
Nov Beans +1 @ 9.17 ¼

 

The first round of FSA acreage numbers come out this morning, this data is very early in the game, and the long term accuracy is questionable, FSA report as of August 1, showed slightly larger than expected total US prevent plant acreage at 6.44 mln acres, with corn at 2.300 mln acres, beans 2.173 mln acres

 

Pro Farmer crop tour begins today and continues through Thursday, final estimates reported on Friday.  It will be interesting to see if they confirm the increased yield that the USDA hit us with last week.  Watch for updates throughout the week, in fact, they have already “Tweeted.”  You can find the schedule here http://www.profarmer.com/pro-farmer-services/more/seminars-events/about-crop-tour#schedule

 

For Fun: With School either starting soon, or already begun, I now have 2 junior high boys.  My youngest, now entering 7th grade told me he is scared.  Scared he won’t find his classes, scared he won’t remember his locker combination.  I told him it will be okay…..the crazy thing is….I still occasionally have that dream as an adult. You know, when I’m in Junior high lost, trying to find my next class, can’t get my locker open, and freaking out.  I am sure you have had this one too, so maybe it is that scary for a 7th grader.  Especially if I still have that dream….

 

On a lighter note, what’s the deal on #2 pencils?  I always wondered why it “Must be a #2 pencil” for your SAT test.  Despite the “bubble” test now being taken over by computers, I still thought it might be interesting for the older generation (you know….the ones born in the 1900’s).  The pencil numbering system is a reflection of how hard and how black a pencil’s lead is.  Pencils numbered higher than 2 have harder leads and are often used by engineers, architects, and draftsmen because of their harder points.  If you mess up and use a #3 pencil on your test, it won’t matter, it might be a bit harder to erase if you make a mistake is all.

http://mentalfloss.com/article/24832/what-makes-2-pencils-so-special

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

USDA Report


USDA raised its average corn yield forecast to 168.8 bushels per acre from its previous projection of 166.8 bushels.  The average soybean yield increased 46.9 bushels from USDA’s previous of 46 bushels.  No changes seen in corn acres planted/harvested, however there was a reduction in beans planted acres of -800,000 and harvested of -900,000.

Corn ending stocks for 2015-16 came in at 1.7 BB, up 114 million bushels from last month’s estimate.  Soybean ending stocks for 2015-16, at 470 mb, were up 45 mb from last month.  USDA estimated ending stocks for 2014-15 at 240 mb

 

Market reaction was incredibly negative, New crop beans nearly hitting limit down, all in just a few minutes.

 

Currently the markets are (12:12pm)

Dec Corn -21 @ $3.66 ½

Nov Beans -62 ½ @ $9.09

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Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report and South Dakota Sights


Markets @10:50am

Dow +27
S&P +2.26
Nasdaq +9.90

 

U.S. stocks were little changed early Monday following a batch of better-than-expected earnings from companies such as google (jumping 16.3%) and Hasbro (jumping 5.8%).  Investors turned their attention to a stream of corporate earnings reports from several large companies this week.  The Nasdaq ended at a record level on Friday, Gaining 46.96 points, or .9%, to 5210.14.  Googles surge is to blame posting their 3rd largest daily gain ever.

 

The U.S. Dollar rose to its highest level as compared to the Euro in nearly 3 months on Friday, likely due to the continued discussion of the feds interests rate hikes later this year.

 

Gold Hits 5 Year Low

Gold tumbles, hitting 5 year low at the open today after 23 days of steady decline.  Gold likely weighed down by the U.S Dollars continued gains and the continued concern of the first U.S interest rate increase in more than 9 years.  While some analysts believe the down trend is the market taking advantage of low liquidity as opposed to actual fundamentals.

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Grain Markets @ 10:51am

Sept Corn -7 ½ @ $4.12 ¾
Dec Corn – 7 ½ @ $4.23 ¾
Aug Beans -6 @ $10.08 ¾
Nov Beans -6 ½ @ $10.00 ¼ 

 

A weaker start to the open this week due to favorable weather through the Midwest.  Fridays CFTC report showed spec funds long 130k corn, and just over 80k beans, the funds are liquidating some of these positions today causing some market negativity.  Also expecting crop ratings report out this afternoon, not looking to see much of an adjustment.

 

Corn – With today’s low landing right at the 20 day moving average we are likely to see some support in the $4.21 area for Dec Corn.  The next support line would fall at $4.10.  I will also mention there was a “Gap” at the open, many technical analysts believe there is almost always a gap retracement.  If that holds true we should see ourselves back to at least $4.29 ¼ in the short term.

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Beans opened very weak this morning below $10, but have gain back most of what was lost on the overnight by mid-morning.  The story in beans may not play out until August when USDA resurveys Arkansas, Missouri, and Kansas.  The trade believes we may see USDA reduce yield estimates by a few bushels.  Until then it seems Nov Beans will continue to see support at $9.80 and resistance at $10.30 giving us a wide trading range, until we get some news sending us one way or another.

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For Fun: Just returning from a vacation in South Dakota, I took the family to see some of the most impressive marvels of nature starting with the Badlands, the Needles, Sylvan Lake, Custer Park and even crystal cave.  Then of course Mt. Rushmore, something that many of us have seen but forget how truly amazing the process of making it was.  All done through private funding, this is not likely ever seem something of this magnitude in our lifetime being built.  Mt. Rushmore cost $989,992.32 to build, taking 14 years to complete, with over 400 workers to complete, there was not one single death.  Despite the fact that I have been there many times, it was the first with my boys.  It was a fun and affordable trip.

 

That said, there are so many things to do in the midwest over a long weekend, things we easily forget about, its easy to get caught up in the hustle and bustle of everyday life, or fixate only on glamourous trips.  When there are some great things our children have never seen right here in our back yard!  I will add the liesure trip and lack of internet…gives a lot of time to learn about your family, and hold a lot of conversations you may not ave had otherwise.

 

Top 10 places to go in the Black Hills
http://www.midwestliving.com/blog/travel/top-10-things-to-do-with-kids-the-black-hills/

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Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | C: (402) 380-9855 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

 

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