Grain Markets


Grain Markets

 

Sept Corn +0’4@3.52’6

Dec Corn +0’4@3.58’6

Aug Beans -15@10.57’4

Nov Beans-14’2@10.43’0

 

This week’s report comes to you in video form, ProEdge’s Luke Beckman on “Market Journal” found here: https://www.youtube.com/watch?v=pnOtqjwomC4&feature=youtu.be

 

Weather remains the hot topic,  It seems weather is what the trade is watching a there is volatility that goes with it.  Looking forward to later this week we will be seeing temperatures getting very hot and a predicted heat advisory as well.  As far as rain goes, there is a low probability.

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Greg Mockenhaupt

ProEdge Risk Management Consultant

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

Greg Mockenhaupt

Greg Mockenhaupt

 

 

 

 

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

 

 

Market Report


Dow +127.62
S&P +11.97
Nasdaq +45.02

The S&P 500 touched an intraday record this morning, topping levels last seen more than a year ago in a reflection of investors’ bets that the U.S. economy remains a pocket of solidity in a troubled world.

The S&P 500 climbed 0.5% to 2141.02 early this am, exceeding its intraday record of 2134.72 hit in May 2015. The Dow Jones Industrial Average rose 106 points, or 0.59% to 18252. The gains left the S&P 500 on pace to close at a record, with the Dow Industrials within 1 percentage point of the blue chip index’s record close of 18312.39.

A better-than-expected jobs report Friday was the latest boost to S&P 500, which has gained more than 16% since falling to a yearly low in February. Stocks have been bolstered by signs of strength in the U.S. economy, a recovery in oil prices and the Federal Reserve’s cautious stance toward raising interest rates.

Some investors and analysts said the rally highlights the appeal of U.S. equities at a time when the global economy faces an uncertain future in the wake of the U.K. vote to leave the European Union. At the same time, central banks are continuing extraordinary efforts to promote growth and inflation that have helped send government bond yields to historic lows.

http://www.wsj.com/articles/european-stocks-buoyed-by-rally-in-japan-1468223360

 

Grain Markets 7/11/16 @ 11:55am

Sept Corn -8’2@3.46’6
Dec Corn -8’2@3.54’2
Aug Beans+0’2@10.83’4
Nov Beans+2’0@10.59’6

With corn losing almost $1 from the highs we are now under the spring insurance level of $3.86.  Fundamentally the crop looks good and another trend line production year or above year will increase carryout.  I fear the bears and the possibility of corn dropping below $3.25, though I am not ruling out the markets ability to re-trace back to $4.00 it will surely take the help from some hot and dry weather to get us there.

 

Demand seems to be strong, many anticipate USDA bumping export demand.  With a good crop we would also see ending stock move higher and possibly a reduction in corn used for feed.  There is talk of wheat competing with corn for feed usage.

 

Opportunities –

  • Reserved for clients

 

Beans:

With USDA predicting and average of 46.7 Bpa.  A swing in either direction can really change bean pricing.  Based on fixed demand, a yield of 48 bpa would potentially give us a 441 mln bu carry out, while 44 bpa take us down to 109 mln bu carryout.  You can see the significant difference here.

 

Chinas demand for beans remains strong, however if China continues to have financial issues and is forced to devalue currency, could ultimately give them less buying power.  Just keep in mind China is about 60% of the worlds export soybean demand.  Chinas financial situation is certainly worth paying attention to.

 

Concern of a LATE La Nina still remain for beans.  Thoughts that weather concerns surfacing in August adds to uncertainty.  The next 30 days keep a close eye on weather as it is likely to cause a roller coaster of market volatility.

 

Weather:

Weather has certainly been the dominating factor in market movement.  More wide spread rainfall and cooler forecasted temps have removed a lot of weather risk premium from the markets.  Though we are running out of time, there is still an opportunity for weather risk to once again become a factor.  The next 5 days offer rains throughout the Corn Belt, the eastern Corn Belt (needing rain) looks to have good rain in the forecast.

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

 

Greg Mockenhaupt

Greg Mockenhaupt

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Markets @ close:

Dow -108.75

S&P -14.40

Nasdaq -39.67

 

US Dollar steady/higher. trend is higher.  Crude Oil is lower, trend is sideways.

 

Grain Markets @ Close:

Sept Corn -9’2 @ $3.50’6

Dec Corn -9’0 @ $3.58’0
Aug Beans -54’2 @ 11.10’0

Nov Beans -60’2 @ 10.77’2

 

Attached you will find a preview of the CVA Radio ad, set to air later this week.

 

USDA S&D Report around the corner July 12th

 

More acres, More bushels and more moisture.  Funds are liquidation record long position.  Funds sell 8k corn on the day, their long position is 132K, down from 275K on June 17. trend is lower.  Funds sell 7K Beans, their net long position is estimated to be 193K. The record is 260K.

 

South America – Argentina reported that 41% of their corn harvest is now completed compared to 60% LY and the 3 yr. average of 65%.

 

Export inspections: corn 57.1 last week 48.6, good number; beans 10, last week 11.6, another decent week.

 

Export sales: corn: old 18 million, 21 over estimate, new 21 million bushels. Beans old 27 million, 10 over the USDA estimate, new 29 million.

 

Corn crop condition rating, estimate 1-2% lower unchanged at 75% good to excellent, vs. 71% LY and 67% is the 5 yr average. This year’s corn crop is the 6th best rated since 1989.

Bean crop condition rating estimated to be 1-2% lower. decline 2%, 72% good to excellent, vs. 65% LY and 64% is the 5 yr average. The condition of this bean crop only surpassed by the crop of 2014.

 

Basis begins to firm up in the area as markets drop.

 

Corn/Soybean Ratio – It’s worth noting that the corn/bean ratio at about 1:3

 

Weather:

Saw heavy rain over the 4th of July weekend across the Midwest, as well as cooler temps.  Weekend rains in Missouri, Kansas, Illinois, and Indiana ease concerns over recent drier trend in those areas.  Weather tension eases and grain markets see pressure.  Chances of rain for the first part of the week and a couple days of heat and humidity.

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

Greg Mockenhaupt

Greg Mockenhaupt

 

 

 

 

 

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Dow +189.80

S&P +21.35

Nasdaq +66.35

 

Land O’Lakes To Acquire Ceres: Land O’Lakes Inc. and Ceres Inc. announced June 17 that they have signed a definitive merger agreement under which Land O’Lakes will acquire all of the outstanding capital stock of Ceres in a transaction valued at approximately $17.2 million

 

U.K: The prospect of a U.K. exit from the EU had sent stocks around the world tumbling in recent sessions, while bond yields dropped to record lows as investors feared the move would spark a prolonged period of uncertainty and deal a blow to growth and trade in the world’s fifth-largest economy.  Stocks, sterling and oil soared at the start of the week after polls suggested the U.K. was more likely to vote to remain in the European Union in Thursday’s referendum than previously expected.  The pound surges more that 2% against the U.S. Dollar.

 

Grain Markets @ 12.36pm

 

July Corn -15’6 @ 4.22’0

Dec Corn -14’2 @ 4.34’4

July Beans -13’4 @ 11.46’0

Nov Beans -11’6 @ 11.36’4

 

For a glimpse of last week check out the ProEdge Update found here: http://cva-assets.s3.amazonaws.com/content/uploads/2015/03/ProEdge-Update-061716.pdf

 

Looking forward: June 30th at 11am will be the USDA planted acreage report.  I anticipate the extreme heat we have been seeing will impact the production.  I don’t see the production numbers growing.  I do believe the markets has already added a lot of weather premium to the market, and with forecasted record heat I anticipate support continues in the market places.  Conversely if we had a turn to cooler weather as well as good rain, we could see the markets lose traction quickly.

 

Strategy: Using call options to keep upside potential on presold grain.  For example short dated $4.40 corn calls are about 19 cents.  This can be done through brokerage or CVA.

 

Weather

Trained weather spotters in the Fremont area recorded rain totals of 6.3 inches overnight, and there are reports of flooding and downed trees in the area.  Parts of Douglas and Dodge counties are under a flash flood warning till 4:30 a.m. Saturday.  See video here http://www.ketv.com/news/reports-of-heavy-rain-flooding-in-fremont/40114986

This week chances of thunderstorms, but no real rain opportunities throughout the corn belt.

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My Blog

 

Check out weekly blogs at http://www.cvacoop.com/blog/

 

The market is full of surprises and we continue to see the grain markets rally.  Recently seeing a lot of volatility in both corn and soybeans, it leaves many wondering what to do next.  Will the market go up?  Will the market go down?  Many producers hold out because it may go higher, however, that philosophy could mean a missed opportunity.  Many producers also find themselves looking in their rear view mirror, saying I wish I would not have sold so early.

 

The reality is no one has the ability to look into the future.  Sales are made based on the information a producer has at that moment in time.  That being said, a rally like this was unexpected.  A producer who sells ahead makes that first sale and HOPES it will be the worst sale of the year.  What?!?! You may ask, then why make it?  To that I say, to manage your risk, to lock in a profit.  For example, if a producer sold 40% of their new crop beans at $10.50, and come harvest time beans are worth $12.00, the producer is averaging $11.40 futures price on their entire crop.  However, if the harvest price drops to $9.00 the average price would then be $9.60.

 

Market Moves Up
  Percent Price
Sold 40% $10.50
Harvest 60% $12.00
Average 100% $11.40
Market Moves Down
  Percent Price
Sold 40% $10.50
Harvest 60% $9.00
Average 100% $9.60

 

Selling ahead a solid way to protect your operation from a bear market.  Without risk management producers stand the risk of having a losing year.  Market timing is everything, and locking in profitable sales to guarantee income is never a bad idea.  Selling on the way up and continuing to “grab profits” from the market is a guarantee of success.  Waiting for a home run often back fires when the market rally ends abruptly and a producer finds himself unsold and currently at an unprofitable level.

 

When it comes to marketing, many find it to be very emotional.  Never beat yourself up for selling too early or selling too late.  The key is to lock in profits incrementally and guarantee profits for your family.

 

Final thought:  This principle also applies to producers who sell from their bins not selling ahead).  Selling incrementally and locking in profit as they become available is a sound business practice.  Selling ahead only offers a larger window of opportunity to sell.

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

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1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Market Report


Dow -86.87
S&P -3.98
Nasdaq +6.00

The Dow industrials and S&P 500 fell this morning, with major indexes still on track to end the month higher despite mounting expectations for a U.S. interest rate increase.  The Dow Jones Industrial Average fell 84 points, or 0.5%, to 17789. The S&P 500 lost 0.2% and the Nasdaq Composite Index gained 0.1%.   That left the Dow industrials on pace to finish the month 0.1% higher, while the S&P 500 was headed toward a 1.4% May gain.

Some analysts said the monthly gains for major indexes since their climb off February’s lows was an encouraging sign for equities markets, given new concerns about increased interest rates and other global uncertainty.  Expectations for the Fed to announce an interest-rate increase this summer have risen dramatically since the start of the month, while the dollar has gained for four consecutive weeks.

http://www.wsj.com/articles/european-stocks-steady-as-investors-look-to-upcoming-key-events-1464681623

 July Corn -7’0 @ $4.05’6

New Corn -4’2 @ $4.09’2
July Beans -5’2 @ $10.81’2
New Beans -0’2 @ $10.56’0

 

Corn:

The corn made some gains recently hitting $4.13 on the July board Friday and touching it again last night during the evening trade.  Happy to see the corn finally getting some attention reaching levels we haven’t seen since October ‘15.  Basis continues to suffer as the board rallies and those producers that locked in basis levels have seen the benefit.  Looking forward we are needing to price these basis contracts and we seem to be getting some opportunities.  Be sure to place offers, we don’t want to miss out on a bounce.

I am enjoying seeing the grain prices upward move, however I remain realistic, keeping in mind if U.S. weather cooperates we could easily see a corn crop upwards of 14 billion bushels and domestic ending stocks of 2.2 billion bushels or more.  I guess the moral of the story is manage your risk and hope for it to go higher.

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Beans: 

July beans remain fairly range bound since the bounce May 10th, but the stretch to $10.98 last week was promising.  We can always hope to shoot past $11, which would provide some real potential from a technical perspective.  However there are discussions regarding the switch to beans from corn, which is not necessarily bullish news for the beans.  I don’t anticipate the funds care much about that however.  It seems for now political risk, the US Dollar, and oil prices seem to have more impact than the actual crop does.  So where do we go from here?  Do markets continue to rally or do beans settle down?  No one knows.  As a producer it is wise to reduce risk at profitable levels.  Understanding it is very easy to kick yourself when prices go higher but from a risk management perspective it’s the right move and fits the longer-term goals of a profitable operation.

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So let’s talk about weather into the summer.  Should we be concerned?  The Weather Channel says the trend of warmer-than-average temperatures overall during summer months the last several years is expected to continue.  Well-above-average temperatures are expected this summer from the West Coast into the northern Plains, Great Lakes, Ohio Valley, mid-Atlantic and Northeast.

The only area where cooler-than-average temperatures are expected this summer will be across much of Texas, Oklahoma, Arkansas and Louisiana, again, owing partially to the soaked ground from a spring of heavy rainfall.

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“We expect that the full La Niña forcing will not be in place by June, but will come roaring into play by July and, especially, August,” Crawford said. “We expect a strongly ‘back-loaded’ summer with the heat continuing into September.”

Typically, La Niña summers feature hotter temperatures from the central U.S. into the Northeast.

Crawford notes that during previous years where rapid changes from El Niño to La Niña occurred, the worst of the summer heat was focused from the northern Plains to the Great Lakes states.

Another factor to consider regarding temperatures this summer are sea-surface temperatures in the western North Atlantic, which are forecast to be warmer than any time over the past five years. That often results in warmer temperatures in the eastern U.S.

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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

Grain Funds


Reuters – Addresses the funds and their effect on grain

http://www.reuters.com/article/usa-grains-funds-idUSL2N17H2F0

Bloomberg

http://www.bloomberg.com/news/articles/2016-04-11/farmers-get-biggest-u-s-subsidy-check-in-decade-as-prices-drop

Wall Street Journal

http://www.wsj.com/articles/corn-imports-surge-in-u-s-despite-record-harvests-at-home-1460485875

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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 +19.66

S&P +1.11

Nasdaq -6.72

U.S. stocks were calm Monday ahead of a flurry of data and end-of-month portfolio positioning expected this week.  Investors will receive readings on manufacturing production and consumer sentiment, and the highly anticipated March jobs report is set for Friday morning. The data will be closely monitored following a week of renewed talk about the timing of the next Federal Reserve interest rate increase. Traders attributed Monday’s light trading activity in part to other stock markets around the world remaining closed.  Many global markets, including the U.S. stock market, were closed for Good Friday, and many major exchanges in Europe, including those in London and Frankfurt, and some in Asia, including Hong Kong and Australia, remained closed Monday.

Grain Markets at Close:

Corn +0’4@3.70’4

Beans -1’4@9.09’0

 

Quick update for you this Monday as we have a USDA report later this week.

 

Markets continue to hold their gains and I expect them to do so until Thursday when the scheduled USDA report is released.  Then we will see what the USDA had for us.  Be sure to have “above the market” orders in place, just in case of a volatile market.

 

New Crop beans rallied to $9.26 over night filling every one that placed an order at $9.25.  I just want to stress the importance of making a small new crop sale if you have not already.  YES, it may go higher, or it MAY NOT!  On the other hand, no one wants to be sitting there at $8.50 saying I sure wish I would have sold.  Instead lets reward the rally, especially since fundamentals are not supportive at this time.  If you have a sale, be happy, and hope this rally continues!

 

-The outside markets see the Euro +70 ticks, crude oil +41 cts, gold -$2, and Dow Jones futures +21 pts.

-In economic reports, US Feb Personal Income +0.2% vs expectations of +0.1%, US Feb Personal Spending +0.1% vs expectations +0.1%

-Hotter/drier  conditions and limited precipitation for the US southwest Plains over the next 10 days.  Warmer /drier conditions are forecasted for the Midwest.

-Malaysian palm oil rallied 35 ringitts overnight as analysts Dorab Mistry estimated Malaysian palm production will be down 2.0 million MT due to the El Nino.

-Friday, the USDA announced daily sales of soybeans sold to unknown destination, of which  214,000 MT  were for the 2015/16 marketing year and 90,000 MT for the 2016/17 marketing year.

 

Market Report


Markets

3/14/16@11:07am
Dow -12.87
S&P -6.49
Nasdaq -3.72

Crude oil moved higher and the U.S Dollar moved lower last week, which positively influenced stock and commodity prices.  U.S. stocks fell this morning, offering clues to the course of monetary policy this year.  The Dow Jones Industrial Average slipped 25 points, or 0.1%, to 17188 shortly after the opening bell. The S&P 500 dropped 0.2%, and the Nasdaq Composite declined 0.3%.

Crude oil has slid more than 70% from its peak in ’14.  However, U.S. oil prices are up more than 45% from a 13 year low in February which came to an end after major producers held discussions about capping output.  As the bullish sentiment increases, the oil market remains supportive.  Could this rally lead to its own demise?  Higher prices will likely encourage shale producers to ramp up output again, muddying any forecasts for shrinking U.S. supply. Shale wells can be drilled and fracked within a matter of months, compared with the years it can take to complete other types of oil wells.

April Crude Oil

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Grain Markets

3/14/16@11:10am
May Corn +3’0 @ $3.68’0
May Beans+0’2 @ $8.96’0

 

Last trading day for March futures

 

In the News: El Nino may be weakening, but it is still clobbering crops in the Asia-Pacific region, effecting sugar, rice and palm oil production. http://www.wsj.com/articles/el-nino-may-be-weakening-but-it-is-still-clobbering-crops-1457953780

 

Corn:

The funds continue to increase their net short position and go further in to record territory.  Beneficial rains throughout the southern plains with more to come.  Nearby corns resistance in the low to mid $3.70’s.  We have seen a bit of a bounce in corn but fundamentally nothing has changed.

 

Beans:

May futures broke through the 50 and 100 day moving averages last week on its 8 day run closing higher and higher.  Farmer selling remains steady as prices rise.  Processor basis levers steady to weaker as they take more bushels.

 

As beans seem to push higher there is likely some resistance at $9, as many have offers in at those levels for the nearby.  Much of this rally comes from short covering, and funds seem to be adding some additional shorts as the market keeping us under $9 for the May.

 

Weather

After unseasonably warm weather in the Midwest, cooler temps on the way.  Still mild weather and some chances of thunderstorms tonight.

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New Cars:

 

New vehicle sales in the U.S came in at 17.5 million in 2015.  Used car sales (mostly subprime borrowers) has also been on the rise.  Total volume of U.S auto loans now reaching an all-time high of close to $1 trillion.  Impressive growth for the industry.

The concerning part is the default rate.  Through February, about 12% of the underlying loans were at least 30 days past due, a third of which were more than 60 days delinquent. In another 2.6% of loans, borrowers had filed for bankruptcy or the vehicles had been repossessed.  This from Equifax.

Those borrowers are at the outer fringe of the auto market. Still, the high level of missed payments for loans made so recently is a warning sign for an industry that needs every customer it can get to keep sales increasing at a record pace.  It will be interesting to see where auto makers go from here.

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Read more here: http://www.wsj.com/articles/subprime-flashback-early-defaults-are-a-warning-sign-for-auto-sales-1457862187

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

Grain Markets


Grain Markets 11/30/15 @ 11:43am
Dec Corn +6’0 @ $3.65’2
Jan Beans +8’6 @ $8.81’6

A key reversal last Monday sets the technical stage for a potential rally, but fundamentals remain negative, and without headlines to move the market.  However, funds don’t typically care about the fundamentals, just profit.  It makes sense the Thanksgiving holiday kept trade volume at bay until today.

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

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

1007 County Road O

Oakland, NE 68045

Market Report


Markets 11/9/15 @ 12:13pm
Dow -221.10
S&P -27.03
Nasdaq -67.32

 

I have been happy to see the macro markets be less influential to grains, but as of Friday some movement in Oil and the USD has me thinking the market will have to listen again.

 

The US Dollar surged from 98.00 to 99.47 on Friday, pulling back today yet still sitting above 99 which is bringing us back to the levels we haven’t seen since April 23rd.  If you remember these levels, then you know it seemed to be a primary influencer in the grain markets.  The strong US Dollar can potentially reduce exports as other countries pricing becomes more attractive.  The good news is we use most of our own corn locally, which leads us to OIL.

 

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Oil (Dec WTI) finished last week on the soft side in fact lost more than $2 a barrel currently with the next support line found at $43.00 while this may be good for fuel hedgers, it doesn’t mean a lot for ethanol demand.  Just something to keep your eye on as oil is an outside market which has the power to damage corn demand for ethanol use.

 

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Grain Markets 11/9/15 @ 11:58am

Dec Corn -5’0 @ $3.68’0
Jan Beans -0’4 @ $8.66’6

USDA Report tomorrow at 11am

 

Corn – The trade is anxious for the USDA S&D Report scheduled for tomorrow at 11am.  Not much corn left out in the fields the USDA currently estimates corn at 168 Bpa will we see it push above 170?  It seems most are concerned this will be a bearish report.  Currently we have strong support at $3.60, but with the market sitting at $3.68 with pre-report positioning, a very negative report could easily push us through it for the short term.  Though I still believe the $3.50-$4.00 trade range I mention in the past remains relevant.  In fact, if we go back down to those levels a buy back strategy may be in order for those with a bullish position.

 

Beans – The bean market continues to slip to the low end of its trading range, Jan beans touching $8.58 on Friday.  Keeping in mind the contract low is $8.57, we are dangerously close to making new contract lows.  Unfortunately, I don’t believe the market is supportive enough to keep it from breaking through and it will be interesting to see where we find support in the event of a bearish report.  On the bullish side, weather can become a factor in Argentina or Brazil.  With all the negative news, and positive news can be very impactful.

 

For Fun
As I drive through Fremont, NE I see a huge parking lot of shipping containers.  It has always intrigued me to see what people make from these things.  I have seen outdoor bars, to cabins.  But little did I know there are people that build complete homes and offices from shipping containers!  Seems crazy, almost like a bad idea, but turned out some are quite impressive.  Then I ask myself, did they actually save any money at all!  I would think the small lake cabins yes, but the huge structures, I would think they spent more?  None the less, cool to see what people create!  Popular Mechanics did a good write up if you are interested http://www.popularmechanics.com/home/how-to/g172/shipping-container-homes-460309/

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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

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