RWA Financial Services, Inc. Randy Allen Calavar Drive Austin, TX Cell: Web:

Transcription

1 RWA Financial Services, Inc Randy Allen Calavar Drive Austin, TX Cell: Web: RandyAllen

2 Commodity Markets Have Changed We are no longer living in a time when the fundamentals rule commodity markets. It is a new economy since 2008 Studying supply/demand, etc. are a fraction for analysis Investment management companies now share a larger part of their portfolio investments in commodities Commodity markets also trend by the investment money flow between the equity markets and the commodity markets Commodity fundamentals only apply when Fund Money is less invested

3 Marketing Rules

4 Rules Marketing Rules & Behaviors The always wins. The always loses. The cannot finance the. Marketing Behaviors Marketing is all about being. Buyers/Sellers have to be at marketing, not just. I have never met a buyer/seller who could his/her feelings. Market Loss Aversion: Associated with past losses and marketing mistakes that are. A fixed fear of the. Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

5 Marketing Rules & Behaviors Silo Mentality: Hiding from by being busy. Focusing on things that are. Herd Instinct: The tendency for people to adopt the and behaviors of the majority to feel safer and avoid. Hindsight Bias: Sometimes called the I-knew-it-all-along. The tendency to see past events as being. Each year, Buyers/Sellers start out with. When markets are adverse, they generally fall into. Since 2007, a new dilemma has entered into the ag markets: Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

6 Marketing Rules & Behaviors What is the missing link in marketing?. Marketing plan: Plan is the most important factor in a marketing plan. What is the hardest part about marketing?. Always remember that storage is an. Companies manufacture goods to, not to. Manage the not the. Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

7 Your Producer Clients Are Now Up Against The Big Leagues Agricultural Marketing Is Now A Real Professional Sport, Not A High School Or College Game. Forget The USDA Reports. The Question Is, What s The Money Doing Between Commodities And Equities Your Clients Are Up Against Big Forces They Don t Even Realize Corn Prices Were Down 30.82% Last Year And Some Producer s Bins Are Full. Feeders And Mill Buyers Have Already Seen An Increase In Soy Meal Up Over 7% or $34.00 Per Ton This Year Unfortunately, They Don t Know How To Analyze The Markets Anymore And They Don t Even Know It Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

8 The Big Leagues Here s What I Am Going To Point Out 1. Those In Ag Play The Win Or Lose Game Each Year 2. Production Break Evens Have To Be Calculated Each Quarter And Applied To A Marketing Plan 3. Risk Management Has Never Played A More Important Part In Farm Agriculture 4. Land Prices Dropped 3.3% In The Midwest Last Year 5. Who s In Charge? Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

9 The Vegas Marketing Plan Hoping For Grain Or Livestock Prices To Move Higher Is A Losers Game, Not A Risk Management Skill. The Longest Lines In Vegas Are At The ATM Machines Few People Have A Plan In Vegas. How Much Am I Willing To Lose? This Is Called Plan B. Producers Do Not Think Of their Production As Investments When Plan B Targets Are Triggered, It Takes Discipline To Exit. It s the Hardest Part In Following A Personal Marketing Plan. Producers Usually Fall Back And Take Chances That the Market Will Return. Randy Allen RWA Calavar Drive Austin, Texas randy@farmrwa.com Cell: Facebook: Randy Allen

10 The Business Marketing Plan Hope Plan A: At What Price Am I Willing To Sell For? $5.25 Plan B: At What Price Am I Willing To Take No Less? $4.75 Discipline NO ONE KNOWS WHAT THE MARKET IS GOING TO DO SO QUIT BELIEVING SOMEONE DOES

11 Money Flow By Contract Volume 2,100,000 1,800,000 1,500,000 1,200, , , , , ,000 Non-Financial - COT - Futures and Options Non-Commercial and Nonreportable Combined Net Position Number Of Contracts The Hightow er Report Source: CFTC Max: 1,949,268 (2/8/2011) - Min: -318,945 (2/16/1999) - Most Recent: 917,068 (09/03/2013)

12 Outside Money / Grains As Of December 31, 2013 Investment Fund Commodity Positions Crude Oil & Gasoline Futures: 1,855,069 Contracts Corn, Soybeans, Wheat: 2,190,017 Contracts

13 Capital Management Group Partial Investment Portfolio Services 21% Utilities 19% Consumer Goods 14% Financial 13% Technology 11% Healthcare 11% Industrial Goods 8% Commodities 3% Largest U.S. Investment Firms Capital Management Group - $1.3 Trillion Under Management Vanguard - $1.2 Trillion Under Management Fidelity $1 Trillion Under Management

14 Behavioral Economics -Invasion Curve Informed Early Majority Late Majority Observers High Risk Low Data Hopeful Laggards Extreme Risk Extreme Risk Visionarie s Supporters Early Adaptors Conservatives Late Adaptors Losers

15 Crude Oil Invasion Curve Early Majority Money Flow Informed New Dow Highs Money Flow Exit New Dow Highs Money Flow Exit Late Majority Late Minority Extreme Risk Crude Oil 2013 Up 5.28%

16 Money Moves Markets New High New High New High Money Flow Exits Equities Money Flow Exits Commodities Money Flow Exits Commodities Dow Jones 2013 Up 26.51%

17 Example: Dow/Corn Futures Money Flow Exits Commodities Money Flow Exits Equities Corn Prices 2013 Down 30.82% Record Heat No Moisture Crop Conditions Excellent Record Crop

18 Computer Platforms Equities Commodities Half Time

19 Analytics 14 Analytic Models Trend Spotters Short Term Indicators Medium Term Indicators Long Term Indicators Money Flow in Traditional, Index & Hedge Funds, including Commercials

20 14 Analytics Summary As of February 26, 2013 Dow Jones / Equities: ST 16% Sell. MT 39% Buy. LT 57% Buy. Avg 38% Buy Equities Are Transferring Money. Eyes On Interest Rates/Company Returns Crude Oil: ST 87% Buy. MT 67% Buy. LT 53% Buy. Avg 71% Buy With Equities failing, The Energy Markets Are Stabilizing. Money Flow Is Stable. Fundamentals Are Weak, With Crude Oil And Gasoline Stocks Stable. Corn Futures: ST 91% Buy. MT 74% Buy. LT 38% Buy Avg 77% Buy Corn Futures Are Supporting After A Massive Down Trend. Hedge, Traditional an Index Funds Are Investing At A Fast Rate. Fundamentals Show High Exports. Soybean Futures: ST 96% Buy. MT 88% Buy. LT 83% Buy. Avg 89% Buy Wheat Futures: ST 42% Buy. MT 36% Sell. LT 35% Sell Avg 22% Sell Cattle Futures: ST 100% Buy. MT 93% Buy. LT 100% Buy. Avg 97% Buy

21 Business Rules 1. Operating and managing a business is not a financial guessing game. 2. Owners and managers should attend business management meetings not just old fashion misleading marketing seminars 3. It s not just about market fundamentals, it s also about awareness of the investment money flow. 4. Risk management and market planning are the keys to business responsibility. 5. Discipline is the characteristic of a great manager.

22 Put Your Farm Customers In Today s Market World Let me be of service to you. Please check the card and hand it in before leaving. Thank you. Interested in conducting a customer seminar with a new message your customers will find completely useful. Subscribe to RWA Market Mail. $ per year. 2 times / day also including market alerts and reports.

23 THANK YOU! Thank You For Inviting Me 3 Times Over The Years! It s Been A Pleasure! Randy Allen

24 NEVER EVER TRADE DAIRY FUTURES!

25 What s A Consultant Worth? 1. Producers, feed mills and other agricultural industries rarely have a marketing department 2. Too many times, large business marketing decisions whether buying or selling are made (or not made) in haste without an outside perspective 3. The secret to business success is to minimize financial mistakes by measuring risk 4. Being aware of market conditions is emotionally and financially invaluable 5. Taking marketing advice from someone you do business with is a conflict of interest no matter how close the relationship is