2013 World Grain Outlook Presented by: John Roach February 18, 2013
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World Economy
World growth rates Large economies
United States
The U.S. Dollar s Trend
Dollar Index Green Line 20-day Moving Average Red Line 200-day Moving Average Source: Futuresource, CME
Source: Futuresource, CME Weekly Dollar Index
Commodity Speculation
500000 CFTC COT Report - Corn Sum of Managed Money & Large Traders - Net Position 450000 400000 350000 Contracts 300000 250000 200000 150000 100000 50000 0 Source: CFTC COT Report Source: CFTC COT Report
300000 CFTC COT Report - Soybeans Sum of Managed Money & Large Traders - Net Position 250000 200000 Contracts 150000 100000 50000 0-50000 Source: CFTC COT Report Source: CFTC COT Report
80000 CFTC COT Report - Chicago Wheat Sum of Managed Money & Large Traders - Net Position 60000 40000 Contracts 20000 0-20000 -40000-60000 -80000 Source: CFTC COT Report Source: CFTC COT Report
Source: Goldman Sachs Global Research Goldman Volatility Index
So where has investor money gone?
Source: Bloomberg
Source: Bloomberg
U.S. Acreage
*Informa 2013 Estimate 99.3*
*Informa 2013 Estimate 78.96*
*Informa 2013 Estimate 57.1*
*Informa 2013 Estimate 10.0*
The Weather
Soybean Fundamentals
Source: USDA WASDE
What is happening to the Brazil and Argentine Crops?
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: USDA Crop Progress
Source: FCStone, NOPA
Source: USDA WASDE
Corn Fundamentals
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE 90.0 80.0 70.0 60.0 50.0 40.0 30.0 World Coarse Grains Ending Stocks Days of Supply Days of Supply 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: CME Daily Livestock Report
Hogs & Pigs Source: USDA Quarterly Hogs & Pigs, FCStone
Source: USDA Cattle on Feed, FCStone
Source: QST, CME Cattle problems
Daily livestock report
Daily livestock report
Data for October showed that inflation for food consumed at home was up less than 1% from a year ago. At the same time, inflation for food consumed away from home rose 2.7% vs. October 2011. Daily livestock report
Source: CME Daily Livestock Report
Feed estimates are still too low Protein balance tables adjusted in Feb 8 th report: Combined beef, pork, broiler forecasts up 2.005 billion lbs Since Dec Forecast Broiler up 845 million lbs Pork up 650 million lbs Beef up 510 million lbs If U.S. economy continues to show improvement, look for larger feed demand. Source: USDA WASDE
Wheat Fundamentals
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
Source: INTL/FCStone, USDA
U.S. Wheat Feed Use (million tons) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2008/09 2009/10 2010/11 2011/12 2012/13 Source: USDA PSD
Source: USDA WASDE
Source: USDA WASDE
Source: USDA WASDE
How Should U.S. Farmers Market Their Crops?
Rule # 1 Focus the majority of sales in the 1 st half of the year Best Prices Usually Occur in March to June
Rule # 2 Sell only when markets are giving us a Roach Ag Sell Signal
2013 November Soybeans
2013 December Corn
2013 July Chicago Wheat
Rule # 3 Figure out the percentage of bushels you are comfortable selling each and every spring and tie that % to the your crop insurance policy coverage level / farm profits
Rule # 4 Make sure you have enough on-farm or other owned storage to hold the balance of a crop with room for upside in yields.
Rule # 5 Make sure you sell enough in the spring prior to harvest to generate necessary cashflow from harvest through February
Rule # 6 Split your old crop bushels and new crop contracts into between 3 and 5 increments and sell one increment on each Sell Signal
Cover Unsold and Sold Grain Buy Puts on spring Sell Signals Hold them until an August September or Buy Signal It takes advantage of the normal price decline Cash in and wait until next year May also sell Calls but loss potential makes this very risky Spend about 30 cents on corn and 50 cents on bean Buy calls on sold grain when concerned for weather. Don t re-own grain directly after a sale unless trend is positive.
Roach Ag Marketing, Ltd. 568 East Yamato Road Suite 200 Boca Raton, FL 33431 800-622-7628 Broach@roachag.com http://www.roachag.com