Grain Price Outlook and Market Strategies<br />Cruise The Crop Markets<br />by John Roach<br />January 17 - 24, 2009<br />...
Roach Ag Marketing, Ltd. <br />7601 N. Federal Hwy<br />Suite 265-B<br />Boca Raton, FL  33487<br />800-622-7628<br />jroa...
Grain prices set their peak of a new price plateau in 2008. The new price plateau will remain but prices will search out t...
Why will the new price plateau remain?<br />© Roach Ag Marketing, Ltd.<br />
Population Growth Rates<br />Source: USDA Agricultural Projections to 2017.<br />© Roach Ag Marketing, Ltd.<br />
Global Meat beef + pork + chickens & turkeys<br />Production, per capita consumption, and population<br />Source: USDA Agr...
Dollar’s value has been driving trade for the last 2 years<br />Dollar Index<br />© Roach Ag Marketing, Ltd.<br />
Index funds increasingly important beginning 4 years ago<br />© Roach Ag Marketing, Ltd.<br />
Five-year moving average of world production values.<br />© Roach Ag Marketing, Ltd.<br />
GSCI™ Components and Dollar Weights (%)  <br />(12-18-2009) <br />Energy 69.53 <br />Industrial Metals 8.21 <br />Precious...
What role did fundamentals play in 2009 grain prices?<br />© Roach Ag Marketing, Ltd.<br />
#1 - World Soybean Crop down 27.4 million tons = 34% of entire U.S. Crop<br />© Roach Ag Marketing, Ltd.<br />
#2 - March Intentions<br />March Intentions<br />© Roach Ag Marketing, Ltd.<br />
Final<br />March<br />© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
#3- On May 17 only 62% of the U.S. corn crop was planted with Illinois at 20%.<br />Beans were 25% planted with Illinois a...
Dollar back in decline from Feb 09 to June 09 <br />Dollar Index<br />Bears’ 1st Target<br />© Roach Ag Marketing, Ltd.<br />
In Addition<br /><ul><li>Tight U.S. soybean ending stocks this year and tight corn stocks next year were forecast
China building soybean reserves
Fear of rampant inflation
Speculative money again flowed into grain markets as traders chased beginning bull market moves</li></ul>© Roach Ag Market...
Grain Prices Dropped from July to Sept 2009 because: <br /><ul><li>South American crops quit shrinking
U.S. Dollar quit getting cheaper
There was no inflation….yet
China quit buying
U.S. farmers planted more acres than expected and the weather became nearly perfect for big crops</li></ul>© Roach Ag Mark...
Then Prices Rallied from Sept to December <br /><ul><li>U.S. crop experienced cold wet fall and slow harvest
U.S. Dollar resumed its decline and inflation fear grew
China became an aggressive buyer of beans
Speculative fever re-ignited in the face of shrinking production, increasing bean demand estimates</li></ul>© Roach Ag Mar...
What are the Fundamentals Now? <br />© Roach Ag Marketing, Ltd.<br />
Aug forecast +31.5 MMT                      Nov & Dec +39.4 MMT                          Jan +42.58 MMT<br />© Roach Ag Ma...
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
Bean Acreage<br />© Roach Ag Marketing, Ltd.<br />
Bean Situation and Price Outlook<br /><ul><li>U.S. and world inventory very tight now
China demand numbers increasing
2010 ending stocks no longer tight, but we must raise big crops in 2010
Prices should peak prior to normal March June selling season if no U.S. crop problem develops</li></ul>© Roach Ag Marketin...
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
FSU-12 Exports<br />2007-8 – 27.47 MMT<br />2008-9 – 54.71 MMT<br />2009-10 – 49.50 MMT<br />U.S. Corn Exports <br />2007-...
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
USDA 2009 World Corn Yields 12/10/09<br />© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
© Roach Ag Marketing, Ltd.<br />
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Cruise The Crop Markets 2010 Day 1

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Grain Price Outlook and Market Strategies

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Cruise The Crop Markets 2010 Day 1

  1. 1. Grain Price Outlook and Market Strategies<br />Cruise The Crop Markets<br />by John Roach<br />January 17 - 24, 2009<br />Day 1<br />© Roach Ag Marketing, Ltd.<br />
  2. 2. Roach Ag Marketing, Ltd. <br />7601 N. Federal Hwy<br />Suite 265-B<br />Boca Raton, FL 33487<br />800-622-7628<br />jroach@roachag.com<br />http://www.roachag.com<br />© Roach Ag Marketing, Ltd.<br />
  3. 3. Grain prices set their peak of a new price plateau in 2008. The new price plateau will remain but prices will search out the bottom of their range again this fall, if crops are good.<br />© Roach Ag Marketing, Ltd.<br />
  4. 4. Why will the new price plateau remain?<br />© Roach Ag Marketing, Ltd.<br />
  5. 5. Population Growth Rates<br />Source: USDA Agricultural Projections to 2017.<br />© Roach Ag Marketing, Ltd.<br />
  6. 6. Global Meat beef + pork + chickens & turkeys<br />Production, per capita consumption, and population<br />Source: USDA Agricultural Projections to 2017.<br />© Roach Ag Marketing, Ltd.<br />
  7. 7. Dollar’s value has been driving trade for the last 2 years<br />Dollar Index<br />© Roach Ag Marketing, Ltd.<br />
  8. 8. Index funds increasingly important beginning 4 years ago<br />© Roach Ag Marketing, Ltd.<br />
  9. 9. Five-year moving average of world production values.<br />© Roach Ag Marketing, Ltd.<br />
  10. 10. GSCI™ Components and Dollar Weights (%) <br />(12-18-2009) <br />Energy 69.53 <br />Industrial Metals 8.21 <br />Precious Metals 3.30 <br />Agriculture 14.71; <br />Wheat 3.16; Red Wheat 0.63; Corn 3.40 <br />Soybeans 2.39; Cotton 1.15; Sugar 2.82 <br />Coffee 0.78; Cocoa 0.38 ; <br />Livestock 4.26 <br />Live Cattle 2.44; Feeder Cattle 0.46; Lean Hogs 1.36 <br />© Roach Ag Marketing, Ltd.<br />
  11. 11. What role did fundamentals play in 2009 grain prices?<br />© Roach Ag Marketing, Ltd.<br />
  12. 12. #1 - World Soybean Crop down 27.4 million tons = 34% of entire U.S. Crop<br />© Roach Ag Marketing, Ltd.<br />
  13. 13. #2 - March Intentions<br />March Intentions<br />© Roach Ag Marketing, Ltd.<br />
  14. 14. Final<br />March<br />© Roach Ag Marketing, Ltd.<br />
  15. 15. © Roach Ag Marketing, Ltd.<br />
  16. 16. #3- On May 17 only 62% of the U.S. corn crop was planted with Illinois at 20%.<br />Beans were 25% planted with Illinois at 1% <br />© Roach Ag Marketing, Ltd.<br />
  17. 17. Dollar back in decline from Feb 09 to June 09 <br />Dollar Index<br />Bears’ 1st Target<br />© Roach Ag Marketing, Ltd.<br />
  18. 18. In Addition<br /><ul><li>Tight U.S. soybean ending stocks this year and tight corn stocks next year were forecast
  19. 19. China building soybean reserves
  20. 20. Fear of rampant inflation
  21. 21. Speculative money again flowed into grain markets as traders chased beginning bull market moves</li></ul>© Roach Ag Marketing, Ltd.<br />
  22. 22. Grain Prices Dropped from July to Sept 2009 because: <br /><ul><li>South American crops quit shrinking
  23. 23. U.S. Dollar quit getting cheaper
  24. 24. There was no inflation….yet
  25. 25. China quit buying
  26. 26. U.S. farmers planted more acres than expected and the weather became nearly perfect for big crops</li></ul>© Roach Ag Marketing, Ltd.<br />
  27. 27. Then Prices Rallied from Sept to December <br /><ul><li>U.S. crop experienced cold wet fall and slow harvest
  28. 28. U.S. Dollar resumed its decline and inflation fear grew
  29. 29. China became an aggressive buyer of beans
  30. 30. Speculative fever re-ignited in the face of shrinking production, increasing bean demand estimates</li></ul>© Roach Ag Marketing, Ltd.<br />
  31. 31. What are the Fundamentals Now? <br />© Roach Ag Marketing, Ltd.<br />
  32. 32. Aug forecast +31.5 MMT Nov & Dec +39.4 MMT Jan +42.58 MMT<br />© Roach Ag Marketing, Ltd.<br />
  33. 33. © Roach Ag Marketing, Ltd.<br />
  34. 34. © Roach Ag Marketing, Ltd.<br />
  35. 35. © Roach Ag Marketing, Ltd.<br />
  36. 36. © Roach Ag Marketing, Ltd.<br />
  37. 37. © Roach Ag Marketing, Ltd.<br />
  38. 38. © Roach Ag Marketing, Ltd.<br />
  39. 39. © Roach Ag Marketing, Ltd.<br />
  40. 40. © Roach Ag Marketing, Ltd.<br />
  41. 41. © Roach Ag Marketing, Ltd.<br />
  42. 42. © Roach Ag Marketing, Ltd.<br />
  43. 43. © Roach Ag Marketing, Ltd.<br />
  44. 44. © Roach Ag Marketing, Ltd.<br />
  45. 45. © Roach Ag Marketing, Ltd.<br />
  46. 46. © Roach Ag Marketing, Ltd.<br />
  47. 47. © Roach Ag Marketing, Ltd.<br />
  48. 48. Bean Acreage<br />© Roach Ag Marketing, Ltd.<br />
  49. 49. Bean Situation and Price Outlook<br /><ul><li>U.S. and world inventory very tight now
  50. 50. China demand numbers increasing
  51. 51. 2010 ending stocks no longer tight, but we must raise big crops in 2010
  52. 52. Prices should peak prior to normal March June selling season if no U.S. crop problem develops</li></ul>© Roach Ag Marketing, Ltd.<br />
  53. 53. © Roach Ag Marketing, Ltd.<br />
  54. 54. © Roach Ag Marketing, Ltd.<br />
  55. 55. FSU-12 Exports<br />2007-8 – 27.47 MMT<br />2008-9 – 54.71 MMT<br />2009-10 – 49.50 MMT<br />U.S. Corn Exports <br />2007-8 – 69.89 MMT<br />2008-9 – 51.17 MMT<br />2009-10 – 55.79 MMT<br />U.S. Wheat Exports <br />2007-8 – 34.36 MMT<br />2008-9 – 27.64 MMT<br />2009-10 – 22.45 MMT<br />© Roach Ag Marketing, Ltd.<br />
  56. 56. © Roach Ag Marketing, Ltd.<br />
  57. 57. © Roach Ag Marketing, Ltd.<br />
  58. 58. USDA 2009 World Corn Yields 12/10/09<br />© Roach Ag Marketing, Ltd.<br />
  59. 59. © Roach Ag Marketing, Ltd.<br />
  60. 60. © Roach Ag Marketing, Ltd.<br />
  61. 61. © Roach Ag Marketing, Ltd.<br />
  62. 62. © Roach Ag Marketing, Ltd.<br />
  63. 63. © Roach Ag Marketing, Ltd.<br />
  64. 64. © Roach Ag Marketing, Ltd.<br />
  65. 65. © Roach Ag Marketing, Ltd.<br />
  66. 66. © Roach Ag Marketing, Ltd.<br />
  67. 67. © Roach Ag Marketing, Ltd.<br />
  68. 68. © Roach Ag Marketing, Ltd.<br />
  69. 69. © Roach Ag Marketing, Ltd.<br />
  70. 70. © Roach Ag Marketing, Ltd.<br />
  71. 71. © Roach Ag Marketing, Ltd.<br />
  72. 72. © Roach Ag Marketing, Ltd.<br />
  73. 73. © Roach Ag Marketing, Ltd.<br />
  74. 74. © Roach Ag Marketing, Ltd.<br />
  75. 75. © Roach Ag Marketing, Ltd.<br />
  76. 76. Corn Situation and Price Outlook<br /><ul><li>World coarse grain and U.S. ending stocks ample - but just barely. Wheat hurting demand
  77. 77. U.S. ending stocks likely to increase due to smaller exports and feed offset by + ethanol
  78. 78. Livestock producers losing less money
  79. 79. We still need a big corn crop every year and should have seasonal strength in 2010</li></ul>© Roach Ag Marketing, Ltd.<br />
  80. 80. © Roach Ag Marketing, Ltd.<br />
  81. 81. © Roach Ag Marketing, Ltd.<br />
  82. 82. © Roach Ag Marketing, Ltd.<br />
  83. 83. © Roach Ag Marketing, Ltd.<br />
  84. 84. © Roach Ag Marketing, Ltd.<br />
  85. 85. © Roach Ag Marketing, Ltd.<br />
  86. 86. © Roach Ag Marketing, Ltd.<br />
  87. 87. © Roach Ag Marketing, Ltd.<br />
  88. 88. © Roach Ag Marketing, Ltd.<br />
  89. 89. Wheat Situation and Price Outlook<br /><ul><li>World wheat ending stocks are 3rd largest on record and US biggest since 1988
  90. 90. Prices increasingly dominated by former Soviet Union production
  91. 91. Index fund ownership distorting price higher and basis wider
  92. 92. 2010 winter acreage 37.1 mil acres down 14.3% from 2009</li></ul>© Roach Ag Marketing, Ltd.<br />
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