Mason City 3 18 10 Meeting
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    Mason City 3 18 10 Meeting Mason City 3 18 10 Meeting Presentation Transcript

    • © Roach Ag Marketing, Ltd. Grain Price Outlook and Market Strategies Presented by: John Roach March 18, 2010
    • © Roach Ag Marketing, Ltd. What fundamentals drove 2009 grain prices?
    • © Roach Ag Marketing, Ltd. #1 - World Soybean Crop down 27.4 million tons = 34% of entire U.S. Crop
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. #3- On May 17 only 62% of the U.S. corn crop was planted with Illinois at 20%. Beans were 25% planted with Illinois at 1%
    • © Roach Ag Marketing, Ltd. What are the Fundamentals Now?
    • © Roach Ag Marketing, Ltd. Aug forecast +31.5 MMT Nov & Dec +39.4 - Jan +42.58 Feb & March +44.16 MMT
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
      • Tight stocks - loosening with S.A. harvest
      • 2010 supplies becoming surplus
      • Prices likely peaked in January if no U.S. crop problem develops
      • S. America will still be shipping in Dec. hurting new crop bean price
      Bean Situation and Price Outlook
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. FSU-12 Exports 2007-8 – 27.47 MMT 2008-9 – 54.71 MMT 2009-10 – 49.50 MMT U.S. Corn Exports 2007-8 – 69.89 MMT 2008-9 – 51.17 MMT 2009-10 – 55.79 MMT U.S. Wheat Exports 2007-8 – 34.36 MMT 2008-9 – 27.64 MMT 2009-10 – 22.45 MMT
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. USDA 2009 World Corn Yields 12/10/09 Non – U.S. 58.9 Bu/Acre World 80.3 Bu/Acre U.S. 162.9 Bu/Acre
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
      • World coarse grain and U.S. ending stocks ample - but likely to grow. Wheat hurting demand
      • U.S. ending stocks likely to increase due to smaller exports and feed offset by + ethanol
      • Livestock producers breaking even or better
      • We still need a big corn crop every year and should have spring strength in 2010
      Corn Situation and Price Outlook
    • © Roach Ag Marketing, Ltd. How Should I Market My Crops?
    • © Roach Ag Marketing, Ltd.
      • Focus the majority of sales in the 1 st half of the year
      • March through June is usually best
      Rule # 1
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • Why Market Grain Aggressively?
      • In the last 21 years,
      • Comparing December Corn Futures in
      • March–June vs. Oct-Nov
      • Dropped Significantly – 15 years
      • Drifted Sideways – 3 years
      • Increased Significantly – 3 years
      • Marketing Ahead is Correct 85% of the Time!
    • What is it worth? The 5 Year Ave. of Dec corn during Oct – Nov $3.07 0.66 The 5 Year Ave. of Dec corn during Roach Mar – June Sell Signals = $3.73
    • What is it worth? 150 bpa X 0.66 = $100 per acre
    • © Roach Ag Marketing, Ltd.
      • Sell only when markets are giving us a Roach Ag Sell Signal
      Rule # 2
      • December 2007 Corn
      © Roach Ag Marketing, Ltd. Both Lines Over 75 = Roach Ag Sell Signal
    • © Roach Ag Marketing, Ltd. Roach Ag Sell & Buy Signals Your Digital Thermometer For Prices
    • © Roach Ag Marketing, Ltd. Roach Ag Sell Signals When Both Lines Are Above 75 = Sell Signal
    • © Roach Ag Marketing, Ltd. Roach Ag 2007 Corn Sell Signals 56 Days of Sell Signals ($3.91) and 272 Days Without ($3.71)
    • © Roach Ag Marketing, Ltd.
      • 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
      Rule # 3
    • © Roach Ag Marketing, Ltd.
      • Make sure you have enough on-farm or other owned storage to hold the balance of a crop using your best ever yields
      Rule # 4
    • © Roach Ag Marketing, Ltd.
      • Make sure you sell enough in the spring prior to harvest to generate necessary cash-flow from harvest through February
      Rule # 5
    • © Roach Ag Marketing, Ltd.
      • Split your old crop bushels and new crop contracts into between 3 and 5 increments and sell one increment of each on each Sell Signal
      Rule # 6
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. December 2009 Corn Sales Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd.
    • © Roach Ag Marketing, Ltd. Put Opportunity - Buy Puts on some of the Crop You Do Not Want to Sell on a Cash Contract
    • © Roach Ag Marketing, Ltd.
    • What About the Grain You Don’t Want to Sell Ahead?
      • Build Storage to hold increasingly larger yields
      • Increased infrastructure will reduce harvest bottlenecks
      • Reduce drying and shrink costs
      • Capture the futures carry available
      • Capture the improvement in basis and competition between bids
      • Space out your workload
      • Avoid extremely low harvest bids
      • Price Risk
        • “ If I sell, Prices might go higher.”
      • Marketing Risk
        • “ If I oversell, I won’t have enough money to buy-back my sales.”
      • Buy Puts on spring Sell Signals
      • Hold them until an August – September Buy Signal
      • It takes advantage of the normal price decline
      • Cash in and wait until next year
      • May also sell Calls if margin calls don’t freak you out – you have to fund Call option loss as it occurs
      • Spend about 30 cents on corn and 50 cents on bean
      • Frequently able to double your money – but will lose premium if prices don’t go down
      Cover Unsold Grain With Put Options
    • Put Option Charts
    •  
    • © Roach Ag Marketing, Ltd. The Information Revolution is Driving the Long Term Demand for Milk, Meat, and Eggs
    • © Roach Ag Marketing, Ltd. Roach Ag Marketing, Ltd. 7601 N. Federal Hwy Suite 265-B Boca Raton, FL 33487 800-622-7628 [email_address] http://www.roachag.com