Developments In Irish Grain Markets

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1 Developments In Irish Grain Markets John Bergin R&H Hall Ltd

2 Irish Market Where have we come from Where we are today Irish Production Drivers of Irish Market Marketing Grain Summary

3 Where Have We Come From Two years of heavy carry over stocks. Quality issues low kph due to weather. Lower Plantings Irish wheat area down 24% approx. Low prices due to global over supply and carry over stocks. Continued volatility in the market. Prospect of another large global crop last June. Very little forward selling.

4 Where are we today Irish closing stocks reduced to normal levels as of June Excellent quality of grain this harvest. low moistures, high kph. High prices. Due to a reduced global production and global stock dislocation. Grain Sold Forward - 150,000mt approx Ongoing volatility i.e. grains had the biggest monthly rise, since 1959 in July.

5 Change In Global Wheat Balance (mmt) Production Ending Stocks 2008/ / /11 May June July August September

6 Irish Cereal Production

7 Native Harvest Production ( 000tn)

8 Irish Cereal Area ( 000ha)

9 Irish Yield versus EU and World (mt/ha) Wheat 2007/ / / /11 World EU Ireland Barley 2007/ / / /11 World EU Ireland

10 Irish Wheat Production scale to Europe/Black Sea (mmt) Source: Stratégiegrains

11 Drivers of Irish Market

12 Drivers of Irish Market Nett importers - Gives higher ex farm prices. European market Price Influence. Supply of Irish Grain Native Production. Global Supply & Stocks. Coarse Grain price. Price Relationship between Corn, Barley and Wheat Weather. Russia, Germany Funds / Global Economy / Currency.

13 Price Spread - Matif / Liffe / Native Native Liffe Matif /9/08 5/10/08 5/11/08 5/12/08 5/1/09 5/2/09 5/3/09 5/4/09 5/5/09 5/6/09 5/7/09 5/8/09 5/9/09 5/10/09 5/11/09 5/12/09 5/1/10 5/2/10 5/3/10 5/4/10 5/5/10 5/6/10 5/7/10 5/8/10 5/9/10

14 Drivers of Irish Market Nett importers - Gives higher ex farm prices. European market Price Influence. Supply of Irish Grain Native Production. Global Supply & Stocks. Coarse Grain price. Price Relationship between Corn, Barley and Wheat Weather. Russia, Germany Funds / Global Economy / Currency.

15 Global Wheat Stocks mmt mmt Production mmt 2010F 645mmt

16 Global Corn Stocks mmt 2010F 134mmt Production mmt 2010F 827mmt

17 Global Barley Stocks mmt 2010F - 27mmt Production mmt 2010F 134mmt

18 Drivers of Irish Market Nett importers - Gives higher ex farm prices. European market Price Influence. Supply of Irish Grain Native Production. Global Supply & Stocks. Coarse Grain price. Price Relationship between Corn, Barley and Wheat Weather. Russia, Germany Funds / Global Economy / Currency.

19 Russia Wheat Situation mil tn Some estimate this at 35mil Russia Wheat Carryin Production Imports Available Domestic Export Total Carryout

20 Drivers of Irish Market Nett importers - Gives higher ex farm prices. European market Price Influence. Supply of Irish Grain Native Production. Global Supply & Stocks. Coarse Grain price. Price Relationship between Corn, Barley and Wheat Weather. Russia, Germany Funds / Global Economy / Currency.

21 Fund Activity in Cbot Wheat

22 Economic Influence. FTSE 100 V s LIFFE Wheat Front Month

23 Grain Marketing

24 Mature Irish Market Irish market has matured leading to the following: Forward Selling Selling throughout the year Constant Market Monitoring Contracts Using forward price to establish value of con acre to grower Selling decision Sell at a price rather than at certain time of year if possible.

25 Making a Selling Decision Have a marketing plan Time, Quantity Know your cost of production. Set a price that you are willing to sell at. Avoid target prices (as 75% of sellers will be using them) Recognise you business, cash flow requirement and storage constraints Recognise the market drivers As discussed. Utilise all the information that is available to you.

26 Risk Management Must know markets do not stand still (Volatility) Prices are fluid and change daily Know what are selling opportunities Sell throughout the year (about having averages right) When you have sold, don t look back. Most Merchants/Coops now offer the opportunity to sell on the green price equivalent all year-round.

27 Summary

28 Market Drivers Going Forward Where Will Final Global Cereal Production Be. South America, Australia. Demand Will high prices reduce demand Switch in exports Russia 18mmt to 3mmt USA 24mmt to 34mmt Planting forecast for 2011/2012 harvest Global Economy

29 Summary Grain markets appear to be well supported at current levels. Volatility will remain. Next year prices are well supported as the market debates planting intentions and the switch of exports from FSU to USA, EU, etc. Market will react violently to any food shortage, whether it be perceived or real.

30 Thank You

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