Grain Market Outlook and Marketing Strategies Presented by: Brian Roach Dec 6 & 7, 2016 Roach Ag Marketing, Ltd.
Disclaimer: Futures/options trading involves substantial risk of loss and trading may not be suitable for all investors. You should fully understand those risks prior to trading. Past financial results are not necessarily indicative of future performance. This material should be construed as the solicitation of an offer to sell or the solicitation of an offer to buy the derivative(s) noted in any jurisdiction where such an offer or solicitation would be legal. These materials have been created for a select group of individuals, and are intended to be presented with the proper context and guidance. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by Roach Ag Marketing, Ltd. Roach Ag. Marketing is not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Contact Roach Ag. Marketing designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by Roach Ag. Marketing. Roach Ag Marketing, Ltd.
Roach Ag Marketing, Ltd. 568 East Yamato Road Suite 200 Boca Raton, FL 33431 800-622-7628 broach@roachag.com http://www.roachag.com Roach Ag Marketing, Ltd.
High Level View Population Growth Stable World growth with upsides U.S. energy independence Strong Dollar Big Demand needs Big Supply Accuracy in Marketing Roach Ag Marketing, Ltd.
http://www.worldometers.info/world-population/ Roach Ag Marketing, Ltd.
Growing 1.18% per year 83 million new mouths annually 8.5 billion people by 2030 9.7 billion people by 2050 Roach Ag Marketing, Ltd.
CIA & Gallup Roach Ag Marketing, Ltd.
Crude oil and Ethanol Roach Ag Marketing, Ltd.
Fracking changes the speed U.S. oil comes online at higher prices. Baker Hughes and INTL FCStone Financial Inc. Roach Ag Marketing, Ltd.
U.S. production ready to surge?
Monthly Crude Oil OPEC s deal supports crude above $50 but not $70-$80 Source: Futuresource Roach Ag Marketing, Ltd.
Source: USDA, EIA Roach Ag Marketing, Ltd.
Accelerating U.S. economy equates to a stronger Dollar vs. Ag exporting nations. Weekly Dollar Index Source: Futuresource Roach Ag Marketing, Ltd.
U.S. exporters lost a currency advantage over Brazil after the election correcting now Roach Ag Marketing, Ltd.
Funds Expect Same Volatility as in Past Years Roach Ag Marketing, Ltd.
Contracts 500000 Managed Money Corn - Net Position 400000 300000 200000 100000 0-100000 -200000-300000 Source: CFTC COT Roach Ag Marketing, Ltd.
Source: CFTC COT Roach Ag Marketing, Ltd.
Contracts 100000 Managed Money Chicago Wheat - Net Position 50000 0-50000 -100000-150000 -200000 Source: CFTC COT Roach Ag Marketing, Ltd.
Contracts 150000 Managed Money Soybean Oil - Net Position 100000 50000 0-50000 -100000
CORN
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Million Tons 2.50% Average Annual Growth Rate since 2003-04 1350.00 1300.00 1250.00 1200.00 1150.00 1100.00 1050.00 1000.00 950.00 900.00 850.00 800.00 750.00 World Coarse Grain 6 Billion People Total Use Rate of climb has steepened since 03/04 7 Billion People Source: USDA Roach Ag Marketing, Ltd.
Total usage up 49.7 million tons from last year Source: USDA WASDE Roach Ag Marketing, Ltd.
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Days of Supply 90.0 80.0 Ending Stocks slightly smaller in 17 Ending Stocks USDA Corn Price World Coarse Grains Ending Stocks Days of Supply $9.00 $8.00 70.0 60.0 50.0 40.0 30.0 $7.00 $6.00 $5.00 $4.00 $3.00 Avg. Farm Price ($/bu) 20.0 $2.00 10.0 $1.00 Source: USDA WASDE Roach Ag Marketing, Ltd.
Export Inspections Source: USDA, INTL FCStone Financial Inc Roach Ag Marketing, Ltd.
Source: INTL FCStone Financial Inc, USDA Roach Ag Marketing, Ltd.
Source: INTL FCStone Financial Inc, USDA Roach Ag Marketing, Ltd.
CORN OUTLOOK U.S. corn demand at 14.6 Billion largest in history by 6% 2017 swing to bean acres in the U.S. will drive price risk in need for another big yield in southern and northern hemispheres. Livestock feed, ethanol and exports all set to outperform Early 17 prices hinge the performance of Brazil/Argentina crops. Don t get too down on today s prices. Let s look at the past 4 years to see why (Below)
SOYBEANS Why are futures rising?
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Million Tons 4.0% Average Annual Growth Rate for World Soybean Usage Since 340.00 2003-04. 320.00 300.00 280.00 260.00 240.00 220.00 200.00 180.00 160.00 140.00 120.00 100.00 80.00 World Soybeans Total Use 6 Billion People 7 Billion People Source: USDA WASDE Roach Ag Marketing, Ltd.
1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Ending Stocks (Days of Supply) 110.0 100.0 Requires big crops 90.0 80.0 70.0 60.0 50.0 40.0 30.0 World Soybeans Ending Stocks Days of Supply Ending Stocks USDA Price $18.00 $16.50 $15.00 $13.50 $12.00 $10.50 $9.00 $7.50 $6.00 $4.50 Avg. Farm Price ($/bu) 20.0 $3.00 Source: USDA WASDE Roach Ag Marketing, Ltd.
Source: USDA WASDE Roach Ag Marketing, Ltd.
U.S. pork accounts for only 17% of China s total imports January-August 2016, pork exports to China doubled to 12% of total U.S. shipments. The recent rise in Chinese hog and pork prices will stimulate herd recovery and thus production expansion will be initiated in 2017. Source USDA FAS
China s Swine recovery driving Bean demand Higher priced domestic pork allows herds to grow and justifies increases to bean imports Risk next year -- Chinese govt policy to increase bean acreage
November 2017 Soybean Sales Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
SOYBEAN OUTLOOK U.S. soybean demand at historically high levels World livestock herds are rebuilding (China, Australia and U.S.) Growers have risk at stake in several areas for 2017/18. 1) U.S. acre estimates are larger 2) Brazil is off to a very good start 3) Market leading Palm Oil due for a correction 4) China s bean planting? S. American growing season is VERY long. Plan for market volatility as we are seeing today.
WEATHER 2 issues
Source: http://droughtmonitor.unl.edu/ Roach Ag Marketing, Ltd.
Source: worldagweather.com Roach Ag Marketing, Ltd.
Source: worldagweather.com Roach Ag Marketing, Ltd.
How Should U.S. Farmers Market Their Crops in 2017? Roach Ag Marketing, Ltd.
Roach Ag Plan $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 Sell New Crop Corn Buy Puts on Balance Buy calls on sold grain in buy signals Sell Balance of Old Crop Repeat New Crop Strategy $5.00 $4.50 Don't Sell Here! Reownership $4.00 Mar Apr May Jun Oct Nov Mar Apr May Jun Oct Nov Past performance is not necessarily indicative of future results
Focus the majority of sales in the 1 st half of the year Best Prices Usually Occur in March to July, sometimes August Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Sell when markets are giving us a 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 Our We system will direct gives you the to grower the best 10-12 3-4! selling opportunities /yr Roach Ag Marketing, Ltd.
December 2016 Corn Sales Pre-Harvest Average: $4.05 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2015 Corn Sales Pre-Harvest Average: $4.26 Source: Futuresource Past performance is not necessarily indicative of future results 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 / farm profits Roach Ag Marketing, Ltd.
Market Plan Farm Name: Phone: Date: Account #: Unpriced grain Old Crop # of sell signals Bushels to sell per sell signal in spring of '17 Approximate bushels to sell per day for 5 days 2016 Corn 4 0 0 2016 Beans 4 0 0 2016 Wheat 4 0 0 Acres Expected Yield 2017 Production New Crop Plan to Forward Price Bushels already sold Bushels to Sell Spring of '17 # of Sell Signals Bushels to Sell Per Sell Signal in Spring of '17 2017 Corn 0 0 4 0 0 2017 Beans 0 0 4 0 0 2017 Wheat 0 0 4 0 0 Approximate Bushels To Sell per Day Put Options Unsold Bushels Estimated Number of Sell Signals Put Contracts to buy per Sell Signal Total Contracts 2017 Corn 0 4 0 0 2017 Beans 0 4 0 0 2017 Wheat 0 4 0 0 Notes: Call Options Sold Bushels Estimated Number of Buy Signals Call Contracts to buy per Buy Signal Total Contracts 2017 Corn 0 4 0 0 2017 Beans 0 4 0 0 2017 Wheat 0 4 0 0 Roach Ag Marketing, Ltd.
Make sure you have enough on-farm or other owned storage to hold the balance of a crop with room for upside in yields. Roach Ag Marketing, Ltd.
Make sure you sell enough in the spring prior to harvest to generate necessary cashflow from harvest through February Roach Ag Marketing, Ltd.
Track your local basis looking for trends
Legacy Corn basis
Legacy Bean basis
$4 corn and $10+ returned every year past 4 Corn and soybean rallies from pre-season or mid-season lows 4 year average corn 13 60 cents 14 80 cents 15 92 cents 16 85 cents 4 year average soybeans 13 $1.95 14 $1.91 15 $1.55 16 $3.09 Average : 79 ¼ cents/bu Average : $2.12 / bu
Selling Accuracy 12 of the last 14 years the Dec corn high came during a Roach Ag Sell Signal. 6 of the last 9 years for Nov soybeans Our results improve when: Roach Ag Sell Signals Money Flow Seasonality Cash Price vs. Forecasted Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Highest prices tend to come Mar-Aug during key U.S crop development 7 of 10 years for corn when spec money flow most positive. Seasonality 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 245 303 356 372 391 411 404 362 372 381 327 331 2007 -- 2008 354 358 382 427 489 516 547 593 601 700 646 549 2008 -- 2009 542 413 374 367 391 363 380 388 422 413 328 327 2009 -- 2010 325 372 391 402 386 363 368 354 368 347 378 409 2010 -- 2011 489 546 553 592 635 691 686 753 724 722 668 714 2011 -- 2012 694 632 627 606 631 640 648 633 601 600 759 803 2012 -- 2013 763 750 740 721 715 705 715 649 651 656 528 483 2013 -- 2014 460 439 423 430 427 450 485 505 490 444 379 363 2014 -- 2015 339 349 379 401 388 388 386 377 361 367 409 374 2015 -- 2016 379 383 370 371 362 366 364 375 391 413 348 333 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Highest soybean prices tend to come Dec-Jan during South American crop development and Mar-Aug during U.S crop development SA Crops US Crop Development 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 545 593 667 662 698 757 756 737 773 824 854 842 2007 -- 2008 949 975 1062 1151 1258 1383 1351 1314 1334 1503 1504 1282 2008 -- 2009 1175 922 898 868 994 929 903 1018 1141 1199 1045 1061 2009 -- 2010 931 966 1012 1033 981 939 953 974 954 948 996 1023 2010 -- 2011 1065 1163 1256 1317 1395 1394 1360 1365 1357 1360 1362 1363 2011 -- 2012 1340 1214 1171 1144 1205 1256 1352 1441 1419 1419 1634 1680 2012 -- 2013 1676 1539 1448 1455 1419 1457 1445 1403 1438 1507 1420 1293 2013 -- 2014 1344 1287 1293 1330 1285 1348 1422 1485 1481 1408 1173 1067 2014 -- 2015 971 968 1032 1034 1002 994 981 972 954 959 999 921 2015 -- 2016 876 892 866 879 873 874 893 967 1061 1146 1049 983 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Target the top-end USDA cash price estimates When: Average farm gate price Is close to or greater than: Top End USDA Price Range = Selling opportunity Corn- $3.00-3.60 Beans- 8.45-9.95 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Why Roach Ag? Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
In 11 of the last 13 years, the Dec. Corn high came during a Sell Signal. 12/14 on Jan 1 91% of our subscribers renewed in 2015 and 2016. In 2015, Dec corn futures fell an average of 25 cents following a Sell Signal. 2016 that number was.. Customers in 45 states utilizing our system for cash grain sales. Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Roach Ag Marketing, Ltd. 568 East Yamato Road Suite 200 Boca Raton, FL 33431 800-622-7628 Broach@roachag.com http://www.roachag.com Roach Ag Marketing, Ltd.
Next slides for Research and Q/A
1/3 1/10 1/17 1/24 1/31 2/7 2/14 2/21 2/28 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 5/2 5/9 5/16 5/23 5/30 6/6 6/13 6/20 6/27 7/4 7/11 7/18 7/25 8/1 8/8 8/15 8/22 8/29 9/5 9/12 9/19 9/26 10/3 10/10 10/17 10/24 10/31 11/7 11/14 11/21 11/28 12/5 12/12 December Corn Seasonality 20-Yr 15-Yr 10-Yr 5-Yr 100% 80% 60% 40% 20% 0% Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
1/3 1/10 1/17 1/24 1/31 2/7 2/14 2/21 2/28 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 5/2 5/9 5/16 5/23 5/30 6/6 6/13 6/20 6/27 7/4 7/11 7/18 7/25 8/1 8/8 8/15 8/22 8/29 9/5 9/12 9/19 9/26 10/3 10/10 10/17 10/24 10/31 11/7 November Soybeans Seasonality 20-Yr 15-Yr 10-Yr 5-Yr 100% 80% 60% 40% 20% 0% Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Money flow drives the best selling opportunities 8 of 10 years for corn. 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 245 303 356 372 391 411 404 362 372 381 327 331 2007 -- 2008 354 358 382 427 489 516 547 593 601 700 646 549 2008 -- 2009 542 413 374 367 391 363 380 388 422 413 328 327 2009 -- 2010 325 372 391 402 386 363 368 354 368 347 378 409 2010 -- 2011 489 546 553 592 635 691 686 753 724 722 668 714 2011 -- 2012 694 632 627 606 631 640 648 633 601 600 759 803 2012 -- 2013 763 750 740 721 715 705 715 649 651 656 528 483 2013 -- 2014 460 439 423 430 427 450 485 505 490 444 379 363 2014 -- 2015 339 349 379 401 388 388 386 377 361 367 409 374 2015 -- 2016 379 383 370 371 362 366 364 375 391 413 348 333 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Money flow drives the best selling opportunities 8 of 10 years for beans. 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 545 593 667 662 698 757 756 737 773 824 854 842 2007 -- 2008 949 975 1062 1151 1258 1383 1351 1314 1334 1503 1504 1282 2008 -- 2009 1175 922 898 868 994 929 903 1018 1141 1199 1045 1061 2009 -- 2010 931 966 1012 1033 981 939 953 974 954 948 996 1023 2010 -- 2011 1065 1163 1256 1317 1395 1394 1360 1365 1357 1360 1362 1363 2011 -- 2012 1340 1214 1171 1144 1205 1256 1352 1441 1419 1419 1634 1680 2012 -- 2013 1676 1539 1448 1455 1419 1457 1445 1403 1438 1507 1420 1293 2013 -- 2014 1344 1287 1293 1330 1285 1348 1422 1485 1481 1408 1173 1067 2014 -- 2015 971 968 1032 1034 1002 994 981 972 954 959 999 921 2015 -- 2016 876 892 866 879 873 874 893 967 1061 1146 1049 983 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2015 Corn Sales Pre-Harvest Average: $4.26 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2014 Corn Sales Pre-Harvest Average: $4.66 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2013 Corn Sales Pre-Harvest Average: $5.84 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2012 Corn Sales Pre-Harvest Average: $6.47 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2011 Corn Sales Pre-Harvest Average: $6.09 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2010 Corn Sales Pre-Harvest Average: $4.14 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2009 Corn Sales Pre-Harvest Average: $4.42 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
December 2008 Corn Sales Pre-Harvest Average: $5.73 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2015 Soybean Sales Pre-Harvest Average: $9.88 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2014 Soybean Sales Pre-Harvest Average: $11.75 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2013 Soybean Sales Pre-Harvest Average: $12.96 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2012 Soybean Sales Pre-Harvest Average: $13.50 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2011 Soybean Sales Pre-Harvest Average: $13.25 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2010 Soybean Sales Pre-Harvest Average: $9.58 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2009 Soybean Sales Pre-Harvest Average: $9.77 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
November 2008 Soybean Sales Pre-Harvest Average: $13.07 Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Highest prices tend to come Mar-Aug during key U.S crop development 7 of 10 years for corn when spec money flow most positive. Seasonality 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 245 303 356 372 391 411 404 362 372 381 327 331 2007 -- 2008 354 358 382 427 489 516 547 593 601 700 646 549 2008 -- 2009 542 413 374 367 391 363 380 388 422 413 328 327 2009 -- 2010 325 372 391 402 386 363 368 354 368 347 378 409 2010 -- 2011 489 546 553 592 635 691 686 753 724 722 668 714 2011 -- 2012 694 632 627 606 631 640 648 633 601 600 759 803 2012 -- 2013 763 750 740 721 715 705 715 649 651 656 528 483 2013 -- 2014 460 439 423 430 427 450 485 505 490 444 379 363 2014 -- 2015 339 349 379 401 388 388 386 377 361 367 409 374 2015 -- 2016 379 383 370 371 362 366 364 375 391 413 348 333 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.
Highest soybean prices tend to come Dec-Jan during South American crop development and Mar-Aug during U.S crop development SA Crops US Crop Development 2006 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 2006 -- 2007 545 593 667 662 698 757 756 737 773 824 854 842 2007 -- 2008 949 975 1062 1151 1258 1383 1351 1314 1334 1503 1504 1282 2008 -- 2009 1175 922 898 868 994 929 903 1018 1141 1199 1045 1061 2009 -- 2010 931 966 1012 1033 981 939 953 974 954 948 996 1023 2010 -- 2011 1065 1163 1256 1317 1395 1394 1360 1365 1357 1360 1362 1363 2011 -- 2012 1340 1214 1171 1144 1205 1256 1352 1441 1419 1419 1634 1680 2012 -- 2013 1676 1539 1448 1455 1419 1457 1445 1403 1438 1507 1420 1293 2013 -- 2014 1344 1287 1293 1330 1285 1348 1422 1485 1481 1408 1173 1067 2014 -- 2015 971 968 1032 1034 1002 994 981 972 954 959 999 921 2015 -- 2016 876 892 866 879 873 874 893 967 1061 1146 1049 983 = Money Flow Indicator in Top 75 th Percentile Red numbers indicate high price of crop year Source: Futuresource Past performance is not necessarily indicative of future results Roach Ag Marketing, Ltd.