Basic for grain seminar - North Dakota Corn Growers Association

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2014 OUTLOOK

Ray Grabanski Progressive Ag Fargo, ND

Trading futures and options involves risk. Past performance is not indicative of future results.

North Dakota Marketing Year Average Price

Year 1971-2006 2007 2008 2009 2010 2011 2012 Spring Wheat 1.30 - 4.71

7.45

7.19

4.90

6.78

8.17

8.19

Soyeans 2.87 - 7.37

9.63

9.71

9.26

10.90

11.90

14.00

Corn 1.00 - 3.16

4.06

3.74

3.18

5.01

5.81

6.46

Jan-13

Chi Wht H Chi Wht N 7.7800

7.9400

KC Wht H KC Wht N 8.3100

8.2700

Mpls Wht H Mpls Wht U 8.6500

8.9500

2013 – IN REVIEW

Dec-13 Change

6.0500

6.1700

6.4000

6.4300

6.3500

6.6600

-22.2% -22.3% -23.0% -22.2% -26.6% -25.6%

2013 – IN REVIEW

Jan-13 Dec-13 Change

Corn H Corn Z 6.9800

5.8600

Soybean H Soybean X 14.1900

13.0300

Soybean Oil H 49.16

Soybean Meal H 420.60

4.2200

4.5000

13.1200

11.3500

38.82

-39.5% -23.2% -7.5% -12.9% -21.0% 437.70

4.1%

2013 – IN REVIEW

Jan-13

Live Cattle G Feeder Cattle F Lean Hog G 129.900

151.400

85.720

Dec-13 Change

134.500

166.700

85.420

3.5% 10.1% -0.3%

2013 – IN REVIEW

Jan-13

GOLD G Silver H Copper G Platinum F Palladium H 1677.10

30.38

3.64

1538.70

717.40

Dec-13 Change

1201.90

19.34

3.44

1371.10

702.65

-28.3% -36.3% -5.5% -10.9% -2.1%

2013 – IN REVIEW

Jan-13

Crude Oil G RBOB G Heating Oil G Ethanol G Natural Gas G 91.79

2.81

3.05

2.19

3.37

Dec-13

98.42

2.79

3.08

1.91

4.23

Change

7.2% -0.9% 1.1% -12.7% 25.6%

2013 – IN REVIEW

Jan-13

Dow Jones H S&P 500 H Nasdaq H Dollar CRB Index 13070.00

1422.50

2652.00

79.88

313.37

Dec-13

16494.00

1841.10

3584.00

80.32

277.68

Change

26.2% 29.4% 35.1% 0.6% -11.4%

Stocks Breakout to New Highs

10 year Monthly DJIA

CORN

Corn’s Issues Bigger than expected crop (158.8 bu) Demand Exports started poor/cancellation/improving Ethanol pace slowing EPA changing RFS 1.6 Million less Soft Red Acres

Corn Exports To Date

2012 Sales .538

Shipments 0.312

USDA .731

2013 1.32

0.574

1.6

60.0/week 1.8/3.12 BB 26.1/week 783/1.357

22 weeks into corn’s marketing year, 30 weeks to go Sales need to average 9.3/Shipments 34.2

Corn Category Supply Beginning Stocks Production Imports Total Supply Use Food, Seed, Ind.

Ethanol Feed and Residual Exports Total Use Ending Stocks Stocks/Use Ratio 5 Year Average Planted Acres Harvested Acres Yield Per Acre (Bu.) Average Price 09/10 1,673 13,092 8 14,774 1,370 4,591 5,125 1,980 13,066 1,708 13.1

86.4

79.5

164.7

3.55

10/11 1,708 12,447 28 14,182 1,407 5,019 4,795 1,834 13,055 1,128 8.6

11/12 1,128 12,360 29 13,517 1,428 5,000 4,557 1,543 12,528 989 7.9

12/13 989 10,780 162 11,932 1,396 4,648 4,335 731 11,111 821 7.4

88.2

81.4

152.8

5.18

91.9

84.0

147.2

6.22

97.2

87.4

123.4

6.89

13/14 821 13,925 35 14,781 1,400 5,000 5,300 1,600 13,300 1,481 11.1

95.4

87.7

158.8

4.50

14/15 1,481 13,871 15 15,367 1,425 4,600 5,000 1,750 12,775 2,592 20.3

11.2

92.5

85.1

163.0

3.35

USDA 2014 L-R Projections  93.5 million acres, 86.1 hvstd.

 165.6 bu/acre yield  14.26 billion bu crop  Ethanol 4.9 billion bu.

 2.6 billion carryout ($3.65)  But reduce 400 mb since Nov. (2.2 B)

USDA 10 yr. projections  2014-2018: $3.30-$3.65

 2019-2024: $3.75-$4.20

 B/E now is $4.14

 Target Price is now $3.70

Monthly corn: Consolidation?

Weekly Chart: Bottoming???

Mar 14 Corn: $4.45 sell July

Dec 14 Corn: $4.65/$5.35?

SAM Weather

SOYBEAN

Soybean Issues South America: Brazil: huge acres, 5 to 8% increase, early harvest good, getting hot south Argentina: hot dry conditions/improving US demand impressively strong Crush demand very strong meal demand main reason Exports very strong but China has huge

Soybean Exports To Date

2012 Sales 1.25

Shipments 1.01

USDA 1.32

2013 1.58

1.16

1.51

71.8/week 2.15/3.73 BB 52.7/week 1.58/2.74 BB

22 weeks into corn’s marketing year, 30 weeks to go Sales are over expectations/Shipments need 11.7

Soybean Export Destinations 25,00 22,50 20,00 17,50 15,00 12,50 10,00 7,50 5,00 2,50 0,00 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 China Mexico Japan Taiwan Indonesia Netherlands

Soybeans Category Supply Beginning Stocks Production Imports Total Supply Use Crush Exports Seed and Feed Residual Total Use Ending Stocks Stocks/Use Ratio 5 Year Average Planted Acres Harvested Acres Yield Per Acre (Bu.) Average Price 09/10 138 3,359 15 3,512 1,752 1,499 90 20 3,361 151 4.5

10/11 151 3,329 14 3,495 1,648 1,501 87 43 3,280 215 6.6

77.5

76.4

44.0

9.59

77.4

76.6

43.5

11.30

11/12 215 3,094 16 3,325 1,703 1,365 90 -2 3,155 169 5.4

12/13 169 3,034 36 3,239 1,689 1,320 89 1 3,099 141 4.5

75.0

73.8

41.9

12.50

77.2

76.2

39.8

14.40

13/14 141 3,289 30 3,459 1,700 1,510 87 12 3,309 150 4.5

76.5

75.9

43.3

12.70

14/15 150 3,484 15 3,649 1,750 1,550 90 25 3,415 234 6.9

5.2

79.5

78.3

44.5

10.35

USDA Baseline 2014 no’s  78 million acres  45.2 bu/acre yield  3.480 billion bu crop  203 million bu carryout ($9.75) • But reduced 20 mb after Nov. (183)

USDA 10 yr. projections  2014-2021: $8.85 to $9.75

 2022-2024: $9.95 - $10.15

 Target price is $8.40

Soybean Monthly: Downside Risk?

Weekly: Consolidation???

Mar 14 Sbns: inverted, sell

Nov 14 Sbns: $11.65/$12.35

Corn Revenue Rankings

1200 1100 1000 900 800 700 600 7 Yr.

6 Yr.

5 Yr.

4 Yr.

3 Yr.

2 Yr.

2012 Progressive Ag AgResources Agrivisor Agrivisor Brock Stewart-Peterson Utterback Doane

700 650

$ R e v e n u e

600 550

P e r A c r e

500 450

Soy Revenue Rankings

400 7 Yr.

6 Yr.

5 Yr.

4 Yr.

Year of Rankings

3 Yr.

2 Yr.

2012 Progressive Ag AgResources Agrivisor Brock Stewart-Peterson Top Farmer Utterback Doane

Check Out Our Website www.progressiveag.com

Daily Comments: User name: daily Password: heart Weekly Comments: User name: weekly Password: superbowl [email protected]

rwww.progressiveag.com

WHEAT

Wheat’s Issues - US US Winter Wheat going into dormancy at very good condition Exports started strong, slowing due to strong dollar Winter Wheat crop high quality Spring Wheat average quality, discounts Oct/Nov/Dec Crop Production Report BEARISH, not expected

Wheat’s Issues - US US Winter Wheat Crop Condition Rating KS: 63% G/E OK: 77% G/E TX: 32% G/E 38/35/37% CO: 55% G/E 58% 63% 18 States: 62% G/E Last Year: 33% G/E 35% 36% 19%

Winter Wheat Acres Down State

KS TX OK MT CO IL IN NE OH

Total

2007

10.40

6.20

5.90

2008

9.60

5.80

5.60

2009

9.30

6.40

5.70

2010

8.60

5.40

5.20

2011

8.80

5.30

5.10

2012

9.40

5.70

5.40

2013

9.50

6.20

5.60

2014

8.80

6.20

5.30

2.24

2.50

1.00

0.42

2.60

2.15

1.20

0.58

2.55

2.60

0.85

0.47

2.00

2.40

0.35

0.30

2.25

2.30

0.80

0.43

2.30

2.35

0.66

0.35

2.00

2.30

0.88

0.47

2.50

2.90

0.74

0.43

2.05

0.82

1.75

1.12

1.70

1.01

1.50

0.80

1.52

0.88

1.38

0.50

1.47

0.69

1.50

0.63

45.01 46.31 43.31 37.10 40.65 41.20 43.10 41.90

-7% 0% -5% 25% 26% -15% -9% 2% -9% -3%

WW Acres 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 10,50 10,00 9,50 9,00 8,50 8,00 7,50 7,00 6,50 6,00 5,50 2007 2008 2009 2010 2011 2012 2013 2014 Kansas Texas Oklahoma Montana Colorado Illinois Indiana Nebraska Ohio

Wheat Exports To Date

2012 Sales 0.772

Shipments 0.599

USDA 1.007

2013 0.981

0.811

1.175

28.0/week 476 MB/1.46

23.2/week 394 MB/1.21

35 weeks into marketing year, 17 weeks to go Sales need average 11.4/Shipments 21.4

Wheat Category Supply Beginning Stocks Production Imports Total Supply Use Food Seed Feed and Residual Exports Total Use Ending Stocks Total Ending Stocks Stocks/Use Ratio 10 Year Average Planted Acres Harvested Acres Yield Per Acre (Bu.) Average Price 09/10 657 2,218 119 2,993 919 69 150 879 2,018 976 48.4

10/11 976 2,207 97 3,279 926 71 132 1,289 2,417 862 35.7

11/12 862 1,999 112 2,974 941 76 162 1,051 2,231 743 33.3

12/13 743 2,266 123 3,131 945 73 388 1,007 2,414 718 29.7

59.2

49.9

44.5

4.87

53.6

47.6

46.3

5.70

54.4

45.7

43.7

7.24

55.7

48.9

46.3

7.77

13/14 718 2,130 170 3,018 960 74 250 1,175 2,459 558 22.7

56.2

45.2

47.2

6.80

14/15 558 2,366 120 3,044 950 75 275 1,200 2,500 544 21.8

28.5

57.5

52.0

45.5

6.50

2014 USDA Baseline no’s  57 million acres, 48.5 hvstd.

 45.8 bu/acre  2.220 billion bu production  642 million bu carryout ($4.90) • Only 7 mb reduction since Nov. (635)

USDA 10 yr. projections  2014-2020: $4.30 - $4.90

 2021-2024: $4.90-$5.35

 Target Price is $5.50 in new farm bill

Mar Mpls: $6.95/$7.35 sell

Sept 14 Mpls: $7.00/$7.35

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