Post on 25-May-2015
© Roach Ag Marketing, Ltd.
Grain Price Outlook and Market Strategies
For Wyffels’
Corn Strategies 2010
Presented by: John RoachJuly13 & 20, 2010
Disclaimer:
These data and comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. Commodity trading involves the risk of loss, and you should fully understand those risks before trading. Past financial results are not necessarily indicative of future performance.
John Roach was paid an honorarium to make the following presentation. John Roach is completely responsible for the content that follows.
© Roach Ag Marketing, Ltd.
What are the Fundamentals Now?
© Roach Ag Marketing, Ltd.
80.00
100.00
120.00
140.00
160.00
180.00
200.00
220.00
240.00
260.00
280.00
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World Soybeans Production
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
80.00
100.00
120.00
140.00
160.00
180.00
200.00
220.00
240.00
260.00
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World Soybeans Total Use
© Roach Ag Marketing, Ltd.
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
Da
ys
of
Su
pp
ly
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World Soybeans Ending Stocks Days of Supply
© Roach Ag Marketing, Ltd.
5.00
5.00
15.00
25.00
35.00
45.00
55.00
Mill
ion
To
ns
19
95
/96
19
96
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20
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20
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Chinese Soybean Imports
© Roach Ag Marketing, Ltd.
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
Mill
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1995
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1996
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1997
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2003
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2004
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2005
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2006
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2007
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2008
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2009
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2010
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Chinese Soybeans Total Use
© Roach Ag Marketing, Ltd.
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
Day
s o
f S
up
ply
19
95
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19
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19
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20
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20
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20
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20
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20
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20
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20
10
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Chinese Soybeans Ending Stocks in Days of Supply
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
July 201042.9 Bu / Acre
© Roach Ag Marketing, Ltd.
Iowa Soybean Plantings Condition (10,200 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Illinois Soybean Plantings Condition (9,300 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Minnesota Soybean Plantings Condition (7,500 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Missouri Soybean Plantings Condition (7,500 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
1700
1900
2100
2300
2500
2700
2900
3100
3300
3500
Mill
ion
Bu
sh
els
93
-94
94
-95
95
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96
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97
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00
-01
01
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02
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03
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04
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05
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US Soybean Production
© Roach Ag Marketing, Ltd.
1700
1900
2100
2300
2500
2700
2900
3100
3300
3500
3700
Mill
ion
Bu
sh
els
93
-94
94
-95
95
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96
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97
-98
98
-99
99
-00
00
-01
01
-02
02
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03
-04
04
-05
05
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06
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07
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08
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09
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US Soybean Total Supply
© Roach Ag Marketing, Ltd.
400
500
600
700
800
900
1000
1100
1200
1300
1400
1500
Mill
ion
Bu
sh
els
93
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94
-95
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96
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97
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98
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00
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01
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02
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03
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04
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05
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06
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07
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08
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09
-10
10
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US Soybean Exports
© Roach Ag Marketing, Ltd.
July 1, 2010
© Roach Ag Marketing, Ltd.
900
1100
1300
1500
1700
1900
Mill
ion
Bu
sh
els
93
-94
94
-95
95
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96
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97
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98
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99
-00
00
-01
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02
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04
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US Soybean Crush
© Roach Ag Marketing, Ltd.
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
3400
Mill
ion
Bu
sh
els
93
-94
94
-95
95
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96
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97
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99
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00
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01
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02
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03
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US Soybean Total Use
© Roach Ag Marketing, Ltd.
0
20
40
60
80
Da
ys
of
Su
pp
ly
93
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US Soybean Ending StocksDays of Supply
© Roach Ag Marketing, Ltd.
Tight stocks until harvest
2010 supplies becoming more surplus
Prices headed toward harvest lows if no weather problems
S. America will still be shipping in Dec. hurting new crop bean price
Bean Situation and Price Outlook
© Roach Ag Marketing, Ltd.
500.0
525.0
550.0
575.0
600.0
625.0
650.0
675.0
700.0
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World Wheat Production
© Roach Ag Marketing, Ltd.
700.00
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800.00
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1050.00
1100.00
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World Coarse Grain Production
© Roach Ag Marketing, Ltd.
Non – U.S. 58.9 Bu/Acre
World 80.3 Bu/Acre
U.S. 162.9 Bu/Acre
USDA 2009 World Corn Yields 12/10/09
© Roach Ag Marketing, Ltd.
2008/09: 54.9 MMT2009/10: 49.7 MMT2010/11: 44.5 MMT
2008/09: 51.2 MMT2009/10: 54.0 MMT2010/11: 53.4 MMT
2008/09: 27.6 MMT2009/10: 23.5 MMT2010/11: 27.2 MMT
FSU - 12 Exports
U.S. Coarse GrainExports
U.S. Wheat Exports
Wheat 2008/2009 2009/2010 2010/2011
Argentina 6.77 4.00 7.00
Australia 14.75 14.50 15.50
Canada 18.81 18.50 15.50
EU-27 25.32 21.00 23.00
FSU-12 37.76 35.05 31.65103.41 93.05 92.65
Coarse GrainsArgentina 12.45 14.81 16.21
Australia 4.41 4.39 4.46
Canada 3.87 3.03 2.88
Brazil 7.15 8.03 7.03
EU-27 5.55 2.98 5.26
FSU-12 17.10 14.69 12.8650.53 47.93 48.70
Total 153.94 140.98 141.35
Major World Feed Exporters 7-9-2010
© Roach Ag Marketing, Ltd.
750.00
800.00
850.00
900.00
950.00
1000.00
1050.00
1100.00
1150.00
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World Coarse Grain Total Use
© Roach Ag Marketing, Ltd.
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Da
ys
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Su
pp
ly
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World Coarse Grains Ending Stocks Days of Supply
© Roach Ag Marketing, Ltd.
July 2010163.5 Bu / Ac
© Roach Ag Marketing, Ltd.
Iowa Corn Plantings Condition (13,300 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Illinois Corn Plantings Condition (12,600 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Nebraska Corn Plantings Condition (8,800 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
Minnesota Corn Plantings Condition (7,500 thousand acres)
SOURCE: USDA June 30, 2010 Planted Acres Report and July 12, 2010 Crop Progress Report
© Roach Ag Marketing, Ltd.
U.S. Corn Condition (% Good, Excellent)
© Roach Ag Marketing, Ltd.
Harvest
1960 - 64 62.52 Average1965 74.1 119% Percentage of average since last record
1966 - 71 79.85 Average1972 97.1 122% Percentage of average since last record
1973 - 78 88.23 Average1979 109.5 124% Percentage of average since last record
1980 - 85 103.15 Average1986 119.4 116% Percentage of average since last record
1987 - 91 109.56 Average1992 131.4 120% Percentage of average since last record
1993 - 03 129.22 Average2004 160.4 124% Percentage of average since last record
2005 - 09 153.32 Average20?? 185.5 121% Percentage of average since last record
U.S. Corn Yield
© Roach Ag Marketing, Ltd.
5000
6000
7000
8000
9000
10000
11000
12000
13000
14000
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sh
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93
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94
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US Corn Production
© Roach Ag Marketing, Ltd.
5000
7000
9000
11000
13000
15000
17000
Mill
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Bu
sh
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92
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93
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94
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95
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US Corn Total Supply
© Roach Ag Marketing, Ltd.
4000
4400
4800
5200
5600
6000
6400
6800
7200
Mill
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Bu
sh
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92
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93
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94
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US Corn and DDG Feed Usage
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
1000
1200
1400
1600
1800
2000
2200
2400
Mill
ion
Bu
sh
els
92
/93
93
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94
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95
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96
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97
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98
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02
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06
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07
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08
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09
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10
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US Corn Exports
© Roach Ag Marketing, Ltd.
July 1, 2010
© Roach Ag Marketing, Ltd.
100
600
1100
1600
2100
2600
3100
3600
4100
4600
5100
Mill
ion
Bu
sh
els
92
/93
93
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94
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95
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96
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97
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98
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99
/00
00
/01
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02
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03
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04
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05
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06
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07
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08
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09
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10
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Corn Used for Ethanol
© Roach Ag Marketing, Ltd.
6500
7500
8500
9500
10500
11500
12500
13500
14500
Mill
ion
Bu
sh
els
92
/93
93
/94
94
/95
95
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96
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97
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98
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/00
00
/01
01
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02
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03
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04
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05
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06
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08
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US Corn Total Usage
© Roach Ag Marketing, Ltd.
0
20
40
60
80
100
Da
ys
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Su
pp
ly
92
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93
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94
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95
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97
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98
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99
/00
00
/01
01
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02
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03
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04
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05
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07
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08
/09
09
/10
10
/11
US Corn Ending StocksDays of Supply
© Roach Ag Marketing, Ltd.
World coarse grain and U.S. ending stocks smaller
Poor quality took more bushels
This year crop quality back to normal
We need a big corn crop in 2011
Prices headed to harvest low- sell ‘11 and ‘12
Inflation gone
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 1st half of the year
•March through June is usually best
Rule # 1
© Roach Ag Marketing, Ltd.
Chicago December Corn Futures, 1990-2005 average1-
Jan
1-Fe
b 1-M
ar
1-Apr
1-M
ay
1-Ju
n
1-Ju
l
1-Aug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
230
235
240
245
250
255
260
265
approximate dates
cents
per
bus
hel
© Roach Ag Marketing, Ltd.
Chicago November Soybean Futures, 1990-2005 average1-
Jan
1-Fe
b
1-M
ar
1-Apr 1-
May
1-Ju
n
1-Ju
l
1-Aug 1-
Sep
1-O
ct
1-N
ov
570
575
580
585
590
595
600
605
610
approximate dates
cent
s pe
r bu
shel
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
© Roach Ag Marketing, Ltd.
December 2007 Corn
Both Lines Over 75 = Roach Ag Sell Signal
© Roach Ag Marketing, Ltd.
Roach Ag Sell & Buy SignalsYour Digital Thermometer For Prices
© Roach Ag Marketing, Ltd.
Roach Ag Sell SignalsWhen Both Lines Are Above 75 = Sell Signal
© Roach Ag Marketing, Ltd.
Roach Ag 2007 Corn Sell Signals56 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 Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
December 2009 Roach Ag. Corn Sell Signals
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
December 2010 Roach Ag. Corn Sell Signals
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
Put Opportunity - Buy Buy Puts on some of the Crop Puts on some of the Crop You Do Not Want to Sell You Do Not Want to Sell on a Cash Contracton a Cash Contract
© Roach Ag Marketing, Ltd.
Nov. 2010 Roach Ag. Bean Sell Signals
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
© 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 HwySuite 265-B
Boca Raton, FL 33487
800-622-7628
jroach@roachag.com http://www.roachag.com