Outlook for Agriculture & Grain Market ing

Alleviate the stress of marketing, do what you love!

Corn, Soy, Cattle & Hogs Outlook

Futures Basis Carry

Decision Points

• Life is like poker.

• Farming is like chess.

• Marketing is like poker.

• Uncertainty

• Certainty

• Decision making

• Uncertain Futures • Focus on strategy rather than prediction• Sell increments over favorable periods.• Use optionality – economically & rationally.•

Uncertainty

• Uncertain Futures • Focus on strategy rather than prediction• Sell increments over favorable periods• Use optionality – economically & rationally•

Uncertainty

• Futures• Encompassing world supply & demand• Iowa State University – Bob Wisner• University of Illinois – AgMas• Seasonal Average – Yearly Average

Uncertainty

Futures Basis Carry

Decision Points

• Basis & Carry• Merchandising & risk control employed by

world leading grain companies, cooperatives and some farmers!

• Our marketing partners are profitable because they do little things right, massively.

Certainty

• Farmers have difficult marketing job!• Pick good futures• Pick good basis• Have to do them at different times!

Uncertainty + Certainty

• Sell DEC corn futures @ $4.00• If $3.50, then $0.50 gain futures account• Sell $3.50 cash to elevator add $0.50 hedge

gain• Cash price + hedge gain=?

What is a hedge?

• Sell DEC corn futures @ $4.00• If $4.50, then $0.50 loss futures account• Sell $4.50 cash to elevator less $0.50 hedge

loss• Cash price + hedge gain=?

What is a hedge?

• Sell DEC corn futures @ $4.00• Definition of a hedge is that the producer

receives net $4.00 whether corn futures go to 3.50 or 4.50, or 2.50 or 5.50.

What is a hedge?

• Corn farmer on the sell side• Ethanol plant on the buy side• Oil producer on the sell side• Southwest Airlines on the buy side

What is a hedge?

Corn, Soy, Cattle & HogsOutlook

DTN10/7/18

Pop =10 billion

Top 10 U.S. export markets for wheat, corn, soybeans, and cotton, by volume

Oct.-Aug. Oct.-Aug. Aug. Aug.Commodity 2017 2018 2017 2018

Metric tons

SoybeansChina 33,587,785 25,327,022 1,223,751 67,852European Union-28 4,386,278 5,499,460 214,856 921,007Mexico 3,628,959 3,930,334 368,907 383,316Indonesia 2,356,264 2,339,504 190,254 316,637Egypt 939,218 2,331,332 115,968 148,738Japan 2,289,774 2,071,703 258,759 159,308Taiwan 1,451,986 1,962,996 56,077 151,470Pakistan 558,189 1,594,199 56,314 137,602Thailand 1,014,119 1,408,017 33,858 74,452Vietnam 529,118 1,059,504 14,214 101,225World Total 55,211,538 53,479,199 2,990,160 3,367,510

60%

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