Peosta, Iowa Seminar - February 11, 2009

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Grain Price Outlook and Market Strategies

Peosta, Iowa

by John Roach

February 11, 2009

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Why were grain prices so high?

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Population Growth Rates

Source: USDA Agricultural Projections to 2017.

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Global Meat beef + pork + chickens & turkeysProduction, per capita consumption, and population

Source: USDA Agricultural Projections to 2017.

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Dollar Index

Dollar Value Down 40% Since 2002 Peak

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DJ / AIG Commodity Index

Index Up 180% Since 2002 Low

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DJ / AIG Commodity Index Composition

•Energy: 37.6% •Livestock: 6.97% •Grains: 16.57% •Base Metals: 19.54% •Precious Metals: 8.99% •Softs: 7.59% •Soybean Oil: 2.74%

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What happened to cause prices to drop?

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Non – U.S. 60.1 Bu/Acre

World 78.1 Bu/Acre

Chinese 87.6 Bu/Acre

U.S. 149.0 Bu/Acre

USDA 2008 World Corn Yields 6/10/08

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© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

There will not be enough money to raise crops this big next year

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

World coarse grain ending stocks tight

U.S. ending stocks expected to loosen

Exports off to slow start

Ethanol demand slowing

Yet, we still need a big corn crop every year

Price peak due in Mar – June in 2009

Corn Situation and Price Outlook

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© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

© Roach Ag Marketing, Ltd.

Shrinking 2009 & 2010 crop in S. America

Demand is surprising market

US stocks very tight

World soybean ending stocks tightening

Prices currently tied to S. American weather China and spec demand

Bean Situation and Price Outlook

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How Should I Market My Crops?

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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

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Roach Ag Sales Plan1. Make as many of your sales as possible

during the months of March, April, May and June. Avoid October and November

2. Sell in increments to take advantage of several market peaks using Roach Ag Sell Signals

3. Buy puts on unsold new crop production with either profit goal or insurance goal

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•Focus the majority of sales in the 1st half of the year

•March through June is usually best

Rule # 1

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December 2007 Corn

Both Lines Over 75 = Roach Ag Sell Signal

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Roach Ag Sell & Buy SignalsYour Digital Thermometer For Prices

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Roach Ag Sell SignalsWhen Both Lines Are Above 75 = Sell Signal

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Roach Ag 2007 Corn Sell Signals56 Days of Sell Signals ($3.91) and 272 Days Without ($3.71)

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•Sell only when markets are giving us a Roach Ag Sell Signal

Rule # 2

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•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

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•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

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•Make sure you sell enough in the spring prior to harvest to generate necessary cash-flow from harvest through February

Rule # 5

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•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

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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.

© 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.

© Roach Ag Marketing, Ltd.

Roach Ag Marketing Plan Worksheet

© Roach Ag Marketing, Ltd.

Roach Ag Marketing, Ltd.

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800-622-7628

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