Post on 22-Jun-2015
© Roach Ag Marketing, Ltd.
Grain Price Outlook and Market Strategies
Cruise The Crop Markets
by John Roach
January 18 - 24, 2009
Day 1
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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
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.
There will not be enough money to raise crops this big next year
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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.
© 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
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© 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 are tight
Exports off to slow start
Ethanol demand slowing
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.
© 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 soybean ending stocks not as tight as corn or wheat, but demand is solid.
US stocks very tight
Look for shrinking 2009 crop in S. America
Prices currently tied to China demand and S. American weather
Bean 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.
© Roach Ag Marketing, Ltd.
World wheat ending stocks burdensome in 2009
US stocks adequate
Look for shrinking 2009 world crop
Prices currently and likely to be dominated by former Soviet Union production
Wheat 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
© 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 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.
© Roach Ag Marketing, Ltd.
© 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.
© 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, Ltd.
© Roach Ag Marketing, Ltd.
© Roach Ag Marketing, Ltd.
Roach Ag Marketing Plan Worksheet
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Roach Ag Marketing, Ltd.
7601 N. Federal HwySuite 265-B
Boca Raton, FL 33487
800-622-7628
jroach@roachag.com http://www.roachag.com