EOCC Marketing Presentation

Who is Peter Archer?

Co-own Maizeing Acres Inc. with Donna

Produce 1500 ac corn and soy

Custom app and harvesting services

2.3 mil bu facility at Campbellford

1.4 mil bu satellite location at Trenton for 2016

Trucking and direct ship off farm services

Market Outlook

We could talk about fundamentals

Supply and demand

Things can/do/will change

Let’s focus on Capturing Opportunities

Avoid Analysis Paralysis

What is a farmer’s hardest job?

Why is that?

Why is that?

Caught the analysis paralysis

Just because it’s not easy, doesn’t mean it can’t be simple

Hard does not equal complicated

Managing Risk

The farmer is always long somewhere

Forward selling reduces that risk

Any plan is better than no plan

We run the KISS plan

Don’t over think it

Your job is to manage cash

Turn it into seed/fert and bury it

Grow it into grain

Flip it back to cash

Rinse and repeat

The sooner you do that, the better

Unsold grain after harvest costs money

A bird in the hand is worth 2 in the bush

Market often pays a premium for the unknown

Lots of history to show best prices occur pre-harvest

Seasonal trends are well documented

Store cash not grain

It’s a Profit Based Decision

You are in business to make money

The market will never care what your costs are

Competition will ensure you can’t pick up the phone and sell at a profit any day you want

The last 8 years have been an aberration

So you need a plan

One that focuses on revenue, not price

One that makes you a price maker instead of a price taker

Do you know what you want or is it just more?

The 5 Step Plan Maizeing Acres Inc.4444 County Rd. # 30 Campbellford, ON K0L 1L0 Office: 705 313 2082

5 Step Grain Marketing Plan (Bushels)

Step #1 - Determine your estimated productionEst Bushels

Acres Yield To SellCorn 150 180 27,000Soybeans 100 45 4,500Wheat 50 75 3,750

Step #2 - Determine your production cost per acreCorn Soybeans Wheat

Land Prep $18.00 $18.00 $0.00Fertilizer $155.00 $50.00 $117.00Chemicals $25.00 $20.00 $42.00Seed $90.00 $70.00 $20.00Application $24.00 $16.00 $24.00Rent $100.00 $100.00 $100.00Planting $23.00 $23.00 $23.00Harvesting $43.00 $43.00 $43.00Trucking $28.00 $9.00 $15.00Drying $70.00 $5.00 $8.00Crop Ins. $12.00 $10.00 $9.00Total/Acre $588.00 $364.00 $401.00

Step # 3 - Set a profit goal per acreGoal/Acre

Corn $125.00Soybeans $125.00Wheat $75.00

Step #4 - Calculate a target price(Cost/Acre + Profit/Acre) /Yield/Acre = Target

Corn $588.00 $125.00 180 = $3.96Soybeans $364.00 $125.00 45 = $10.87Wheat $401.00 $75.00 75 = $6.35

Step #5 - Take Action! Place a Target Order NOW!

Step #1 - Determine your estimated production

Est Bushels

Acres Yield To Sell

Corn 150 180 27,000

Soybeans 100 45 4,500

Wheat 50 75 3,750

Step #2 - Determine your production cost per acre

Corn Soybeans Wheat Land Prep $18.00 $18.00 $0.00 Fertilizer $155.00 $50.00 $117.00 Chemicals $25.00 $20.00 $42.00 Seed $90.00 $70.00 $20.00 Application $24.00 $16.00 $24.00 Rent $100.00 $100.00 $100.00 Planting $23.00 $23.00 $23.00 Harvesting $43.00 $43.00 $43.00 Trucking $28.00 $9.00 $15.00 Drying $70.00 $5.00 $8.00 Crop Ins. $12.00 $10.00 $9.00 Total/Acre $588.00 $364.00 $401.00

Step #3 – Set a Profit Goal per Acre

Goal/Acre

Corn $300.00

Soybeans $250.00

Wheat $75.00

Step #4 – Calculate a Target Price

(Cost/Acre + Profit/Acre) /Yield/Acre = Target

Corn $588.00 $300.00 180 = $4.93

Soybeans $364.00 $250.00 50 = $12.28

Wheat $401.00 $75.00 75 = $6.35

Step #5 - Take Action! Place a Target Order NOW!

At least you have done something

Any plan is better than no plan

Target Orders

The sooner you make the decision, the more time the market has to work

Locks in the profit your business needs to function and grow

Selling the Carry

Why/when one should do that

Benefits forward sellers

The Term Structure

Ontario’s Free Pass

FX gives us more $CAD because futures are $USD

How much difference does it make?

Corn

Friday’s close MAI old crop

$CAD 4.74 x .7216=$US 3.42 cash

Basis is cash- futures

3.42-3.59= -0.17 $US basis

What does a 85 cent dollar mean?

Assuming futures still 3.59

Cash price= 3.59- .17= 3.42 $US cash

3.42 / .85 = 4.02 $CAD

4.02- 4.74= -0.72 $CAD/bu

.72 x 180bu/ac = $130/ac

Beans

MAI Friday close

$CAD11.63x .7216= $US 8.39 cash

Basis= Cash- Futures

8.39- 8.73= -0.34 $US basis

What does an 85 cent dollar mean?

Assuming futures remain 8.73

8.73- .34 basis = 8.39 $US cash

8.39/ .85= 9.87 $CAD cash

9.87- 11.63= -1.76 $CAD/bu

$1.76 x 50 bu/ac = $88/AC

You live in a $US denominated world

The FX just effectively lowered a big part of your cost structure in $US terms

Am I trying to say $CAD will recover?

It’s providing opportunity right now

The trend is your friend

It won’t go down forever

Strong Correlation to Oil

Implications

Dollar followed crude up and down

It will follow it back up again

It may bring good opportunities to forward sell if we see oil start to recover