A SYTEMIC CHANGE IN AGRICULTURE Top Producer Conference Chicago IL. DEC 31, 2014

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Jackson Blvd Suite 1201A Chicago, IL 60604 Cell: 815

1 A SYTEMIC CHANGE IN AGRICULTURE Top Producer Conference Chicago IL. DEC 31, 2014 Jerry Gulke 141 W. Jackson Blvd Suite 1201A Chicago, IL Cell: web: e mail: info@gulkegroup.com 1

2 About Gulke Group Consulting Gulke Group is a research, and consulting firm providing advice and strategies to producers and to those operating and trading within the global grain and oilseeds markets. The firm s services nearly every part of the increasingly-complex agricultural markets, presenting a platform through which clients are able to gain a better understanding of the integrated global agriculture industry; and to act upon this knowledge. We provide: Coordinated risk management (hedge structures and brokerage services with offices located in the CBOT/CME Bldg, Chicago, IL) Crop Insurance Expertise/Advice/Services Daily advising services via web site Daily phone updates Trading strategies for non-producers Commodity execution services In forming Gulke Group Services in 1991, Jerry Gulke sought the best fundamental information available, and combined it with his technical analysis expertise as well as his grass roots production Ag experience to help manage production risk. Jerry began actively farming in 1974 and continues today with interests in IL and ND. Coupled with his practical experience, his formal education in a BS in Engineering from North Dakota State University and an MBA degree from Northern Illinois University, and his technical & fundamental insights, Jerry provides a rare insight to Ag commodities that has stood the test of time for over 20 yrs. While the main focus of Gulke Group is production Ag, the client base now ranges from international & domestic commercials to hedge funds and investment banks as well as private money portfolio managers, expanding our global influence, and information access. Contact information: Jamie Wasemiller Operations Manager, Gulke Group, Inc Web: info@gulkegroup.com Office: Mobile: Top Producer Specials 30 Day Trial Technical Analysis Fundamentally Easy Insurance Questions Special Emphasis as part of managing risk Feb TP Column Insurance 101 Stop By Booth Jamie & Jeff 2

SYSTEMIC DEFINED sys tem ic [si stem ik] Show IPA adjective 1.of or pertaining to a system. 2.Physiology, Pathology. a.pertaining to or affecting the bo

3 SYSTEMIC DEFINED sys tem ic [si stem ik] Show IPA adjective 1.of or pertaining to a system. 2.Physiology, Pathology. a.pertaining to or affecting the body as a whole. b.pertaining to or affecting a particular body system. 3.(of a pesticide) absorbed and circulated by a plant or other organism so as to be lethal to pests that feed on it. 3

4 IS 2008 Wall-St & Housing Debacle Now History? 4

5 2,975 2,970 Miles Driven Through October 2013 All Roads All Fuel Types 2,965 2,960 2,955 2,950 Series1 2,945 2,940 2,935 2,930 2,925 Vehicle Distance Traveled (Billion Miles) 3,150 3,100 3,050 3,000 2,950 2,900 2,850 2,800 2,750 2,700 2,650 2,600 2,550 2,500 2,450 2,400 2,350 2,300 2,250 2,200 2,150 2,100 2,050 2,000 1,950 1,900 1,850 1,800 1,750 1,700 1,650 1,600 1,550 1,500 1,450 1,400 Figure 1 Moving 12 Month Total on ALL Roads Year 5

6 A CHEAP ALTERNATIVE ENERGY? 6

7 Real =.28 in

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10 Where is the next 100 mmt bil-bu increase going to come from? 10

11 Good news global feedgrain demand did not suffer much due to US prices. 11

12 NOVEMBER TP COLUMN 12

13 Reducing corn acres sufficiently may be difficult 13

14 What Price Is The Market Trading? With supply/previous usage at (14.781/11.110) = 133% where should CZ in SON trade in

15 In 2014 OND? /13.100= 125% 15

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21 KEY FACTORS 2014 ECONOMIES US/Europe/China/New Emerging US Economy better than most Ag Grain Producer: debt/equity, cash flow, breakeven CURRENCIES US/Brazil/Argentina SUPPLIES Excess in every main commodity 2014 planting intentions our survey DEMAND Global/US didn t fall much ENERGY PSYCHOLGY commodities out of favor WEATHER US/Global PED EXPANSION COMPETITION EXPORTS? 21

22 AG STOCKS 22

23 AG STOCKS Using Options to Manage Risk 23

24 Using Options to Manage Risk Using Options to Manage Risk Pre report Strategies 24

25 Using Options to Manage Risk Pre report Strategies Note -- Pre-Report Positions were as follows: 2013: 55% Cash Sold, 45% Futures Hedged 100% Total Hedge 2014: 80% Futures Hedged 1. Exiting short futures and buying long puts is a strategy some are considering. Risk: it cost 8-10 cents (option premium) and leaves upside open while costing 8-10 cents before coverage is in effect again. 2. Holding short futures while being long the $4.25 calls at 9-10 cents is also a strategy being considered. Risk: It leaves downside protected while covering upside but costs 9-10 cents to find out. 3. Exiting hedges completely and letting the chips fall where they may Risk: Means you are long 45% in the field/bin and have downside risk!! Using Options to Manage Risk Note -- Pre-Report Positions were as follows: 2013: 55% Cash Sold, 45% Futures Hedged 100% Total Hedge 2014: 80% Futures Hedged 4. Exit hedges and Sell both the $4.25 puts and calls for cents combined premium on the 45% hedges believing the market won t move 20 cents either way in the short term. Risk: That the crop is huge and we gap lower leaving $4.00 behind leaving 45% of your 2013 crop at risk below $4.05 (not advised for the faint of heart). 5. Take profits on the hedges and apply profits to your bottom line and forward cash contract (if inventory is in the bin) for the carry to May or July adding storage gains of from cents depending on your personal situation and location. Risk: you give up beneficial interest and it caps the profit potential should corn go lower on the back of the Nov 8 report you can always sell the carry but it does lock in a profitable to very good year which always should be a major objective. You can deal with any post report potential up or down after the report. This action would not result in a big mistake! 25

26 Using Options to Manage Risk Note -- Pre-Report Positions were as follows: 2013: 55% Cash Sold, 45% Futures Hedged 100% Total Hedge 2014: 80% Futures Hedged 4. Exit hedges and Sell both the $4.25 puts and calls for cents combined premium on the 45% hedges believing the market won t move 20 cents either way in the short term. Risk: That the crop is huge and we gap lower leaving $4.00 behind leaving 45% of your 2013 crop at risk below $4.05 (not advised for the faint of heart). 5. Take profits on the hedges and apply profits to your bottom line and forward cash contract (if inventory is in the bin) for the carry to May or July adding storage gains of from cents depending on your personal situation and location. Risk: you give up beneficial interest and it caps the profit potential should corn go lower on the back of the Nov 8 report you can always sell the carry but it does lock in a profitable to very good year which always should be a major objective. You can deal with any post report potential up or down after the report. This action would not result in a big mistake! Using Options to Manage Risk Note -- Pre-Report Positions were: 2013: 55% Cash Sold, 45% Futures Hedged 100% Total Hedge 2014: 80% Futures Hedged 6. Do nothing and remain 100% hedged accepting the risk that odds are heavily in your favor that while the report may not be super bearish awaiting perhaps for the Jan 12, 2014 stocks report. 7. Some combination of all of the above lift some hedges, perhaps 20% position, and remain at risk on some of the crop---- buy puts on that 20%, or buy calls on a percentage and hold short positions on the rest. 26

TP Conference Specials

TP Conference Specials CHARTING YOUR COURSE TO PROFITS A Systemic Change In Agriculture Chicago IL. January 23, 2015 Jerry Gulke 141 W. Jackson Blvd Suite 1201A Chicago, IL 60604 Cell: 815 721 4705 web: www.gulkegroup.com e