Marketing Strategies for Robert Anwender Grain Merchandiser

Transcription

1 Marketing Strategies for 2015 Robert Anwender Grain Merchandiser

2 Marketing Tips for 2015 and Forward! Build a Knowledge Base: Stay in tune with market fundamentals Understand how a volatile dollar affects basis levels Look ahead for opportunities Other factors that influence grain prices Individual Marketing Strategies: Know your costs Seriously, know your costs! Know your quality/storage situation Learn the different discount schedules Look outside your traditional marketing avenues Use pricing tools to your advantage during a volatile market Take Home Points: The world is NOT running out of grain Going forward, think Proactive not Reactive!

3 U.S. Soybean Supply and Demand 2013/ /15 Change from Change from estimate forecast December /14 Percent Percent Planted area (million acres) Harvested area (million acres) Yield (bushels per acre) Million bushels Beginning stocks Production 3,358 3, Imports Total supply 3,570 4, Crush 1,734 1, Seed and residual Domestic use 1,832 1, Exports 1,647 1, Total use 3,478 3, Ending stocks Percent Stocks to use ratio Dollars per bushel Average market price / January 12, 2015

4 World Soybean Supply and Use 2013/14 estimate 2014/15 forecast Change from November 10 Change from 2013/14 Million Tons Percent Percent Beginning stocks Production Total Supply Domestic crush Total use Trade Ending Stocks Addendum: China imports* *From all sources. December 10, 2014

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6 USDA SUPPLY/DEMAND Hightower 2015/16 Estimates US SOYBEANS Dec Dec Dec Changes in Planted Acres Est. USDA USDA USDA 15 Yr. Trend Line Yield Planted Area (M Acres) Harvested Area (Acres) Yield (Bu/Acre) Beginning Stocks (M Bu) Production 2,967 3,359 3,329 3,094 3,042 3,358 3,958 3,883 3,928 3,973 Imports Supply,Total 3,185 3,512 3,494 3,325 3,252 3,570 4,065 4,308 4,353 4,398 Crushings 1,662 1,752 1,648 1,703 1,689 1,734 1,780 1,810 1,785 1,810 Exports 1,279 1,499 1,505 1,365 1,317 1,647 1,760 1,770 1,695 1,770 Seed Residual Use, Total 3,047 3,361 3,279 3,155 3,111 3,478 3,655 3,694 3,694 3,694 Ending Stocks Stocks/Use Ratio 4.5% 4.5% 6.6% 5.4% 4.5% 2.6% 11.2% 16.6% 17.8% 19.1%

7 U.S. Corn Supply and Demand 2013/14 estimate 2014/15 forecast Change from December 10 Change from 2013/14 Percent Percent Planted area (million acres) Harvested area (million acres) Yield (bushels per acre) Million bushels Beginning stocks 821 1, Production 13,829 14, Imports Total supply 14,686 15, Feed and residual 5,036 5, Food, seed, and industrial 6,501 6, Ethanol 5,134 5, Domestic use 11,537 11, Exports 1,917 1, Total use 13,454 13, Ending stocks 1,232 1, Percent Stocks to use ratio Dollars per bushel Average market price / January 12, 2015

8 World Corn Production Country or Region 2013/14 estimate 2014/15 forecast Change from November 10 Change from 2013/14 Million Tons Percent Percent World United States Foreign Argentina Brazil Mexico Canada European Union FSU Ukraine Russia South Africa China India December 10, 2014

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10 World Wheat Supply and Use 2013/14 estimate 2014/15 forecast Change from November 10 Change from 2013/14 Million Tons Percent Percent Beginning stocks Production Total Supply Feed use Total use Trade Ending Stocks months of the year, wheat is being harvested somewhere in the world December 10, 2014

11 World Wheat Production Country or Region 2013/14 estimate 2014/15 forecast Change from November 10 Change from 2013/14 Million Tons Percent Percent World United States Foreign Argentina Canada Australia European Union Russia Ukraine Kazakhstan China India December 10, 2014

12 How does a falling dollar affect you? Canadian Dollar has dropped 6% in 2015 so far

13 Canadian Dollar Influence on Basis Assume Futures hold at $10.00/bu and US Basis is $0.00/bu Scenario #1 SH5: $10.00/bu US Basis: $0.00/bu FX:.8500 CAD Basis: $1.76/bu CAD Flat: $11.76/bu Scenario #2 SH5: $10.00/bu US Basis: $0.00/bu FX:.8250 CAD Basis: $2.12/bu CAD Flat: $12.12/bu Scenario #3 SH5: $10.00/bu US Basis: $0.00/bu FX:.8000 CAD Basis: $2.50/bu CAD Flat: $12.50/bu January FX High:.8603 (Jan 2) Low:.8022 (Jan 23) For Comparison: Delivered Hamilton Flat Bid Jan 2: $ $1.80 = $12.02/bu Jan23: $ $2.33 = $12.10/bu Futures: -$0.45 Basis: +$0.53 Net: +$.08

14 Recent Headlines Bank Of Canada Cuts Its Key Interest To 0.75% -Reuters Hedge-Fund Bulls Retreat From Soy as Silos Fill Up: Commodities Bloomberg China Cancels 176,000 mt soy shipments for 2014/15 - USDA IGC Raises Corn Outlook, Sees Grains Stockpiles at 30- Year High Bloomberg Deeper cuts, more pain for companies riding out global oil price war - BNN

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18 Building a Marketing Plan Procrastination when supplies are tight has paid off in the past today is a different story There is no definition of what a good marketing plan looks like, but having a plan is better than nothing Basics of a marketing plan: 1. Know your costs/create a budget 2. Set pricing targets based on profitability/cash flow needs 3. Implement marking plan by setting targets and pricing orders with your market representatives. 4. If available or applicable to your situation, consider more complex marketing tools. Ex. Basis/Futures First contracts, Pricing Products 5. Stick to your plan!

19 Price Pricing Product Example - Accumulator Plus Example: CN5 is trading at 4.00, you would like to sell 5,000 bushels of CN5, 107 days to expiry, every day you sell 47 bushels at the following levels: For every day CN5 stays above 3.00, you sell at 4.15 If 3.00 trades before expiry, remaining quantity is filled at 4.00 If 3.00 never trades and upon expiry of CN5 (Jun ) CN5 closes above 4.15 you have an additional obligation to sell equal quantity of CN5 at Duration Enhanced sell Level CN5 Market Protection level Fill Trigger

20 2014 Corn Budget Example

21 2014 Soybean Budget Example

22 On Farm Storage Marketing for 2014 Marketing lower grade corn takes more work! Know your costs is your storage really free? Know your quality! What is your average grade? Do you have higher/lower quality segregated? Keep a close eye on bin quality! Understand the discounts at different destinations Feed Mills mostly flat rate discounts Ethanol uses Cumulative discounts Look outside your traditional markets to compare pricing

23 Final Thoughts to Consider If there s good money on the table, take some off Don t always go for the Home Run 2014 MLB Home Run leader hit 40 in 618 attempts (7% success) Thanks for your time! Robert Anwender Grain Merchandiser BroadGrain Commodities Inc x.206 robert.anwender@broadgrain.com