outlook presentation updated 3.24.11 darrell holaday advanced market concepts/country futures...
TRANSCRIPT
Outlook PresentationUpdated 3.24.11
Darrell HoladayAdvanced Market Concepts/Country Futures
AMC COUNTRY FUTURES INC
How Did This Happen?
AMC COUNTRY FUTURES INC
Is the Recession Over??• GDP improved
AMC COUNTRY FUTURES INC
Is the Recession Over??• GDP improved
• Consumer Expenditures Increased
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Is the Recession Over??• GDP improved
• Consumer Expenditures Increased
• Inflation under control??– Food and Energy
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Is the Recession Over??• GDP improved
• Consumer Expenditures Increased
• Inflation under control??– Food and Energy
• What about Employment?– How do you explain 9%?
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Is the Recession Over??• Debt issues still haunting this economy– Public and Private
• Explosion in Asian Economies
AMC COUNTRY FUTURES INC
Why are Food Commodities so much higher?
• Corn Yield in 2010 was the flame• The drought in Russia was the spark• Asian economies growing at 6-10% annual rates.• US Exports benefiting from other problems.• US and World Consumers are going to see a
much larger piece of their income pie going to food and energy.– Ultimately this is negative for GDP growth.
AMC COUNTRY FUTURES INC
This was the flame that changed everything!
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Corn/ Feed Grains• Corn is still the backbone of the strength• Yields disappointing
• Down 5%-7 from Trend and Expectations• Still a lot of questions as to why
• Energy drives corn– Has been true since US Govt Initiative in Ethanol– Tax Credits Important but the Mandate is much more
IMPORTANT. How would mandate work without Tax Credits.
• What is the impact of Ethanol on the price of corn?
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Corn / Feed Grains• Price has not seemed to trim use of corn domestically
(or internationally).– Somebody has to stop. The markets job is to make
someone lose money using corn.– It cannot live with ending stock to use ratio at 5%.– Who will stop first??
• Did the Japanese Earthquake Trim Use??• Tremendous pressure to increase acres to 93 million
with at 160 bushel yield.• Acreage “fight” will be more interesting than any year
in the past.
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
How is this at a tight stock situation?
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Corn• What I Like
• Tied To Energy and Overall demand for energy is still growing.
• We have not rationed supplies. Stocks for the current crop year have to increase.
• The fight for acreage will be fierce.
• Corn Inventory in strong hands.
• There will be much more concern about prospective yields after last year.
• What I dislike• A lot of feed wheat in the
world.• Japan’s purchases will be
reduced in the short run.• Tax credits may be on their
last leg. • How do we exist with no tax
credits and a mandatory blending level?
• Cattle and ethanol use may both decline at the same time.
AMC COUNTRY FUTURES INC
Wheat• Fundamentally this market is generally the
weakest of the sector.• The Russian drought changed the “ world
psychology”– Started a small avalanche of production problems
• The problems in Russia and Australia have pushed business to the US.
• Also had Canadian and EU Problems this year• USSOUTHERN PLAINS GETTING ATTENTION !!
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Wheat• What I Like
• Bullish Psychology• Weather problems in the
world. US and China, Russia.
• Will be another fight for acreage that may trim some wheat acres from the high expectations.
• Wheat is a competitive feed in many parts of the world.
• CORN
• What I dislike• US and World Stocks still
in reasonable shape if yields come through without big acreage increase. Still a lot of wheat in the US.
• Australia will “fill the boat” with wheat acres.
• Could be a false price signal and will attract too many acres
• Basis and the possible contract changes
AMC COUNTRY FUTURES INC
Soybeans• Overall long term growth in demand remains
strong.– Still a growing protein market and China consumption
reflects this fact.• We are beginning to see the growth in yield
capability.– Started in 2009– New Genetics will promote additional yield gains.
• South American production will slow US exports, but Argentine crop stunted.
• China carries the big stick in this market.
AMC COUNTRY FUTURES INC
Soybeans• Overall long term growth in demand remains
strong.– Still a growing protein market and China consumption
reflects this fact.• We are beginning to see the growth in yield
capability.– Started in 2009– New Genetics will promote additional yield gains.
• South American production will slow US exports, but Argentine crop stunted.
• China carries the big stick in this market.
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Soybeans• What I Like
• Market cannot deal with ending stock number near 100 million bus in the US
• Chinese Consumption• Argentina crop has questions
and a long way to go.• Macro Psychology of inflation
still dominates• Soyoil Demand still strong
despite biodiesel. • The industry cannot let acres
slip like they did the last time US corn acres jumped up over 93 million (2007)
• What I dislike• CHINA, but no sign of trouble
yet.• If inflation play disappears,
soybean values will retreat.• There is no pullback in South
American production.• Price will eventually destroy
some market.
AMC COUNTRY FUTURES INC
Crop Insurance and Marketing
• RMA offers very Puts and Calls• Don’t Exclude the Harvest Option• Consider selling “Puts”?• Consider selling “Calls”?• Crop Insurance allows for more aggressive
forward pricing.
AMC COUNTRY FUTURES INC
Meats• Inventories Have declined significantly in US and
Much of the World• Beef Demand Exploding in Asia (Until
Earthquake).– Poultry Increasing supplies gradually– Can’t Build Beef Consumption if Supplies Shrinking
• But World supplies of protein Very Tight• Good Demand in Asia extremely positive– Beef and Pork Exports the big story
AMC COUNTRY FUTURES INC
Cattle• Corn Price and Overall Economy (Unemployment driving
near term psychology• Cattle have been marketed very orderly and that has been
critical.• Calf supplies continuing to shrink and COF numbers
declining should eventually decline• Numbers do not indicate any herd building
– The lack of grass is the number one impediment to herd rebuilding
• Corn is the next problem• THE LACK OF GRASS IS THE LIMITING FACTOR FOR COW
HERD EXPANSION!!
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
AMC COUNTRY FUTURES INC
Meats Cont’d
• Poultry product still grow 2-3% this year. Will gain US market share in the US versus pork and beef
• Cattle and Hog futures have built in steep premium to cash anticipating substantial drop in supplies.