WHAT’S AHEADFOR

COMMODITY PRICES &

FARMLAND VALUESRemarks by Mark Pearson

Independent Community BankersNashville, Tennessee

March 12, 2012

Back in Production…Any Way Possible

Source: Matt Leavitt

10-Year Corn Prices

Source: NASS

Corn Use: Fuel versus Food

Source: USDA

‘02

EthanolFeed

6

4

2

0

Bushels

‘03 ‘05‘04 ‘06 ‘08‘07 ‘09 ‘10 ‘11

U.S. Corn Ending Stocksas Percentage of Use

Compliments of PHI Marketing

World Corn Ending Stocksas a Percentage of Use

Compliments of PHI Marketing

USDA Corn Supply and Use 2010/11 est. (2/9/12) 2011/2012 proj.

Area Planted 88.2 91.9Area Harvested 81.4 84.0Yield 152.8 147.2Beginning Stocks 1,708 1,128Production 12,447 12,358Imports 28 20Supply, Total 14,182 13,506Feed & Residual 4,793 4,600Food, Seed & Industrial 6,428 6,405Domestic Use, Total 11,220 11,005Exports 1,835 1,700Use, Total 13,055 12,705Ending Stocks 1,128 801Average Farm Price $5.18 $5.80-$6.60

Compliments of PHI Marketing

World Corn Supply and Use 2009-10 2010-11 (est.) 2011-12 (proj.)

Beginning Stocks 147.54 144.18 128.83Production 819.23 827.54 864.11Imports 89.76 91.34 92.84Feed 488.48 494.41 510.83Total 822.60 842.89 867.59Exports 96.82 90.45 94.93Ending Stocks 144.18 128.83 125.35

Million Metric Tons

Compliments of PHI Marketing

May ’12 Corn

Source: CBOT

December ’12 Corn

Source: CBOT

Light Sweet Crude Oil

Source: NYMEX

  

10-Year Soybean Prices

Source: NASS

Brazil’s Big Ag Expansion 2011-21

Source: DTN

75%60%50%40%30%20%10%0%

Coffee Soybeans CottonExports

Production24% 46% 36% 39% 48% 68%

U.S. Soybean Ending Stocks As % of Use

Compliments of PHI Marketing

World Soybean Ending Stocks

as Percentage of Use

Compliments of PHI Marketing

USDA Soybean Supply and Use

2010/11 Est. (2/9/12) 2011/2012 ProjectedArea Planted 77.4 75.0Area Harvested 76.6 73.6Yield (bushels per acre) 43.5 41.5Beginning Stocks 151 215Production 3,329 3,056Imports 14 15Supply, Total 3,495 3,286Crush 1,648 1,615Exports 1,501 1,275Seed 87 88Residual 43 32Use, Total 3,280 3,011Ending Stocks 215 275Average Farm Price $11.30 $11.10-$12.30

Compliments of PHI Marketing

World Soybean Supply and Use 2009/10 2010/11 (est.)

2011/2012(Proj.)

Beginning Stocks 42.72 59.60 68.90Production 260.85 264.18 251.47Imports 86.83 88.83 90.76Crush 209.50 221.09 227.42Total 238.25 251.74 258.05Exports 92.55 91.97 92.79Ending Stocks 59.60 68.90 60.28

Million Metric Tons

Compliments of PHI Marketing

May ’12 Soybeans

Source: CBOT

November ’12 Soybeans

Source: CBOT

10-Year Wheat Prices

Source: NASS

USDA Wheat Supply and Use2010/11 (2/9/12) 2011/2012 Projected

Area Planted 53.6 54.4Area Harvested 47.6 45.7Yield (bushels per acre) 46.3 43.7Beginning Stocks 976 862Production 2,207 1,999Imports 97 120Supply, Total 3,279 2,982Food 926 935Seed 71 82Feed & Residual 132 145Exports 1,289 1,162Use, Total 2,417 2,137Ending Stocks 862 845Average Farm Price $5.70 $7.15-$7.45

Compliments of PHI Marketing

World Wheat Supply and Use

2009/10 2010/11(est.) 2011/2012 (Proj.)

Beginning Stocks 167.05 202.34 200.70Production 685.43 651.61 692.88Imports 133.58 130.07 135.91Feed 115.36 112.42 130.66Total 650.14 653.24 680.48Exports 135.80 131.82 140.25Ending Stocks 202.34 200.70 213.10

Million Metric Tons

Compliments of PHI Marketing

U.S. Wheat Ending Stocks As % of Use

Compliments of PHI Marketing

World Wheat Ending Stocks

As Percentage of Use

Compliments of PHI Marketing

May ’12 Chicago Wheat

Source: CBOT

December ’12 Chicago Wheat

Source: CBOT

10-Year Cotton Prices

Source: NASS

May ’12 Cotton

Source: CBOT

December ’12 Cotton

Source: NYMEX

10-Year Cattle Prices

Source: NASS

April ’12 Live Cattle

Source: CBOT

December ’12 Live Cattle

Source: CBOT

April ’12 Feeder Cattle

Source: CBOT

November ’12 Feeder Cattle

Source: CBOT

January Milk Cows 2002-12

Source: NASS

April ’12 Class III Milk

Source: CBOT

December ’12 Class III Milk

Source: CBOT

10-Year Hog Prices

Source: NASS

April ’12 Lean Hogs

Source: CBOT

December ’12 Lean Hogs

Source: CBOT

Inflation Adjusted Farmland Values 1964-2010

Source: Chicago Federal Reserve

• Recovering economy• Demographics will drive ag/food product demand• Next world industrial expansion: Africa• U.S. continues to be ag technology leader• U.S., China will drive African development• Infrastructure build-out continues in South America• ‘Youth bulge’ means growth in Middle East, but continued destabilization following Arab Spring• What’s this mean for you: Continued strong demand for U.S. agricultural commodities

Globally Local World: What’s Ahead