Global Overview of AgriculturalCommodities As An Asset Class
Bruce A. ScherrChairman of the Board & Chief Executive Officer
Informa Economics, Inc.
901-766-4511
March 12, 2013
Commodities As AnAsset Class
• Commodity Values Remain Strong
• Reiterating from Last Year
2013:
• Europe’s Impact On TheGlobal Macroeconomic SituationGlobal Macroeconomic Situation
• Asia: Better? Yes!
• U.S. Cliff Hopping
The Dollar:
Still Relatively WeakStill Relatively Weak
Good or Bad?
U.S. Economic Prospects
Slow Organic Growthwithwith
Less Government
The Transition Economy
Select Indicators:
Housing, Housing, Housing!Housing, Housing, Housing!
Annual %CH
2003 1.854
2004 1.950 5.2
2005 2.073 6.3
2006 1.812 -12.6
2007 1.342 -25.9
2008 0.900 -32.92008 0.900 -32.9
2009 0.554 -38.4
2010 0.586 5.7
2011 0.612 4.5
2012 0.781 27.5
2013 0.954 22.2
2014 0.987 3.5
%CH
2003 16.6
2004 16.9 1.3
2005 17.0 0.5
2006 16.5 -2.6
2007 16.1 -2.5
2008 13.2 -18.0
2009 10.4 -21.2
2010 11.6 11.1
2011 12.7 10.2
2012 14.4 13.1
2013 15.6 8.3
2014 16.5 5.8
Vehicle Sales
Liquidity Issues
Are Banks in Good Shape?Are Banks in Good Shape?
The Fed’s Policy Role?
The Fed:
Low Short Rates Long TermLow Short Rates Long Termand
Low Long Term Rates
Feeding 7-9 Billion People;
Demographic Pulls and Limitations:
The Graying of the PopulationThe Graying of the Population
“Constraints As We FollowThe Cold Chain”
Crop Yields?Crop Yields?
US Yield Growth Rate Over 4-Decades
3.5
4.0
4.5
5.0
AN
NU
AL
GR
OW
TH
RA
TE
(10
-yr
av
era
ge
of
15
-yr
AG
R)
Corn Soybeans Winter Wheat
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
19
70
19
80
19
90
20
00
20
10
AN
NU
AL
GR
OW
TH
RA
TE
(10
-yr
av
era
ge
of
15
-yr
AG
R)
Is Natural Gas America’s
MacroeconomicProductivity Feature
Is Natural Gas America’s“Ace In The Hole”?
A Game Changer:Driving Costs Lower!
Crude Oil and Natural GasPrice Relationships
•• Recent Divergence
• Energy Implications
• Implications For Renewable Fuels
10
12
14
16
100
120
140
160
Nat
Ga
s($
/MM
btu
)
Relationship BetweenWTI, Brent, and Henry Hub Natural Gas Spot Prices
WTI Spot FOB ($/Barrel)
Brent Spot FOB ($/Barrel)
Henry Hub Nat Gas Spot ($/Mmbtu)
0
2
4
6
8
10
0
20
40
60
80
100
Jan
-98
Ju
n-9
8
No
v-9
8
Ap
r-99
Sep
-99
Feb
-00
Ju
l-00
De
c-0
0
Ma
y-0
1
Oct-
01
Ma
r-0
2
Au
g-0
2
Jan
-03
Ju
n-0
3
No
v-0
3
Ap
r-04
Sep
-04
Feb
-05
Ju
l-05
De
c-0
5
Ma
y-0
6
Oct-
06
Ma
r-0
7
Au
g-0
7
Jan
-08
Ju
n-0
8
No
v-0
8
Ap
r-09
Sep
-09
Feb
-10
Ju
l-10
De
c-1
0
Ma
y-1
1
Oct-
11
Ma
r-1
2
Au
g-1
2
Jan
-13
Nat
Ga
s($
/MM
btu
)
Cru
de
Pri
ce
($/b
bl)
15.00
20.00
25.00
Do
lla
rsp
er
Mil
lio
nb
tu
Comparison of WTI Crude and Henry Hub Natural Gas Spot Price
WTI Price Henry Hub Price
1 barrel of Crude Oil contains 5.8 million btu.The current price (February 2013) of 1 barrel of Crude Oil is $95.84 per barrel.Cost per million btu in the form of Crude Oil = $95.84/5.8 = $16.52.Cost per million btu in the form of Natural Gas = $3.34.
0.00
5.00
10.00
Ja
n-9
8
Ju
n-9
8
No
v-9
8
Ap
r-9
9
Sep
-99
Fe
b-0
0
Jul-0
0
De
c-0
0
Ma
y-0
1
Oct
-01
Ma
r-02
Aug
-02
Ja
n-0
3
Ju
n-0
3
No
v-0
3
Ap
r-0
4
Sep
-04
Fe
b-0
5
Jul-0
5
De
c-0
5
Ma
y-0
6
Oct
-06
Ma
r-07
Aug
-07
Ja
n-0
8
Ju
n-0
8
No
v-0
8
Ap
r-0
9
Sep
-09
Fe
b-1
0
Jul-1
0
De
c-1
0
Ma
y-1
1
Oct
-11
Ma
r-12
Aug
-12
Ja
n-1
3
Do
lla
rsp
er
Mil
lio
nb
tu
40.00
50.00
60.00
Do
lla
rsp
er
Milli
on
btu
Ratio Between WTI Crude and Henry Hub Spot Price
WTI-Henry Hub Ratio
0.00
10.00
20.00
30.00
Jan
-98
Ju
l-98
Jan
-99
Ju
l-99
Jan
-00
Ju
l-00
Jan
-01
Ju
l-01
Jan
-02
Ju
l-02
Jan
-03
Ju
l-03
Jan
-04
Ju
l-04
Jan
-05
Ju
l-05
Jan
-06
Ju
l-06
Jan
-07
Ju
l-07
Jan
-08
Ju
l-08
Jan
-09
Ju
l-09
Jan
-10
Ju
l-10
Jan
-11
Ju
l-11
Jan
-12
Ju
l-12
Jan
-13
Do
lla
rsp
er
Milli
on
btu
Note: 1 barrel of Crude contains 5.8 million btu
U.S. Energy Independence?
• Global Socio-Political Issues• Global Socio-Political Issues
• Wither the Arab Spring?
• Friends or Foes?
• Wheat
• Corn
The Outlook For Crops
• Corn
• Soybeans
Rebounding from 2012’s Drought
2013A Battle Royal For AcresA Battle Royal For Acres
Corn Yields: What’s Next?
WheatWheat
CornCorn
SoybeansSoybeans
Summary and QuestionsSummary and Questions
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