“Transitioning Expectations” South Dakota Corn Growers 30th Annual Meeting January 9, 2016 Brian Splitt Allendale Inc. http://www.allendale-inc.com/ 800-262-7538 bsplitt@allendale-inc.com “Transitioning Expectations” Ongoing Demand Concerns Finalizing 2015 Production Marketing Efficiency Tips

Two simple actions to consider for sound marketing: Effectively capture carry on bushels going in the bin Ensure that your method of owning grain is in the most efficient way possible

Takeaways from analyzing ten years of carry: 4 of past 10 years, max carry was achieved before July 4th Carry achieved prior to July 4th was, on average, only 3.25 cents away from max carry for the year Removing 2008 due to the economic collapse skewing values, the average would be 2 cents Carry achieved prior to July 4th was, on average, 14.25 cents better than the tightest carry during fall Removing 2012 due to the drought skewing values, the average would be 9.25 cents During 2012 drought, saving 40 of the 58.5 cent rally in the spread would equate to $200,000 for a 500k bu producer In 2015, complacency in rolling futures or HTA sales may have reduced a potential value by as much as 19 cents Effectively managing carry could be the difference between being in the black or being in the red for the year

CASE STUDY Producer in Codington County calls end of November for advice He has 2/3 of his 120,000 bushel corn crop sold HTA in his bin 1/3 of his corn crop is unpriced in commercial storage Storage fees begin December 1st at 5 cents/month He is concerned basis will not improve Intention is to price commercially stored bushels late February / early March He is hoping prices rally after the January report He is margin call adverse and should not use futures

What are his options? Leave grain unhedged and pay 15 cents for commercial storage Buy a put to hedge prices and pay 15 cents for commercial storage Sell cash and accept market value Sell cash and buy a call for paper ownership

South Dakota Corn Growers 30th Annual Meeting January 9, 2016 Brian Splitt Allendale Inc. http://www.allendale-inc.com/ 800-262-7538 bsplitt@allendale-inc.com