Market Perspective or

What do we do now Ollie??

Last December Every Headline Was Bearish! New farm crisis? Iowa farmers expected to lose money over next four years –Des Moines Register Iowa corn and soybean growers can expect to see a $1.4 billion hit to farm income this year alone Record Wheat Harvest Curbs Costs for Domino’s Pizza: Commodities – Bloomberg Canola futures in Winnipeg declined sharply by Can-$15 during the past two trading days, despite the strength in soybeans – Oil World Canadian 13/14 canola ending stocks to set record level Minn-Dak CEO says growers will likely lose money in 2014 – Fargo Forum

One Bullish Headline! The rising standard of living and the shift to more consumer-oriented economies in the emerging markets result in a reversal of the decline in agricultural commodity prices. Corn goes to $5.25 a bushel, wheat to $7.50 and soybeans to $ Byron R. Wien, Vice Chairman, Blackstone Advisory Partners

Things to Consider World consumption of grains and oilseeds increasing annually regardless of prices, economies, world turmoil World consumption of grains and oilseeds increasing annually regardless of prices, economies, world turmoil World inventories will increase in but will still be historically small – except oilseeds World inventories will increase in but will still be historically small – except oilseeds There will again be price volatility There will again be price volatility It is now about weather & yields It is now about weather & yields

Total World Grains

Will get smaller again on April 9th

Record world corn consumption despite high prices

Expected to continue to increase Prohibited GMO variety??

Possible 2014/15 Corn Outlook U.S. Corn Supply/Demand (million bushels) USDA May My 2014/15 Guess Planted Acres Harvested Acres Yield 165.3* 162 Production13,93513,446 Carry In 1,1461,146 Supply15,11114,622 Total Demand 13,38513,400 Ending Supplies 1,7261,222

December Corn Futures

Tightest ever w/ record imports!

Record large world supplies!

World consumes what it produces!

China’s import growth continues unabated despite talk of slowing economy, poor crush margins, etc., etc.

Total World Soybeans

Possible 2014/15 Soybean Outlook U.S. Corn Supply/Demand (million bushels) USDA May My 2014/15 Guess Planted Acres Harvested Acres Yield 45.2* 44 Production3,6353,608 Carry In Imports 15 (90) 15 Supply 3,780 3,753 Total Demand 3,4503,450 Ending Supplies

November Soybeans

Mpls December Wheat Stats Canada Impact

Chicago December Wheat

Kansas City December Wheat

Possible 2014/15 Wheat Outlook U.S. Wheat Supply/Demand (million bushels) USDA May My 2014/15 Planted Acres Harvested Acres Yield Production1,9631,935 Carry In Imports160160? Supply2,7062,678 Total Demand 2,166 (-285) 2,200 Ending Supplies

U.S. Wheat Issues Hard red winter wheat - very tight and maybe quality issues (light test weight, high protein, sprout?) Soft red winter wheat – good crop but no demand? Hard red spring wheat – Canada’s 2013 hangover?

World Wheat Issues EU has been and will be aggressive soft wheat seller drawing stocks down Russia/Ukraine will sell first tonnage “cheap”, balance will depend on crop size Southern Hemisphere wheat crop ?? El Nino?? World demand still growing, but competing with cheaper corn for feed consumption

Why Has Demand Been So Strong?

Global Policy Analysis Division Office of Global Analysis “Middle Class” Outside the U.S. Expected to Double by 2022 – To Nearly 1 Billion Households Developing countries Developed countries (ex US) Source: Global Insight’s Global Consumer Markets data as analyzed by OGA

Global Policy Analysis Division Office of Global Analysis Developing Countries With Fastest Growing Middle Class 24% of households in these countries are middle class. By 2022, this could increase to 51% Source: Global Insight’s Global Consumer Markets data as analyzed by OGA

Meat increase in developing countries is 36% vs. 7% in developed Change in Meat Consumption (2011 vs. 2001) 61% 40% 7% 39% Data Source: USDA - PS&D 6% 48% 78% 43% 30% 12% 19% -1% Meat Consumption Growth Focused in Developing Nations

Things to Consider U.S. old crop soybean supplies will stay very tight U.S. old crop soybean supplies will stay very tight Corn supplies not as burdensome as many had predicted – strong demand at lower prices Corn supplies not as burdensome as many had predicted – strong demand at lower prices U.S. Wheat is very tight but Canada still has to find a home for 2013 crop U.S. Wheat is very tight but Canada still has to find a home for 2013 crop Big World Crops in 2014 Keeps Markets Bearish Big World Crops in 2014 Keeps Markets Bearish The world is still a production problem away from sharply higher prices (John Deere CEO) The world is still a production problem away from sharply higher prices (John Deere CEO)

The next bearish hurdles? USDA June 30 Reports USDA June 30 Reports – Acreage revisions – How much less corn and more soybeans? Quarterly stocks Quarterly stocks – The magical 300 to 400 million bushels of corn? – Soybean supplies? – Wheat feed usage? Weather & yields? Weather & yields?