1. Published By Hackett Financial Advisors, Inc. Shawn Hackett, President 9259 Equus Circle Boynton Beach, FL 33472 (888) 535-5525 Email: Shawn@HackettAdvisors.com www.HackettAdvisors.com Milk OUTLOOK February 13th, 2013

2. Prices are tracing out a bullish up trending wedge formation that calls for a major breakout in the first half of 2013

3. Inflation adjusted prices are nearing a major breakout that would call for a move to much higher levels Prime target area Overshoot target

4. Long Term Milk Prices are in a bullish expanding Wolfe Wave

5. Relative prices to the CCI (continuous commodity Index) are tracing out a bullish rounding bottom

6. The Milk/Live Cattle Price Ratio has been a great tool for picking major bottoms

7. Spot Live Cattle prices are in a precarious technical condition

8. Australian Beef price Arbitrage with U.S, prices has reached extremes

9. Spot Feeder Cattle Prices have shown a steady decay

10. A money flow sell signal remains intact but a buy signal is approaching Feeder cattle Money flow indicator

11. Milk/Corn and Bean Meal price ratio is another valuable tool

12. Follow Money Flow is a critical tool to use in making future forecasts

13. The Year of the Dragon Baby effect on Milk Powder demand should continue into the end of 2013

14. A conservative outlook on the demand for Dragon Babies formula is quite large indeed

15. Feed/Grain prices should remain stubbornly high in first half 2013 despite large South American crops Drought conditions continue in the western half if the U.S grain belt which will keep the grain markets on edge well into early summer given record tight U.S. and global supplies Record planted acreage in 2013 is a must to insure adequate supplies. Prices will need to remain high enough to promote this Speculative panic liquidation is likely over for now opening the way for some upside volatility especially if South American/U.S. weather problems arise Bottom-line is that dairy producers are not likely going to see attractive grain prices until the late summer and fall of 2013

16. Summation-A bottom in Milk prices should be complete by March/April 2013 The 20% correction in U.S. Milk prices stemming from the removal of the drought premium to Oceania and the temporarily reduced Asian/Chinese U.S. exports is near completion The seasonal decline in New Zealand milk production should allowing for surging U.S. Asian exports especially in Q2and Q3 of 2013. With milk production growth of the top 5 milk exporters looking to turn negative in Q2 and Q3 of 2013 due in part to high feed prices and lower milk prices in the U.S as well as less than favorable pasture growth in New Zealand in 2013, a legitimate supply squeeze is likely

17. Summation continued Expect record high Milk prices in Q2/Q3 of 2013 that should at least achieve $25/hwt and could go over $30/hwt should weather adversely effect either the U.S. or New Zealand The record highs set in 2013 may be a high water mark for quite some time. End users should be aggressively procuring their needs now through the summer months Dairy producers should be selling hand to mouth and getting ready for record hedging opportunities over the spring and summer months

18. Dark clouds however will be coming for late 2013 and into 2014 The Dragon baby demand effect will begin to ebb in 2014 providing a demand slowdown shock Dramatically lower feed prices in late 2013 will provide record profit dynamics that should surge U.S milk production and create a major glut A crash in milk prices in Q4 2013 into Q1 2014 is likely although I expect a higher lower band to be set near $15/hwt Producers need to not only protect near term high milk prices but also need to protect prices well into first half 2014 A great long term opportunity to procure long term feed needs will also present itself later in 2013