1. INTL FCStone Financial Inc.
Global Outlook
INTL FCStone Financial Inc.
FCM Division
Kyle Smith

2. DISCLAIMER
The trading of derivatives such as futures, options, and over-the-counter (OTC) products or “swaps” may not be suitable for all investors. Derivatives trading involves substantial risk of loss, and you should fully understand those risks prior to trading. Past financial results are not necessarily indicative of future performance. All references to futures and options on futures trading are made solely on behalf of the FCM Division of INTL FCStone Financial Inc., a member of the National Futures Association (“NFA”) and registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a futures commission merchant. All references to and discussion of OTC products or swaps are made solely on behalf of INTL FCStone Markets, LLC (“IFM”), a member of the NFA and provisionally registered with the CFTC as a swap dealer IFM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of IFM.
This material should be construed as market commentary, merely observing economic, political, and/or market conditions. It is not intended to refer to any particular trading strategy, promotional element or quality of service provided by the FCM Division of INTL FCStone Financial Inc. or IFM.
Neither the FCM Division of INTL FCStone Financial Inc. nor IFM is responsible for any redistribution of this material by third parties or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable, but is not guaranteed. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the opinions or viewpoints of the FCM Division of INTL FCStone Financial Inc. or IFM.
All forecasting statements made within this material represent the opinions of the author unless otherwise noted. Factual information believed to reliable, was used to formulate these statements of opinion; but we cannot guarantee the accuracy and completeness of the information being relied upon. Accordingly, these statements do not necessarily reflect the viewpoints employed by the FCM Division of INTL FCStone Financial Inc. or IFM. All forecasts of market conditions are inherently subjective and speculative, and actual results and subsequent forecasts may vary significantly from these forecasts. No assurance or guarantee is made that these forecasts will be achieved. Any examples given are provided for illustrative purposes only, and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples.
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3. P = f ( S * D ) M
Price is a Function of Supply and Demand as Modified by the Flow of Money.

5. The Composition of the CRB INDEX
SOURCE: Thomson Reuters

6. “High” Interest Rates & China Tariff Fears Derail Commodity Rally – For Now
SOURCE: Reuters Eikon

7. The Weekly Chart Provides Better Long-Term Perspective for the Sector
SOURCE: Reuters Eikon

8. SOURCE: @BrilliantMaps

10. U.S. Exports by Country
SOURCE: Tradingeconomics.com

11. U.S. Imports by Country
SOURCE: Tradingeconomics.com

12. China Currently Charges Tariffs on 545 Items Imported From the United States
SOURCE: Chinese Customs Administration

13. China Trade War Update:
The Midterm Elections are Over – Democrats are Pushing Trump to be Even Harder on China.
President Trump Met with President Xi at G-20 Meeting in Buenos Aires at the End of November.
90-Day Truce is Declared to Negotiate Comprehensive Agreement by March 31st.
China Promises to Purchases “Substantial” Amounts of Commodities “Immediately.”
Let the Games Begin!

14. U. S. GDP Grew at 4. 1% Pace in 2nd Quarter, 3
U.S. GDP Grew at 4.1% Pace in 2nd Quarter, 3.5% for the 3rd Quarter and is on Pace to Reach 3.0% Growth for the Year.

15. Impact on China:
Blue Sky in Beijing Disappears as economic growth and debt issues drain provincial staff salaries, reducing environmental enforcement.
Passenger Car Sales Fall 30% in First Half of November.
Senior Managers of Off-Shore Companies Offering Their Apartments on the Market as They Leave China.
8,000 Public Company Directors From 1,000+ Companies Resign. 10% of Companies Change Principal Decision Makers This Year as Economy Slides.
Guangzhou Trade Fair Sees Drop in Participants as Exports to U.S. Fall by 30%. Even More Pressure Expected in 1H 2019.
Hainan Air Group Offers Debt Holders Airplane Tickets & Other Products in Exchange for Debt Payments.
Fiscal Spending for Medical Care Seeing Severe Strain as Peak Retirement Years Approach for China.
PBOC Pushes for Lower Lending Rates for Private Companies; Forgiving Loan Payments.

16. One of the Significant Stories of the Year has been the Trade War with China. Farmers are Increasingly Resigned to the Trade War Being a Long-Term Story that Lingers On. As such, Respondents to our November Online Twitter Survey (non-scientific) Suggests that Trade, or the Lack Thereof, Will be the Primary Story for Agriculture in 2019.

17. October - China Corn Supply

18. Revised November China Corn Supply

19. October - World Corn Supply
The majority of world corn ending stocks is held by the United States and China. Surplus supplies outside of the United States and China remain at “just in time” levels.

20. Revised November World Corn Supply
The majority of world corn ending stocks is held by the United States and China. Surplus supplies outside of the United States and China remain at “just in time” levels.

21. African Swine Fever

22. African Swine Fever About as Bad as it Gets for Hog Diseases.
Localized Outbreaks in Eastern Europe and Russia.
Outbreaks Rapidly Spreading Within China.
China has 55% of the World’s Hogs.
Pork is the #1 Driver of Food Inflation in China.
Food Inflation Top Driver of Social Unrest.
China Actually Lifting Some Transportation Bans.
Look for This to be the Top Story for 2019.
Already Seeing Soy Protein Demand Destruction.
Some Corn Demand Loss, but Ethanol Demand Partially Offsets.
October Beef Imports Up 80% From Previous Year.

23. World Swine Production Map
Percent of World Production:
China: 55%
United States: 10%
Brazil: 3%
Russia: 3%
Canada: 2%
Mexico: 2%
Japan: 1%
Other Countries: (23%)

24. Chinese Options for Buying Soybeans – Factoring in Currency, Freight & Tariffs

26. = TARRIF = 610

29. Questions?
THANK YOU
KYLE SMITH