1. INTL FCStone Inc. | www.intlfcstone.com
Grain Outlook AUGUST 2012
Michael O’Dea | Risk Management Consultant
Commercial Grain Division
FCStone, LLC
INTL FCStone Inc. |

2. “It’s tough to make predictions… especially about the future!”
Disclaimer
“It’s tough to make predictions… especially about the future!”
Lawrence P. “Yogi” Berra
“Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.”
Kenneth Boulding (an economist)
But first, I too must start with a disclaimer:
-all the data I will present come from sources we believe are credible and authoritative but we have not independently verified them.
-all views and opinions are my own and do not necessarily reflect the views and opinions of INTL FCStone

3. Real Disclaimer
Commodity trading involves risks, and you should fully understand those risks prior to trading. FCStone Group, Inc., INTL FCStone, Inc., and their affiliates assume no liability for the use of any information contained herein. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures, options on futures contracts, or OTC products.
Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples.
References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.
Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice. Reproduction or use in any format without authorization is forbidden. All rights reserved.

5. Corporate Overview 20,000 CUSTOMERS
INTL FCStone Inc. is a customer-centric business focused on mid-market customers.
MARKET POSITIONING
We have one of the leading franchise’s in grains and metals markets.
We are one of the largest traders of agricultural and softs options and structured products designed to mitigate customer risk.
We are a recognized leader in global payments and treasury management services.
In many verticals, we are recognized as industry experts providing advice to industry-leading corporations.
We serve more than
mainly commercial customers in more than
countries through a network of more than
employees
In offices around
the world.
MISSION
We seek to provide high-value-added financial solutions to allow our customers to efficiently and effectively utilize the financial markets to control risk and protect margins.
Our mission is founded on the concept of educating our middle market customers in a transparent fashion.
We provide customers across the globe with execution and advisory services in commodities, capital markets, currencies, asset management and more.
Serving more than
20,000 CUSTOMERS
in more than
100 COUNTRIES through a network of over
1,000 PROFESSIONALS across
39 OFFICES
around the world.
AS OF SEPTEMBER, 2011…
FCStone, LLC had $1.4 billion in required customer segregated customer assets, and executed more than 28.8 million exchange-traded contracts in fiscal year 2011.
INTL FCStone traded more than $75 billion of physical commodities in 2011.
Record operating revenues and net income for fiscal year 2011 3

6. Macro Market Price Discovery – Is it art, science or voodoo ?
Supply and Demand back in focus
World Economy - Demographics
Global currencies – USD Vs. Euro Vs. Yuan
Global Energy supplies/US Ethanol program
Money flow into commodities
Fund money and order flow
HFT and market disruption.
Geopolitical Regional Issues
Middle East (Syria, Iran)
European Politics in wake of Financial Crisis
US and World Election Cycle
China – South China Sea new flashpoint ?

8. Maplecroft.com

9. World Population 1950-2100 9.3 billion
The world has been getting more crowded at a faster rate. It took homo sapiens about 200,000 years to reach a population of 2.5 billion, another 45 years to add 4.5 billion more but the rate of growth is slowing dramatically so that it will take another 40 years to add a further 2.3 billion.
The baseline throughout the presentation will be the medium fertility variant
Assumptions: High-fertility: Until 2010, no fertility reduction or only an incipient decline; Medium-fertility: Fertility declining but estimated level still above 2.1 in ; Low-fertility: Total fertility at or below 2.1.
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision.

10. Most Populous Countries
The order of the 20 most populous countries will change and the bar to entry will rise. The smallest of the top 20 goes from 66 mil. to 92 mil.
Assumption: Medium-fertility variant.
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision.

15. MONEY FLOW INTO COMMODITIES
Who are trading these markets now?
Hedgers
Grain handlers, consumers and traders.
Speculators
Directional traders
HFT – High Frequency Traders
Black box – SP/Crude/Currencies – moving into AGS.
View of markets – highly correlated
My view very disruptive
Index Funds/ETFS
DB PowerShares Commodity Index as of 6/30/12
Sector weightings Energy 55%, AG 22.5%(C 5% W 5% S 5% sugar 5%) Ind. Metals 12.5% Precious Metals 10%
Returns ? YTD -3.51% 1 yr % 5 yr. 1.31% Incept 3.02%

21. CRB has rallied from negative trend

22. China Disposable Income

25. South China Sea = Resources

26. INTL FCStone Inc. | www.intlfcstone.com
Wheat
United States and World
Supply and Demand Information
INTL FCStone Inc. |

29. Wheat Fundamentals
Wheat demand outpaces production – increase in exports and feeding.

30. Feeding HRW 335 mb
Feeding HRW mb
SRW mb
SWW mb
Total mb

31. CME Wheat/Corn Spread Weekly Chart – wheat market did
Its job of moving to feed grain values
But now does market need to build
Risk premium in and take it out of the feeding equation ?

32. KWZ/CZ SPREAD

33. Sharp increase in US exports dues to smaller estimated world wheat production mainly from the Black Sea countries.

34. Carryout is at a 104 day supply

35. World carryout reduced on smaller production but still above 2007-8.
Wheat Fundamentals
World carryout reduced on smaller production but still above

36. Wheat Fundamentals

37. Wheat Fundamentals

38. Wheat Fundamentals

39. Wheat Fundamentals

40. Wheat Fundamentals
If Russian production is 40 mmt or less at the current pace of
Exports they would need to shut down exports by October to
Maintain a historical carryout to use ratio.
WTO entry makes an embargo more problematic but it cannot
Be ruled out, interesting to see multinational grain companies
Aggressive sellers of Russian wheat in latest tenders.

41. Wheat Fundamentals

42. Wheat Fundamentals

43. Wheat Fundamentals

44. Wheat Fundamentals

45. Wheat Fundamentals

46. Wheat Fundamentals

47. Wheat Fundamentals

48. Wheat Fundamentals

49. Carryout is at a 95 day supply
Wheat Fundamentals
Carryout is at a 95 day supply

50. WHEAT FORWARD LOOK Fundamentals: World Supply/Demand has shifted.
Smaller World production/ending stocks have changed market attitude from bearish to nervous in the short term.
Black Sea production issues will shift export demand back to US, Canada and the EU, will the EU need to ration exports ? .
Basis is firm as demand continues to be strong.
Feeders and new KC storage rates compete for bushels.
Rally in futures has seen producer sell – who will be a seller of this market with corn/bean action ?
Basis will have to do the work if flat price or spreads will not.
Over The Horizon
Weather Threats – Australia El Nino can sharply lower production, September critical, US HRW areas need rains for fall planting.
Break up of CWB still a work in progress – more imports into US but “transparent” exports.
Smaller production in Argentina due to Government actions.

52. Wheat Fundamentals

53. Wheat Fundamentals

54. US Supply Demand Alt/2012/13

55. World Supply/Demand WORLD S/D
Notes: These numbers are my estimate on the 12/13 they reflect smaller Black Sea and Australian production from USDA.
2007/8 is listed as a reference but note that C/O to use that year was 20.7% and if demand did stay constant in this estimate the 12/13 C/O % estimate would be on that pace – but I would expect demand to drop with this type of projection as futures prices would cut demand.
Remarkable to look at this S/D just 6 months ago estimates had Carryout over 200 mmt.

56. Outliers – Corn price elevates wheat VS C/O to USE ratio
Supply issue

57. INTL FCStone Inc. | www.intlfcstone.com
Corn
United States and World
Supply and Demand Information
INTL FCStone Inc. |

58. Corn Fundamentals

59. Corn Fundamentals

60. Corn Fundamentals USDA has yield at 123.4/bu acre
Harvested Acres at 87.4/million acres

61. Market is in rationing mode.

62. WORLD CORN EXPORTS 62

63. Corn Fundamentals Ethanol = 40.6% of last years corn crop
Ethanol = 41.6% of this years corn crop
EPA waiver is not the silver bullet to reduce
Corn usage – ethanol is integrated into the
US gasoline complex, economics will the issue.

64. Corn Fundamentals

65. Corn Fundamentals

66. Corn Fundamentals

67. Corn Fundamentals

68. DDG’s - One ton of DGS’s replaces 1.25 ton of corn.

69. Corn Fundamentals
Livestock sector to take the brunt of rationing.

70. Corn Fundamentals

71. Corn Fundamentals

72. Brazilian corn already working

73. Corn Fundamentals
Corn carryout at a 21 day supply

74. Corn Fundamentals

75. Corn Fundamentals

76. Corn Fundamentals Smaller FSU-12 corn exports due to
Drought reducing production in the
Ukraine and Russia

77. Corn Fundamentals

78. Corn Fundamentals

79. Corn World Carryout 52 days Supply

80. Corn Fundamentals

81. FARPI Estimate on China corn Imports going forward
Record yields/production needed for 13/14 crop cycle

82. Corn Fundamentals USDA has China corn production at 200 mmt
What if that number is to high ?

83. China Information provided by Troy Lust, FCStone LLC Risk Manager Des Moines Office

84. Crop scouts after walking a corn field, got a few
Army worms,,,

85. Domestic corn prices have not yet reacted to the
Rally in CME corn futures.

86. Corn Fundamentals

87. China 49.6% of Hog Production
China now subsidizing production

88. Corn Fundamentals

89. Corn Fundamentals
Top 5.

90. CORN FORWARD LOOK Fundamentals: Markets have added Risk Premium.
US corn production and corn stocks have been reduced, trade looking for smaller numbers going forward, small crops get smaller, big crops get bigger.
Corn futures have rallied to $8.50 and stalled, smaller production can take futures higher post harvest – true rationing will be late in the crop cycle and be done by basis and inverses in the markets.
US Ethanol will not go away till they run out of money.
Demand and price.
Wheat/Corn spread will encourage more wheat feeding.
Producer may be limited seller at harvest – yields and insurance.
Over The Horizon -
China corn production reports will be watched closely.
Political intervention in markets, ethanol, export taxes etc.
New crop corn plantings – prices to encourage more area.
Shift to El Nino is good for both US and South American weather.

91. CORN SUPPLY/DEMAND

93. International Assets Holding Corporation | www.intlassets.com
Soybeans
United States and World
Supply and Demand Information
International Assets Holding Corporation | 93

94. Soybean Fundamentals

95. Soybean Fundamentals

96. Soybean Fundamentals

97. Soybean Fundamentals

98. 15 Days of Soybean Carryout

99. Soybean Fundamentals

100. Soybean Fundamentals

101. Soybean Fundamentals

102. Soybean Fundamentals

103. Soybean Fundamentals

104. Soybean Fundamentals

105. Soybean Fundamentals

106. Soybean Fundamentals

107. Chinese Soybean Crush

108. Soybean Fundamentals

109. SOYBEANS – FORWARD LOOK
Fundamentals – “Market out of control”
USDA Crop report reducing US production and carryout, showing a minimum pipeline of 115 mb a 15 day supply.
US can literally run out of soybeans in the spring.
South American production to rebound -
USDA estimating South American production up 1.25 bb.
South American producer aggressively selling new crop beans as they receive record prices.
Shift to El Nino weather pattern will help production.
Over The Horizon -
Dislocation of stocks – World forced to source beans from the US until new crop S/A production comes online
Even if South American crop rebounds market will face inadequate logistic capacity to supply demand – force more business to US.
Disruption of futures markets – potential cash convergence issues in the summer.

110. Soybeans—A look forward

111. Soybean Fundamentals

112. Average age of US Farmer is 60
Biggest threat to US
Ag may be
demographics

113. The Bubble

114. DISCLAIMER
Commodity trading involves risks, and you should fully understand those risks prior to trading. FCStone Group, Inc., INTL FCStone, Inc., and their affiliates assume no liability for the use of any information contained herein. Neither the information, nor any opinion expressed shall be construed as an offer to buy or sell any futures, options on futures contracts, or OTC products.
Past financial results are not necessarily indicative of future performance. Any examples given are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples.
References to and discussions of exchange traded products are made solely on behalf of FCStone, LLC. References to and discussions of OTC products are made solely on behalf of INTL Hanley, LLC, and OTC products are only available to eligible counterparties.
Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. Any opinions expressed herein are subject to change without notice. Reproduction or use in any format without authorization is forbidden. All rights reserved.