130312 CHI SEMINAR BankFin Agribusiness Bruce Scherr

Global Overview of AgriculturalCommodities As An Asset Class

Bruce A. ScherrChairman of the Board & Chief Executive OfficerInforma Economics, [email protected]

March 12, 2013

Commodities As AnAsset Class

Commodity Values Remain Strong

Reiterating from Last Year

2013:

Europes Impact On TheGlobal Macroeconomic SituationGlobal Macroeconomic Situation

Asia: Better? Yes!

U.S. Cliff Hopping

The Dollar:

Still Relatively WeakStill Relatively Weak

Good or Bad?

U.S. Economic Prospects

Slow Organic Growthwithwith

Less Government

The Transition Economy

Select Indicators:

Housing, Housing, Housing!Housing, Housing, Housing!

Annual %CH2003 1.8542004 1.950 5.22005 2.073 6.32006 1.812 -12.62007 1.342 -25.92008 0.900 -32.92008 0.900 -32.92009 0.554 -38.42010 0.586 5.72011 0.612 4.52012 0.781 27.52013 0.954 22.22014 0.987 3.5

%CH2003 16.62004 16.9 1.32005 17.0 0.52006 16.5 -2.62007 16.1 -2.52008 13.2 -18.02009 10.4 -21.22010 11.6 11.12011 12.7 10.22012 14.4 13.12013 15.6 8.32014 16.5 5.8

Vehicle Sales

Liquidity Issues

Are Banks in Good Shape?Are Banks in Good Shape?

The Feds Policy Role?

The Fed:

Low Short Rates Long TermLow Short Rates Long Termand

Low Long Term Rates

Feeding 7-9 Billion People;

Demographic Pulls and Limitations:The Graying of the PopulationThe Graying of the Population

Constraints As We FollowThe Cold Chain

Crop Yields?Crop Yields?

US Yield Growth Rate Over 4-Decades

3.5

4.0

4.5

5.0

AN

NU

AL

GR

OW

THR

ATE

(10-

yrav

erag

eof

15-y

rAG

R)

Corn Soybeans Winter Wheat

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1970

1980

1990

2000

2010A

NN

UA

LG

RO

WTH

RA

TE(1

0-yr

aver

age

of15

-yrA

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)

Is Natural Gas Americas

MacroeconomicProductivity Feature

Is Natural Gas AmericasAce In The Hole?

A Game Changer:Driving Costs Lower!

Crude Oil and Natural GasPrice Relationships

Recent Divergence

Energy Implications

Implications For Renewable Fuels

10

12

14

16

100

120

140

160

Nat

Gas

($/M

Mbt

u)

Relationship BetweenWTI, Brent, and Henry Hub Natural Gas Spot Prices

WTI Spot FOB ($/Barrel)Brent Spot FOB ($/Barrel)Henry Hub Nat Gas Spot ($/Mmbtu)

0

2

4

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0

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100

Jan-

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n-98

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($/b

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15.00

20.00

25.00

Dol

lars

perM

illio

nbt

u

Comparison of WTI Crude and Henry Hub Natural Gas Spot Price

WTI Price Henry Hub Price

1 barrel of Crude Oil contains 5.8 million btu.The current price (February 2013) of 1 barrel of Crude Oil is $95.84 per barrel.Cost per million btu in the form of Crude Oil = $95.84/5.8 = $16.52.Cost per million btu in the form of Natural Gas = $3.34.

0.00

5.00

10.00

Jan-

98Ju

n-98

Nov

-98

Apr

-99

Sep

-99

Feb-

00Ju

l-00

Dec

-00

May

-01

Oct

-01

Mar

-02

Aug

-02

Jan-

03Ju

n-03

Nov

-03

Apr

-04

Sep

-04

Feb-

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l-05

Dec

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May

-06

Oct

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Mar

-07

Aug

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Jan-

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n-08

Nov

-08

Apr

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-09

Feb-

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l-10

Dec

-10

May

-11

Oct

-11

Mar

-12

Aug

-12

Jan-

13

Dol

lars

perM

illio

nbt

u

40.00

50.00

60.00

Dol

lars

perM

illio

nbt

u

Ratio Between WTI Crude and Henry Hub Spot Price

WTI-Henry Hub Ratio

0.00

10.00

20.00

30.00

Jan-

98

Jul-9

8

Jan-

99

Jul-9

9

Jan-

00

Jul-0

0

Jan-

01

Jul-0

1

Jan-

02

Jul-0

2

Jan-

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Jul-0

3

Jan-

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Jul-0

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Jul-0

5

Jan-

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Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Dol

lars

perM

illio

nbt

u

Note: 1 barrel of Crude contains 5.8 million btu

U.S. Energy Independence?

Global Socio-Political Issues Global Socio-Political Issues

Wither the Arab Spring?

Friends or Foes?

Wheat

Corn

The Outlook For Crops

Corn

Soybeans

Rebounding from 2012s Drought

2013A Battle Royal For AcresA Battle Royal For Acres

Corn Yields: Whats Next?

WheatWheat

CornCorn

SoybeansSoybeans

Summary and QuestionsSummary and Questions

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