130312 chi seminar bankfin agribusiness bruce scherr
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130312 CHI SEMINAR BankFin Agribusiness Bruce ScherrTRANSCRIPT
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Global Overview of AgriculturalCommodities As An Asset Class
Bruce A. ScherrChairman of the Board & Chief Executive OfficerInforma Economics, [email protected]
March 12, 2013
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Commodities As AnAsset Class
Commodity Values Remain Strong
Reiterating from Last Year
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2013:
Europes Impact On TheGlobal Macroeconomic SituationGlobal Macroeconomic Situation
Asia: Better? Yes!
U.S. Cliff Hopping
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The Dollar:
Still Relatively WeakStill Relatively Weak
Good or Bad?
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U.S. Economic Prospects
Slow Organic Growthwithwith
Less Government
The Transition Economy
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Select Indicators:
Housing, Housing, Housing!Housing, Housing, Housing!
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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
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%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
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Liquidity Issues
Are Banks in Good Shape?Are Banks in Good Shape?
The Feds Policy Role?
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The Fed:
Low Short Rates Long TermLow Short Rates Long Termand
Low Long Term Rates
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Feeding 7-9 Billion People;
Demographic Pulls and Limitations:The Graying of the PopulationThe Graying of the Population
Constraints As We FollowThe Cold Chain
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Crop Yields?Crop Yields?
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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
GR
)
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Is Natural Gas Americas
MacroeconomicProductivity Feature
Is Natural Gas AmericasAce In The Hole?
A Game Changer:Driving Costs Lower!
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Crude Oil and Natural GasPrice Relationships
Recent Divergence
Energy Implications
Implications For Renewable Fuels
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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
6
8
10
0
20
40
60
80
100
Jan-
98Ju
n-98
Nov
-98
Apr
-99
Sep-
99Fe
b-00
Jul-0
0D
ec-0
0M
ay-0
1O
ct-0
1M
ar-0
2A
ug-0
2Ja
n-03
Jun-
03N
ov-0
3A
pr-0
4Se
p-04
Feb-
05Ju
l-05
Dec
-05
May
-06
Oct
-06
Mar
-07
Aug
-07
Jan-
08Ju
n-08
Nov
-08
Apr
-09
Sep-
09Fe
b-10
Jul-1
0D
ec-1
0M
ay-1
1O
ct-1
1M
ar-1
2A
ug-1
2Ja
n-13
Nat
Gas
($/M
Mbt
u)
Cru
dePr
ice
($/b
bl)
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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-
05Ju
l-05
Dec
-05
May
-06
Oct
-06
Mar
-07
Aug
-07
Jan-
08Ju
n-08
Nov
-08
Apr
-09
Sep
-09
Feb-
10Ju
l-10
Dec
-10
May
-11
Oct
-11
Mar
-12
Aug
-12
Jan-
13
Dol
lars
perM
illio
nbt
u
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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-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
05
Jul-0
5
Jan-
06
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
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U.S. Energy Independence?
Global Socio-Political Issues Global Socio-Political Issues
Wither the Arab Spring?
Friends or Foes?
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Wheat
Corn
The Outlook For Crops
Corn
Soybeans
Rebounding from 2012s Drought
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2013A Battle Royal For AcresA Battle Royal For Acres
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Corn Yields: Whats Next?
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WheatWheat
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CornCorn
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SoybeansSoybeans
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Summary and QuestionsSummary and Questions
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