Global Overview of Agricultural Commodities As An Asset Class

Bruce A. Scherr

Chairman of the Board & Chief Executive Officer Informa Economics, Inc. 901-766-4511
bruce.scherr@informaecon.com

March 12, 2013

Commodities As An Asset Class

Commodity Values Remain Strong Reiterating from Last Year

2013:
Europes Impact On The Asia: Better? Yes! U.S. Cliff Hopping

Global Macroeconomic Situation

The Dollar: Still Relatively Weak Good or Bad?

U.S. Economic Prospects Slow Organic Growth with Less Government The Transition Economy

Select Indicators: Housing, Housing, Housing!

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Annual 1.854 1.950 2.073 1.812 1.342 0.900 0.554 0.586 0.612 0.781 0.954 0.987

%CH 5.2 6.3 -12.6 -25.9 -32.9 -38.4 5.7 4.5 27.5 22.2 3.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Vehicle Sales 16.6 16.9 17.0 16.5 16.1 13.2 10.4 11.6 12.7 14.4 15.6 16.5

%CH 1.3 0.5 -2.6 -2.5 -18.0 -21.2 11.1 10.2 13.1 8.3 5.8

Liquidity Issues Are Banks in Good Shape? The Feds Policy Role?

The Fed: Low Short Rates Long Term and Low Long Term Rates

Feeding 7-9 Billion People; Demographic Pulls and Limitations: The Graying of the Population Constraints As We Follow The Cold Chain

Crop Yields?

US Yield Growth Rate Over 4-Decades

Corn
5.0

Soybeans

Winter Wheat

ANNUAL GROWTH RATE (10-yr average of 15-yr AGR)

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

1970

1980

1990

2000

2010

Macroeconomic Productivity Feature

Is Natural Gas Americas Ace In The Hole? A Game Changer: Driving Costs Lower!

Crude Oil and Natural Gas Price Relationships

Recent Divergence
Energy Implications Implications For Renewable Fuels

Crude Price ($/bbl)

20 40 60 80 100 120 140 160 0

WTI Spot FOB ($/Barrel)

Brent Spot FOB ($/Barrel)

Henry Hub Nat Gas Spot ($/Mmbtu)

Relationship Between WTI, Brent, and Henry Hub Natural Gas Spot Prices

Jan-98 Jun-98 Nov-98 Apr-99 Sep-99 Feb-00 Jul-00 Dec-00 May-01 Oct-01 Mar-02 Aug-02 Jan-03 Jun-03 Nov-03 Apr-04 Sep-04 Feb-05 Jul-05 Dec-05 May-06 Oct-06 Mar-07 Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10 Jul-10 Dec-10 May-11 Oct-11 Mar-12 Aug-12 Jan-13
0 2 4

Nat Gas ($/MMbtu)

10

12

14

16

Comparison of WTI Crude and Henry Hub Natural Gas Spot Price
25.00

20.00 WTI Price Henry Hub Price

Dollars per Million btu

15.00

10.00

5.00

0.00

Feb-00

Mar-02

Feb-05

Mar-07

Feb-10

Mar-12

Jan-98

Jun-98

Jan-03

Jun-03

Jan-08

Jun-08

May-01

May-06

May-11

Nov-98

Sep-99

Dec-00

Aug-02

Nov-03

Sep-04

Dec-05

Aug-07

Nov-08

Sep-09

Dec-10

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.

Aug-12

Jan-13

Apr-99

Oct-01

Apr-04

Oct-06

Apr-09

Oct-11

Jul-00

Jul-05

Jul-10

Dollars per Million btu

10.00 40.00 50.00 60.00 20.00 30.00 0.00

Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Note: 1 barrel of Crude contains 5.8 million btu WTI-Henry Hub Ratio

Ratio Between WTI Crude and Henry Hub Spot Price

U.S. Energy Independence?

Global Socio-Political Issues
Wither the Arab Spring? Friends or Foes?

The Outlook For Crops

Wheat

Corn Soybeans
Rebounding from 2012s Drought

2013 A Battle Royal For Acres

Corn Yields: Whats Next?

Wheat

Corn

Soybeans

Summary and Questions

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