CAPITAL MARKETS IN THE POST-CRISIS ENVIRONMENT Part V Michael Drury Chief Economist, McVean Trading & Investments, LLC
Sponsored by Global Interdependence Center and Bank of Finland Helsinki, Finland June 5-7, 2011
Past Performance Is Not Necessarily Indicative Of Future Results.
0
China’s Share of World Commodity Consumption Commodity
China % of World
Cement
53.2%
Iron Ore
47.7%
Coal
46.9%
Pigs
46.4%
Steel
45.4%
Lead
44.6%
Zinc
41.3%
Aluminum
40.6%
Copper
38.9%
Eggs
37.2%
Nickel
36.3%
Rice
28.1%
Soybeans
24.6%
Wheat
16.6%
Chickens
15.6%
PPP GDP
13.6%
Oil
10.3%
Cattle
9.5%
GDP
9.4%
Source: Barclays 2010
Past Performance Is Not Necessarily Indicative Of Future Results.
1
WTI vs Brent Crude Oil 150
130
110
90
70
50
30 Jan-06
Jan-07
Source: Bloomberg
Jan-08
Jan-09 WTI
Brent
Past Performance Is Not Necessarily Indicative Of Future Results.
Jan-10
Jan-11
Apr-11 2
Gasoline
350
300
250
200
150
100
50
0 Jan-89
Jan-93
Jan-97
Jan-01
Jan-05
Source: Bloomberg
Jan-09
Apr-11 Past Performance Is Not Necessarily Indicative Of Future Results.
3
Corn 800
700
600
500
400
300
200
100 Jan-89
Jan-93
Jan-97
Jan-01
Jan-05
Source: Bloomberg
Jan-09
Apr-11 Past Performance Is Not Necessarily Indicative Of Future Results.
4
US CORN ENDING STOCKS 5,000 4,500 4,000
3,500
MIL BU
3,000 2,500 2,000 1,500 1,000 500 0
Source: McVean Trading Calculation
PIPELINE
USDA ESTIMATE
Past Performance Is Not Necessarily Indicative Of Future Results.
5
Gasoline (Wholesale) vs Corn 350
800
300
700
250
600
200
500
150
400
100
300
50
200
0 Jan-89
100 Jan-91
Jan-93
Jan-95
Source: Bloomberg
Jan-97
Jan-99
Jan-01
Jan-03
Gasoline
Jan-05 Corn
Past Performance Is Not Necessarily Indicative Of Future Results.
Jan-07
Jan-09
Jan-11
Apr-11 6
Corn / Wheat
1
0.9
0.8
0.7
0.6
0.5
0.4 Jan-89
Jan-91
Jan-93
Jan-95
Jan-97
Jan-99
Jan-01
Jan-03
Jan-05
Source: Bloomberg
Jan-07
Jan-09
Jan-11
Apr-11 Past Performance Is Not Necessarily Indicative Of Future Results.
7
Corn / Soybeans
0.65
0.6
0.55
0.5
0.45
0.4
0.35
0.3
0.25 Jan-89
Jan-91
Jan-93
Jan-95
Jan-97
Jan-99
Jan-01
Jan-03
Jan-05
Source: Bloomberg
Jan-07
Jan-09
Jan-11
Apr-11 Past Performance Is Not Necessarily Indicative Of Future Results.
8
Ethanol Production as a percent of US CORN CROP 45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
Source: USDA Past Performance Is Not Necessarily Indicative Of Future Results.
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US CORN DOMESTIC DISAPPEARANCE 14,000
12,000
10,000
MIL BU
8,000
6,000
4,000
2,000
0 00/01 Source: USDA
01/02
02/03
03/04
04/05
05/06
ETHANOL
06/07
07/08
08/09
09/10
10/11
OTHER
Past Performance Is Not Necessarily Indicative Of Future Results.
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US PLANTED ACRES 350
300
250
MIL ACRES
200
150
100
50
2000
2001
Source: USDA
2002
2003
2004 CORN
2005
2006
SOYBEANS
2007
2008
2009
2010
2011
OTHER CROPS
Past Performance Is Not Necessarily Indicative Of Future Results.
11
E10 Penetration – 2010
% of state gasoline blended with ethanol
Past Performance Is Not Necessarily Indicative Of Future Results.
12
Ethanol Margins, Calculated From Board Values Variable Costs are Covered at 20-40 Cents
58 56 54
CENTS/GAL
52 50 48 46 44 42 40 K11
N11
U11
Source: McVean Trading Calculation
Z11
H12
K12
N12
CONTRACT MONTH
Past Performance Is Not Necessarily Indicative Of Future Results.
13
Ethanol, Gasoline and Crude Oil Board Curves
3.40
$/GAL
3.20
3.00
2.80
2.60
2.40 K11
N11
U11
Z11
H12
K12
N12
CONTRACT MONTH Source: CME
ETHANOL
GASOLINE
CRUDE OIL
Past Performance Is Not Necessarily Indicative Of Future Results.
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Global Stocks-To-Use Ratio
0.30
0.25
0.20
0.15
0.10
Source: USDA
WHEAT
CORN
SOYBEANS
Past Performance Is Not Necessarily Indicative Of Future Results.
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World Corn Stocks 250
200
MMT
150
100
50
0
Source: USDA
USA
CHINA
OTHER COUNTRIES
Past Performance Is Not Necessarily Indicative Of Future Results.
16
Chinese Corn Stocks 140
120
100
MMT
80
60
40
20
0
Source: USDA Past Performance Is Not Necessarily Indicative Of Future Results.
17
Chinese Soybeans Imports 60
50
MMT
40
30
20
10
0 00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
Source: USDA Past Performance Is Not Necessarily Indicative Of Future Results.
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Source: McVean Private Sources WHEAT--HENAN
Past Performance Is Not Necessarily Indicative Of Future Results.
INDICA RICE--HUNAN
2/26/11
10/26/10
6/26/10
2/26/10
10/26/09
6/26/09
2/26/09
10/26/08
6/26/08
2/26/08
10/26/07
6/26/07
2/26/07
10/26/06
6/26/06
2/26/06
10/26/05
6/26/05
2/26/05
10/26/04
6/26/04
2/26/04
10/26/03
6/26/03
2/26/03
10/26/02
6/26/02
2/26/02
10/26/01
US$/MT
Chinese Spot Cash Grain Prices
350
300
250
200
150
100
CORN--JILIN
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CORN BALANCE SHEET
Planted Acres (mil.) Harvested Acres (mil.) % Harvested Yield (Bu / acre) Production Ethanol use Ethanol as % of crop Non-Ethanol production Ending stocks Stocks as % of total production Non-ethanol supply Non-ethanol use Ending Stocks
06/07
07/08
08/09
09/10
10/11
11/12
ALT #1 11/12
ALT #2 11/12
78.3 70.6 90%
93.5 86.5 93%
86.0 78.6 91%
86.4 79.5 92%
88.2 81.4 92%
93.2 85.5 92%
93.2 83.9 90%
93.2 85.7 92%
149.1 10.526 2.119 20%
150.7 13.036 3.049 23%
153.9 12.097 3.709 31%
164.7 13.094 4.568 35%
152.8 12.438 4.975 40%
161.5 13.808 5.075 37%
154.2 12.938 5.075 39%
151.6 13.001 5.075 39%
8.407 1.967
9.987 1.304
8.388 1.624
8.526 1.673
7.463 1.708
8.733 0.696
7.863 0.696
7.926 0.696
19%
10%
13%
13%
14%
5%
10.374 9.070 1.304
11.291 9.667 1.624
10.012 8.339 1.673
10.199 8.491 1.708
9.171 8.475 0.696
9.429 8.575 0.854
8.559 8.575 -0.016
8.622 8.575 0.047
Source: McVean Trading , USDA Past Performance Is Not Necessarily Indicative Of Future Results.
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Minnesota Spring Wheat Price 20
18
16
14
12
10
8
6
4
2 Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Past Performance Is Not Necessarily Indicative Of Future Results.
Jan-10
Jan-11
Apr-11 21
U.S. Domestic Beef Availibility Boneless Equivalent
Past Performance Is Not Necessarily Indicative Of Future Results. -3%
2011 JUL-DEC
2011 JAN-JUN
2010 JUL-DEC
2010 JAN-JUN
2009 JUL-DEC
2009 JAN-JUN
2008 JUL-DEC
2008 JAN-JUN
2007 JUL-DEC
2007 JAN-JUN
2006 JUL-DEC
2006 JAN-JUN
2005 JUL-DEC
2005 JAN-JUN
2004 JUL-DEC
2004 JAN-JUN
2003 JUL-DEC
2003 JAN-JUN
2002 JUL-DEC
2002 JAN-JUN
2001 JUL-DEC
2001 JAN-JUN
2000 JUL-DEC
2000 JAN-JUN
1999 JUL-DEC
1999 JAN-JUN
1998 JUL-DEC
1998 JAN-JUN
(Million Pounds)
U.S. Domestic Meat Availability of Beef (Boneless Equivalent)
9900
9700
9500
9300
9100
3% Increase since 1989
8900
-8%
8700
8500
8300
U.S. Domestic Beef Availibility Boneless Equivalent Estimate
Source: USDA 22
Monthly Kansas Slaughter Steer Price
$125.00
$115.00
$105.00
$85.00
$75.00
$65.00
$55.00
$45.00
$35.00
1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
($ per CWT.)
$95.00
Source: USDA
Through March
Past Performance Is Not Necessarily Indicative Of Future Results.
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U.S. Domestic Meat Availability of Pork (Boneless Equivalent)
11,500
11,000
10,000
9,500
9,000
U.S. Domestic Pork Availibility Boneless Equivalent
Source: USDA
U.S. Domestic Pork Availibility Boneless Equivalent Estimate
Past Performance Is Not Necessarily Indicative Of Future Results.
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2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
8,500
1989
(Million Pounds)
10,500
USDA Pork Cutout
Source: USDA
Past Performance Is Not Necessarily Indicative Of Future Results.
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U.S. Domestic Meat Availability of Broilers (Boneless Equivalent)
16,000
15,000
14,000
12,000
11,000
10,000
9,000
8,000
U.S. Domestic RTC Broiler Availability Boneless Equivalent
U.S. Domestic RTC Broiler Availability Boneless Equivalent Estimate
Source: USDA & McVean Estimate Past Performance Is Not Necessarily Indicative Of Future Results.
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2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
7,000
1989
(Million Pounds)
13,000
Source: USDA Past Performance Is Not Necessarily Indicative Of Future Results.
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