Corn Outlook January, 2017

Commodity & Ingredient Hedging, LLC www.cihedging.com 312-596-7755

Corn Outlook – January, 2017

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Historical Price Reference Fundamental Backdrop Seasonal Tendency Summary

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Historical Price Reference

Where are Corn Prices Currently, And Where are they Historically?

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Historical Price Reference

4

Historical Price Reference

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Historical Price Reference

Insert Comparative CK Chart from Website

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Fundamental Backdrop

USDA Supply/Demand Report : January 12, 2017

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Fundamental Backdrop The January WASDE report finalized corn production at 15.148 billion bushels, down 78 million bushels from the December estimate. The average yield is estimated at 174.6 bushels per acre, down 0.7 bushels from the December forecast, but up 6.2 bushels from the 2015 average yield. This year’s yield is a new record above the 2014/15 crop year which produced 171.0 bushels per acre. Area harvested is estimated at 86.7 million acres, down slightly from December, but 7% above last year.

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Fundamental Backdrop U.S. Corn Balance Sheet in Million Bushels Crop Year

2015/2016 December January

Change

2016/2017 December January

Change

Area (Million Acres) Planted Harvested Yield (Bushels/Acre)

88 80.7 168.4

88 80.8 168.4

0 0.1 0

94.5 86.8 175.3

94 86.7 174.6

-0.5 -0.1 -0.7

Beginning Stocks Production Imports Supply, Total

1731 13601 67 15400

1731 13602 67 15401

0 1 0 1

1738 15226 50 17013

1737 15148 55 16940

-1 -78 5 -73

5130 6635 5206 11764 1898 13662 1738 12.72%

5131 6635 5206 11766 1898 13664 1737 12.71%

1 0 0 2 0 2 -1 -0.01%

5650 6735 5300 12385 2225 14610 2403 16.45%

5600 6760 5325 12360 2225 14585 2355 16.15%

-50 25 25 -25 0 -25 -48 -0.30%

Feed & Residual Food, Seed & Industrial Ethanol for Fuel Domestic Total Total Exports Use, Total Ending Stocks Stocks/Usage Ratio

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Fundamental Backdrop 2016/17 Ending Stocks Estimates January USDA Corn 2.355 Soybeans

0.420

Average 2.396

Range 2.206-2.800

December USDA 2.403

0.468

0.430-0.515

0.480

2015-16 USDA 1.738 0.197

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Fundamental Backdrop U.S. Corn Ending Stocks (Updated January 12, 2017) 140,000

Source: USDA Foreign Agricultural Service

120,000

1,000 Metric Tons

100,000

80,000

60,000

40,000

20,000

0

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

11

Fundamental Backdrop U.S. Corn Stocks/Use Ratio (Updated January 12, 2017) 70%

60%

50%

40%

30%

20%

10%

Source: USDA Foreign Agricultural Service 0% 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

12

Fundamental Backdrop U.S. Corn Trendline Yield (Updated January 12, 2017) 200 Source: USDA Economic Research Service

180

Bushels Per Acre

160

140

120

100

80

Source: USDA World Agricultural Outlook Board 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Fundamental Backdrop Total U.S. Domestic Corn Use (Updated January 12, 2017) 14000 Source: USDA World Agricultural Outlook Board & Economic Research Service 12000

Ethanol & by-products

10000

Other Food, Seed & Industrial

100,000 Bushels

Feed and Residual

8000

6000

4000

2000

0 1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

14

Fundamental Backdrop U.S. Feed and Residual Corn Use (Updated January 12, 2017) 7000 Source: USDA World Agricultural Outlook Board & Economic Research Service 6000 Feed and Residual

100,000 Bushels

5000

4000

3000

2000

1000

0 1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

15

Fundamental Backdrop U.S. Corn Consumption for Ethanol (Updated January 12, 2017) 6000 Source: USDA Economic Research Service

5000

100,000 Bushels

4000

3000

2000

1000

0 1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

16

Fundamental Backdrop

What About Global Supply/Demand Fundamentals?

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Fundamental Backdrop

The January WASDE projected lower global corn ending stocks at 220.98 million metric tons, off 1.27. Lower production slightly outstripped greater beginning stocks.

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Fundamental Backdrop

The following tables outline changes to the Global balance sheet for 2015/16 crop year & 2016/17 crop year

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Fundamental Backdrop World Corn Balance Sheet in Million Metric Tons Crop Year

2015/2016 Supply

January, 2017 Use

Beginning Stocks 1.05 0

Production 0.02 0.02

Imports 1.06 0

Feed 1.29 0.04

Exports -0.11 0

Major Exporters Argentina South Africa

1.05 1.05 0

0 0 0

0.7 0 0

1.55 -0.15 0

-0.3 1.2 0

0.5 0 0

Major Importers Egypt EU-27 Japan Mexico Southeast Asia South Korea

0 0 0 0 0 0 0

0 0 0 0 0 0 0

0 0 0 0 0 0 0

0 0 0 0 0 0 0

0.21 0 0 0 0.21 0 0

-0.21 0 0 0 -0.21 0 0

Selected Other Brazil Canada China FSU-12 Ukraine

0 0 0 0 0

0 0 0 0 0

0.7 0.36 0 0 0

1.7 -0.32 0 0 0

-1.5 0 0 0 0

0.5 0.79 0 0 0

Region World United States

Ending Stocks Stocks/Use 1.06 0.11% -0.02

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Fundamental Backdrop World Corn Balance Sheet in Million Metric Tons Crop Year

2016/2017 Supply

January, 2017 Use

Beginning Stocks 1.06 -0.02

Production -1.8 -1.97

Imports -0.27 0.13

Feed -0.87 -1.27

Exports 0.39 0

Major Exporters Argentina South Africa

0.5 0 0

0 0 0

0 0 0

0.5 0 0

0 0 0

0 0 0

Major Importers Egypt EU-27 Japan Mexico Southeast Asia South Korea

-0.21 0 0 0 -0.21 0 0

-0.02 0 -0.02 0 0 0 0

-0.7 0 0 0 0 -0.7 0

-0.4 0 -0.2 0 0 -0.2 0

0.2 0 0.2 0 0 0 0

-0.83 0 -0.12 0 -0.21 -0.5 0

Selected Other Brazil Canada China FSU-12 Ukraine

0.5 0.79 0 0 0

0 0 0 0 0

0 0 0 0 0

0.5 0 0 0 0

0 0 0 0 0

0 0.79 0 0 0

Region World United States

Ending Stocks Stocks/Use -1.27 -0.13% -1.23

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Fundamental Backdrop World Corn Ending Stocks (Updated January 12, 2017) 250,000

Source: USDA Foreign Agricultural Service

1,000 Metric Tons

200,000

150,000

100,000

50,000

0 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

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Fundamental Backdrop World Corn Stocks/Use Ratio (Updated January 12, 2017) 50%

45%

40%

35%

30%

25%

20%

15%

10%

5% Source: USDA Foreign Agricultural Service 0% 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

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Fundamental Backdrop World vs U.S. Corn Stocks/Use Ratio (Updated January 12, 2017) 70%

60%

50% Wor ld

U.S.

40%

30%

20%

10%

Source: USDA Foreign Agricultural Service 0% 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

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Fundamental Backdrop Major Foreign Corn Producers (Updated January 12, 2017) 500,000 Source: USDA Foreign Agricultural Service

450,000

Southeast Asia

Mexico

Argentina

Brazil

E.U.

China

400,000

1,000 Metric Tons

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014

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Fundamental Backdrop Major Foreign Corn Exporters (Updated January 12, 2017) 120,000 Source: USDA Foreign Agricultural Service

100,000

Ukraine

FSU-12

Argentina

Brazil

1,000 Metric Tons

80,000

60,000

40,000

20,000

0 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

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Fundamental Backdrop Brazil Corn Production (Updated January 12, 2017) 100,000 Source: USDA Foreign Agricultural Service

90,000

80,000

1,000 Metric Tons

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

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Fundamental Backdrop Argentina Corn Production (Updated January 12, 2017) 40,000 Source: USDA Foreign Agricultural Service 35,000

30,000

1,000 Metric Tons

25,000

20,000

15,000

10,000

5,000

0 1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

28

Fundamental Backdrop Brazil Corn Exports (Updated January 12, 2017) 40,000 Source: USDA Foreign Agricultural Service 35,000

30,000

1,000 Metric Tons

25,000

20,000

15,000

10,000

5,000

0 1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

29

Fundamental Backdrop Argentina Corn Exports (Updated January 12, 2017) 30,000 Source: USDA Foreign Agricultural Service

25,000

1,000 Metric Tons

20,000

15,000

10,000

5,000

0 1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

30

Fundamental Backdrop Major Corn Importers (Updated January 12, 2017) 90,000 Source: USDA Foreign Agricultural Service

E.U.

Egypt

Southeast Asia

South Korea

Mexico

Japan

80,000

70,000

1,000 Metric Tons

60,000

50,000

40,000

30,000

20,000

10,000

0 1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

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Seasonal Tendency

32

Implied Volatility

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Summary



The January WASDE report finalized the 2016/17 corn crop at a new record of 174.6 bpa, surpassing the old 2014/15 crop year’s record by 3.6 bpa. Final production was estimated to be 15.148 billion bushels on harvested acres of 86.7 million. The carryout of corn is now estimated to be 2.55 billion bushels. Demand was increased in the corn for ethanol category by 25 million bushels, while export expectations were left unchanged at 2,225 million bushels.  Globally, the corn balance sheet was largely unchanged. Lower global production was due largely to the U.S. reduction from December. Argentina and Brazil’s production estimates were both unchanged, but the market will keep a keen eye on both country’s weather, planting progress and crop development going forward as we move further into the first quarter of 2017.

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