michael drury ppt june 0611
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Helsinki, Finland
June 5-7, 2011
0 Past Performance Is Not Necessarily Indicative Of Future Results.
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
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%
1 Past Performance Is Not Necessarily Indicative Of Future Results. Source: Barclays 2010
WTI vs Brent Crude Oil
2 Past Performance Is Not Necessarily Indicative Of Future Results.
30
50
70
90
110
130
150
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
WTI BrentApr-11 Source: Bloomberg
Gasoline
3 Past Performance Is Not Necessarily Indicative Of Future Results.
0
50
100
150
200
250
300
350
Jan-89 Jan-93 Jan-97 Jan-01 Jan-05 Jan-09
Apr-11 Source: Bloomberg
Corn
4 Past Performance Is Not Necessarily Indicative Of Future Results.
100
200
300
400
500
600
700
800
Jan-89 Jan-93 Jan-97 Jan-01 Jan-05 Jan-09
Apr-11 Source: Bloomberg
US CORN ENDING STOCKS
5 Past Performance Is Not Necessarily Indicative Of Future Results.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
MIL
BU
PIPELINE USDA ESTIMATESource: McVean Trading Calculation
Gasoline (Wholesale) vs Corn
6 Past Performance Is Not Necessarily Indicative Of Future Results.
100
200
300
400
500
600
700
800
0
50
100
150
200
250
300
350
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Gasoline CornApr-11
Source: Bloomberg
Corn / Wheat
7 Past Performance Is Not Necessarily Indicative Of Future Results.
0.4
0.5
0.6
0.7
0.8
0.9
1
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Apr-11 Source: Bloomberg
Corn / Soybeans
8 Past Performance Is Not Necessarily Indicative Of Future Results.
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
0.65
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
Apr-11 Source: Bloomberg
Ethanol Production as a percent of US CORN CROP
9 Past Performance Is Not Necessarily Indicative Of Future Results.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
Source: USDA
US CORN DOMESTIC DISAPPEARANCE
10 Past Performance Is Not Necessarily Indicative Of Future Results.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
MIL
BU
ETHANOL OTHERSource: USDA
US PLANTED ACRES
11 Past Performance Is Not Necessarily Indicative Of Future Results.
-
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
MIL
AC
RE
S
CORN SOYBEANS OTHER CROPSSource: USDA
E10 Penetration – 2010
% of state gasoline blended with ethanol
12 Past Performance Is Not Necessarily Indicative Of Future Results.
Ethanol Margins, Calculated From Board Values
Variable Costs are Covered at 20-40 Cents
13 Past Performance Is Not Necessarily Indicative Of Future Results.
40
42
44
46
48
50
52
54
56
58
K11 N11 U11 Z11 H12 K12 N12
CE
NT
S/G
AL
CONTRACT MONTH Source: McVean Trading Calculation
Ethanol, Gasoline and Crude Oil Board Curves
14 Past Performance Is Not Necessarily Indicative Of Future Results.
2.40
2.60
2.80
3.00
3.20
3.40
K11 N11 U11 Z11 H12 K12 N12
$/G
AL
CONTRACT MONTH
ETHANOL GASOLINE CRUDE OILSource: CME
Global Stocks-To-Use Ratio
15 Past Performance Is Not Necessarily Indicative Of Future Results.
0.10
0.15
0.20
0.25
0.30
WHEAT CORN SOYBEANSSource: USDA
World Corn Stocks
16 Past Performance Is Not Necessarily Indicative Of Future Results.
0
50
100
150
200
250
MM
T
USA CHINA OTHER COUNTRIESSource: USDA
Chinese Corn Stocks
17 Past Performance Is Not Necessarily Indicative Of Future Results.
0
20
40
60
80
100
120
140
MM
T
Source: USDA
Chinese Soybeans Imports
18 Past Performance Is Not Necessarily Indicative Of Future Results.
0
10
20
30
40
50
60
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
MM
T
Source: USDA
Chinese Spot Cash Grain Prices
19 Past Performance Is Not Necessarily Indicative Of Future Results.
100
150
200
250
300
350
10/2
6/0
1
2/2
6/0
2
6/2
6/0
2
10/2
6/0
2
2/2
6/0
3
6/2
6/0
3
10/2
6/0
3
2/2
6/0
4
6/2
6/0
4
10/2
6/0
4
2/2
6/0
5
6/2
6/0
5
10/2
6/0
5
2/2
6/0
6
6/2
6/0
6
10/2
6/0
6
2/2
6/0
7
6/2
6/0
7
10/2
6/0
7
2/2
6/0
8
6/2
6/0
8
10/2
6/0
8
2/2
6/0
9
6/2
6/0
9
10/2
6/0
9
2/2
6/1
0
6/2
6/1
0
10/2
6/1
0
2/2
6/1
1
US
$/M
T
WHEAT--HENAN INDICA RICE--HUNAN CORN--JILINSource: McVean Private Sources
CORN BALANCE SHEET
ALT #1 ALT #2
06/07 07/08 08/09 09/10 10/11 11/12 11/12 11/12
Planted Acres (mil.) 78.3 93.5 86.0 86.4 88.2 93.2 93.2 93.2
Harvested Acres (mil.) 70.6 86.5 78.6 79.5 81.4 85.5 83.9 85.7
% Harvested 90% 93% 91% 92% 92% 92% 90% 92%
Yield (Bu / acre) 149.1 150.7 153.9 164.7 152.8 161.5 154.2 151.6
Production 10.526 13.036 12.097 13.094 12.438 13.808 12.938 13.001
Ethanol use 2.119 3.049 3.709 4.568 4.975 5.075 5.075 5.075
Ethanol as % of crop 20% 23% 31% 35% 40% 37% 39% 39%
Non-Ethanol production 8.407 9.987 8.388 8.526 7.463 8.733 7.863 7.926
Ending stocks 1.967 1.304 1.624 1.673 1.708 0.696 0.696 0.696
Stocks as % of total production 19% 10% 13% 13% 14% 5%
Non-ethanol supply 10.374 11.291 10.012 10.199 9.171 9.429 8.559 8.622
Non-ethanol use 9.070 9.667 8.339 8.491 8.475 8.575 8.575 8.575
Ending Stocks 1.304 1.624 1.673 1.708 0.696 0.854 -0.016 0.047
20 Past Performance Is Not Necessarily Indicative Of Future Results.
Source: McVean Trading , USDA
Minnesota Spring Wheat Price
21 Past Performance Is Not Necessarily Indicative Of Future Results.
2
4
6
8
10
12
14
16
18
20
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Apr-11
22
U.S. Domestic Meat Availability of Beef
(Boneless Equivalent)
Past Performance Is Not Necessarily Indicative Of Future Results.
8300
8500
8700
8900
9100
9300
9500
9700
990019
98 JA
N-J
UN
1998
JUL-
DEC
1999
JAN
-JU
N
1999
JUL-
DEC
2000
JAN
-JU
N
2000
JUL-
DEC
2001
JAN
-JU
N
2001
JUL-
DEC
2002
JAN
-JU
N
2002
JUL-
DEC
2003
JAN
-JU
N
2003
JUL-
DEC
2004
JAN
-JU
N
2004
JUL-
DEC
2005
JAN
-JU
N
2005
JUL-
DEC
2006
JAN
-JU
N
2006
JUL-
DEC
2007
JAN
-JU
N
2007
JUL-
DEC
2008
JAN
-JU
N
2008
JUL-
DEC
2009
JAN
-JU
N
2009
JUL-
DEC
2010
JAN
-JU
N
2010
JUL-
DEC
2011
JAN
-JU
N
2011
JUL-
DEC
(Mill
ion
Poun
ds)
U.S. Domestic Beef Availibility Boneless Equivalent U.S. Domestic Beef Availibility Boneless Equivalent Estimate
3% Increase since 1989
-3% -8%
Source: USDA
Monthly Kansas Slaughter Steer Price
23 Past Performance Is Not Necessarily Indicative Of Future Results.
$35.00
$45.00
$55.00
$65.00
$75.00
$85.00
$95.00
$105.00
$115.00
$125.00
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
($ p
er C
WT
.)
Through MarchSource: USDA
24
U.S. Domestic Meat Availability of Pork
(Boneless Equivalent)
Past Performance Is Not Necessarily Indicative Of Future Results.
8,500
9,000
9,500
10,000
10,500
11,000
11,500 19
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(Mill
ion
Poun
ds)
U.S. Domestic Pork Availibility Boneless Equivalent U.S. Domestic Pork Availibility Boneless Equivalent Estimate
Source: USDA
USDA Pork Cutout
25 Past Performance Is Not Necessarily Indicative Of Future Results. Source: USDA
26
U.S. Domestic Meat Availability of Broilers
(Boneless Equivalent)
Past Performance Is Not Necessarily Indicative Of Future Results.
7,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000 19
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(Mill
ion
Poun
ds)
U.S. Domestic RTC Broiler Availability Boneless Equivalent U.S. Domestic RTC Broiler Availability Boneless Equivalent Estimate
Source: USDA & McVean Estimate
27 Past Performance Is Not Necessarily Indicative Of Future Results. Source: USDA
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