december 2013 a lender’s perspective on managing risk ryan d. castle, ag industry specialist adam...
TRANSCRIPT
![Page 1: December 2013 A Lender’s Perspective on Managing Risk Ryan D. Castle, Ag Industry Specialist Adam G. Hartmann, Sr. Ag Industry Specialist Wells Fargo Bank,](https://reader030.vdocuments.mx/reader030/viewer/2022032723/56649d0d5503460f949e25cc/html5/thumbnails/1.jpg)
December 2013
A Lender’s Perspective on Managing Risk
Ryan D. Castle, Ag Industry Specialist
Adam G. Hartmann, Sr. Ag Industry Specialist
Wells Fargo Bank, N.A.
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Bank’s Role in Your Operation Part of Your ‘Team’
Banker Agronomist Farm Business Instructor Grain Merchandiser
Responsibilities Managing/Mitigating Risk vs. Avoiding Risk
Interest Rates Where are Rates Headed?
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The Lender’s Perspective:Inputs & Outputs
Input Costs: Cost of Production Rent Increases Seed Cost Fertilizer/Chemical Costs What is your Cost Of Production?
Outputs: When to Sell Developing a Sound Marketing Plan Does your Lender Understand Your
Marketing Plan?
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Mitigating Risk: Tools of the Trade
What Should Lenders Look For? Marketing Plan: Grain Contracts
Cash Contracts HTA’s Futures Options
Crop/Hail Insurance Determining the Appropriate Type/Coverage Level Example:
2013 Spring MPCI Corn Price: $5.65/bu Fall Harvest Price: $4.39/bu 185APH x 85% RP Coverage: $888.46/ac in coverage 175bu/ac harvest w/Harvest Price: $768.25/ac Indemnity Payment: $120.21/ac
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Switching Gears: Something to Think About…
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Shanghai1990
Shanghai 2010
Global Impact: Who’s in the Driver’s Seat?
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China’s Impact on Net Trade
Billions of dollarsPartner 2007 2008 2009 2010 2011 2012
China and Hong Kong 2.6 6.5 9.1 13.8 16.1 22.1European Union-25 -5.9 -4.6 -5.2 -4.5 -5.3 -5.7Latin America -6.3 -1.0 -5.9 -6.6 -7.6 -7.3Middle East & North Africa 7.2 8.9 6.1 8.5 10.8 8.0North America -7.9 -3.4 -1.7 -3.2 -2.0 -2.6Other 6.7 10.4 10.7 11.1 11.2 7.9
World Total -3.5 16.8 13.0 19.1 23.2 22.5
Net Ag, Fish and Forest Trade
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Where is the Money Going?
Product 2006 2007 2008 2009 2010 2011 2012Jan - Jul
2013Pct of 2013
Soybeans 2,533 4,119 7,261 9,195 10,866 10,539 14,879 3,913 32%Cotton 2,133 1,525 1,670 910 2,249 2,640 3,456 1,745 14%Tree Nuts 151 233 401 735 815 1,044 1,636 406 3%Hides & Skins 973 1,025 1,076 751 1,145 1,354 1,480 1,164 10%Corn 18 16 6 54 285 850 1,315 367 3%Pork & Pork Products 125 271 689 390 463 910 885 509 4%Poultry Meat & Prods. (ex. eggs) 399 662 864 857 816 953 771 394 3%Distillers Grains - - 2 101 504 337 617 565 5%Other Intermediate Products 233 280 249 302 447 402 463 280 2%Dairy Products 126 162 195 146 251 383 442 364 3%Fresh Fruit 217 173 218 257 338 411 408 227 2%Beef & Beef Products 15 36 43 85 160 238 341 369 3%Soybean Oil 59 160 160 46 420 133 265 116 1%All other 707 820 995 1,289 1,608 2,010 2,301 1,821 15%
Agricultural Products 7,689 9,482 13,829 15,118 20,367 22,204 29,259 12,240
China and Hong Kong Agricultural Exports in Millions of USD
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Future Outlook
2007 2008 2009 2010 2011 2012 2013 fcst (5)
-
5
10
15
20
25
US Net Trade in Agriculture, Fish/Forestry
Total USChina/Hong Kong
In BillionsUSD
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Questions? Ryan Castle
Regional Ag Industry Specialist [email protected] PH. (507) 316-8109 (Cell)
Adam Hartmann Regional Senior Ag Industry Specialist
[email protected] PH. (507) 951-5417 (Cell)