Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial...

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GRAINS & OILSEEDS Corn March corn appeared to carve out a post-USDA report bottom last week, dropping to a lows in the 592-593 range on Wednesday-Thursday, then recovering from there to finish the week at 611 1/2, up 12 cents from the previous Friday. As the majority of the time has been spent in the last couple months—save for the USDA run-up and reaction—the grains spent much of last week debating Argentine rain chances, which built up through most of last week and ultimately disappointed over the weekend. The Buenos Aires Grains Exchange last week cut their 2011/12 Argentine commercial-use corn area slightly to 3.70 million hectares, while the government followed that up by actually increasing their total corn plantings estimate (4.9 to 5.0 mln ha) at the expense of soybeans. In addition to the diminishing production South American production prospects, world feed grain importers were doing their part to cut down on the global supply as well—South Korea and Mexico, among others, made large purchases of corn last week, with Korea buying more than one million tonnes of feed grains this month and cover- ing their needs up through April. Private analysts Informa on Friday raised their 2012 corn plantings estimate by 350k tonnes to 94.7 million acres, now 2.8 million ahead of 2011 and an all-time record by 1.2 mln ac. Total plantings of the 12 major crops next year gained another 500k acres compared to Informa’s previous report (now 10.2 mln ac ahead of last year) thanks to better expected plantings in the Northern Plains and Western Corn Belt, along with more winter wheat acreage in Texas and Oklahoma. Domestic corn basis numbers were an ongoing story through last week, with strong basis levels around the U.S., particularly in Illinois where light farmer activity found IL basis anywhere from 20-40 cents over last year. Weekly corn export sales of 29.9 mbu were up from the previous week and trade estimates on Friday, but still 5.7 mbu short of the comparable week last year; cumulative sales are running 75 mbu shy of last year’s pace through 20 weeks of the 2011/12 marketing year, but inspections and shipments are both just 13 mbu behind last season’s pace, with the USDA still looking for a sharp 185- mbu YTY decline. DOE total fuel ethanol production numbers continue to run strong as well—down only slightly to 941,000 barrels per day last week—suggesting an annualized corn usage pace right around 150 million bushels better than last year so far, while the USDA is still expecting a 21-million bushel decline in that category for 2011/12. Soybeans March soybeans put in steady higher lows throughout last week, recovering from post-USDA lows in a methodical fashion despite a weak close on Friday; the weekly finish at 1187 was still almost 30 cents higher than the previous Friday. The grain trade processed plenty of South American production and acreage estimates last week, starting off with private analysts Dr. Michael Cordonnier on Monday who reduced his ARG soy number by a million tonnes to 50 MMT, with BRZ also down a million to 71.0 MMT. Oil World on Tuesday morning matched that ARG number with a two million tonne reduction from last month, with their BRZ figure also matching Dr. Cordonnier, down 1.8 MMT from December. The Argentine government reduced their soy planted area estimate 200k hectares to 18.8 mln ha last week. Meanwhile, Paraguay’s farm groups on Friday estimated production at 6.9 million tonnes this year, down from 8.4 MMT last season and 700k tonnes behind the cur- rent USDA estimate. Private analysts Imea are expecting the soybean harvest in Brazil’s #1 production state, Mato Grosso (certainly the recip- ient of the some of the best weather in South America this year), to reach a record 22 MMT, up 1.6 MMT from last season. Thursday’s soy- bean export sales more than doubled the previous week’s total at 36.4 million bushels, though cumulative sales remain more than 400 mbu behind last year’s pace; Monday’s export inspections were also solid at 40.9 mbu, though cumulative numbers there stand a sharp 250 mbu+ back of last season as well. The USDA is now expecting a substantial 226-mbu year-to-year soybean export decline for 2011/12. Wheat March CBOT wheat rallied for a strong finish on Friday at 610 1/2, just 8 1/4 cents better on the week altogether, but safely above the $6/bu mark and the week’s lows at 590. Private analysts Informa on Friday pumped up their winter wheat seedings estimate by over 2 million acres to match the USDA at 41.95 million acres, with all wheat plantings up 800k tonnes this month to 57.9 mln ac; 2012 spring wheat area was seen at 13.5 mln ac, down 824k from December, with Durum plantings down 450k this month to 2.5 mln ac (though that remains 1.1 mln higher than 2011). Export activity was a key story last week, with South Korea buying 225k tonnes of feed wheat late in the week, and Japan coming in with a strong 185k weekly purchase as well. Thursday’s wheat export sales rose to 21.6 million bushels, the best since mid- November, while cumulative sales of 755 mbu stand behind last year’s one-billion-bu pace, roughly on pace with the USDA’s projection for a 339-mbu YTY decline. The IGC raised their 2011/12 world wheat production by 7 MMT to 690 MMT, a record global harvest. Ethanol Quiet market once again with flat price, basis, spreads, and crushes showing little change from the previous week. Futures moved only $0.014 higher for the week. Chicago Argo basis appears to be comfortable trading 2 to 3 cents unders while the other major destinations (NY, LA, &GC) continue to chop around the +10 area. Feb to Jul board spread stable at -9. Chicago Platts to CBOT spread for FH 2012 trading in that -2 to -3.5 range. Board crushes off perhaps a half cent for the week. Spot average net physical crush for the typical plant weaker due to a firmer corn basis and estimated at -11.7 cents per gallon. Ethanol market lacks activity and it doesn't help when US gasoline demand is under 8.0 mbls/d, 10% off last year's levels and one the lowest recorded weekly DOE estimate since February of 2001. 2012 ethanol export picture has yet to take shape. Somewhat surprising with Brazilian ethanol, FOB Santos, indicated some $0.60 per gallon higher than US Gulf prod- uct. But at the same time, the Eurozone is experiencing record high gasoline prices and definitely curbing motor fuel consumption in the re- gion. Most recent data showed gasoline use in Europe down 5 to 8% from previous year. US ethanol production remains steady with a daily output number of 39.52 mg/d (14.425 bg annualized). Implied demand for US ethanol noted at 34.95 mg/d (12.755 bg annualized). DOE showing stocks rising by 32 mg to 820 mg. 2012 calendar blenders spread settled out the week near -$0.60. A few spot physical blenders spreads suggests a difference of $0.55 to $0.60. 3 out of the last 4 years the CBOT to RBOB spread has reached at least -$0.80. INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————- Grains: Matt Zeller Ethanol: Mike Blackford 2829 Westown Parkway, Suite 100 West Des Moines, IA 50266 [email protected] 515-273-4053 [email protected] 515-223-7439 Weekly Commodity Recap January 23, 2012

Transcript of Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial...

Page 1: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

GRAINS & OILSEEDS Corn March corn appeared to carve out a post-USDA report bottom last week, dropping to a lows in the 592-593 range on Wednesday-Thursday, then recovering from there to finish the week at 611 1/2, up 12 cents from the previous Friday. As the majority of the time has been spent in the last couple months—save for the USDA run-up and reaction—the grains spent much of last week debating Argentine rain chances, which built up through most of last week and ultimately disappointed over the weekend. The Buenos Aires Grains Exchange last week cut their 2011/12 Argentine commercial-use corn area slightly to 3.70 million hectares, while the government followed that up by actually increasing their total corn plantings estimate (4.9 to 5.0 mln ha) at the expense of soybeans. In addition to the diminishing production South American production prospects, world feed grain importers were doing their part to cut down on the global supply as well—South Korea and Mexico, among others, made large purchases of corn last week, with Korea buying more than one million tonnes of feed grains this month and cover-ing their needs up through April. Private analysts Informa on Friday raised their 2012 corn plantings estimate by 350k tonnes to 94.7 million acres, now 2.8 million ahead of 2011 and an all-time record by 1.2 mln ac. Total plantings of the 12 major crops next year gained another 500k acres compared to Informa’s previous report (now 10.2 mln ac ahead of last year) thanks to better expected plantings in the Northern Plains and Western Corn Belt, along with more winter wheat acreage in Texas and Oklahoma. Domestic corn basis numbers were an ongoing story through last week, with strong basis levels around the U.S., particularly in Illinois where light farmer activity found IL basis anywhere from 20-40 cents over last year. Weekly corn export sales of 29.9 mbu were up from the previous week and trade estimates on Friday, but still 5.7 mbu short of the comparable week last year; cumulative sales are running 75 mbu shy of last year’s pace through 20 weeks of the 2011/12 marketing year, but inspections and shipments are both just 13 mbu behind last season’s pace, with the USDA still looking for a sharp 185-mbu YTY decline. DOE total fuel ethanol production numbers continue to run strong as well—down only slightly to 941,000 barrels per day last week—suggesting an annualized corn usage pace right around 150 million bushels better than last year so far, while the USDA is still expecting a 21-million bushel decline in that category for 2011/12. Soybeans March soybeans put in steady higher lows throughout last week, recovering from post-USDA lows in a methodical fashion despite a weak close on Friday; the weekly finish at 1187 was still almost 30 cents higher than the previous Friday. The grain trade processed plenty of South American production and acreage estimates last week, starting off with private analysts Dr. Michael Cordonnier on Monday who reduced his ARG soy number by a million tonnes to 50 MMT, with BRZ also down a million to 71.0 MMT. Oil World on Tuesday morning matched that ARG number with a two million tonne reduction from last month, with their BRZ figure also matching Dr. Cordonnier, down 1.8 MMT from December. The Argentine government reduced their soy planted area estimate 200k hectares to 18.8 mln ha last week. Meanwhile, Paraguay’s farm groups on Friday estimated production at 6.9 million tonnes this year, down from 8.4 MMT last season and 700k tonnes behind the cur-rent USDA estimate. Private analysts Imea are expecting the soybean harvest in Brazil’s #1 production state, Mato Grosso (certainly the recip-ient of the some of the best weather in South America this year), to reach a record 22 MMT, up 1.6 MMT from last season. Thursday’s soy-bean export sales more than doubled the previous week’s total at 36.4 million bushels, though cumulative sales remain more than 400 mbu behind last year’s pace; Monday’s export inspections were also solid at 40.9 mbu, though cumulative numbers there stand a sharp 250 mbu+ back of last season as well. The USDA is now expecting a substantial 226-mbu year-to-year soybean export decline for 2011/12. Wheat March CBOT wheat rallied for a strong finish on Friday at 610 1/2, just 8 1/4 cents better on the week altogether, but safely above the $6/bu mark and the week’s lows at 590. Private analysts Informa on Friday pumped up their winter wheat seedings estimate by over 2 million acres to match the USDA at 41.95 million acres, with all wheat plantings up 800k tonnes this month to 57.9 mln ac; 2012 spring wheat area was seen at 13.5 mln ac, down 824k from December, with Durum plantings down 450k this month to 2.5 mln ac (though that remains 1.1 mln higher than 2011). Export activity was a key story last week, with South Korea buying 225k tonnes of feed wheat late in the week, and Japan coming in with a strong 185k weekly purchase as well. Thursday’s wheat export sales rose to 21.6 million bushels, the best since mid-November, while cumulative sales of 755 mbu stand behind last year’s one-billion-bu pace, roughly on pace with the USDA’s projection for a 339-mbu YTY decline. The IGC raised their 2011/12 world wheat production by 7 MMT to 690 MMT, a record global harvest. Ethanol Quiet market once again with flat price, basis, spreads, and crushes showing little change from the previous week. Futures moved only $0.014 higher for the week. Chicago Argo basis appears to be comfortable trading 2 to 3 cents unders while the other major destinations (NY, LA, &GC) continue to chop around the +10 area. Feb to Jul board spread stable at -9. Chicago Platts to CBOT spread for FH 2012 trading in that -2 to -3.5 range. Board crushes off perhaps a half cent for the week. Spot average net physical crush for the typical plant weaker due to a firmer corn basis and estimated at -11.7 cents per gallon. Ethanol market lacks activity and it doesn't help when US gasoline demand is under 8.0 mbls/d, 10% off last year's levels and one the lowest recorded weekly DOE estimate since February of 2001. 2012 ethanol export picture has yet to take shape. Somewhat surprising with Brazilian ethanol, FOB Santos, indicated some $0.60 per gallon higher than US Gulf prod-uct. But at the same time, the Eurozone is experiencing record high gasoline prices and definitely curbing motor fuel consumption in the re-gion. Most recent data showed gasoline use in Europe down 5 to 8% from previous year. US ethanol production remains steady with a daily output number of 39.52 mg/d (14.425 bg annualized). Implied demand for US ethanol noted at 34.95 mg/d (12.755 bg annualized). DOE showing stocks rising by 32 mg to 820 mg. 2012 calendar blenders spread settled out the week near -$0.60. A few spot physical blenders spreads suggests a difference of $0.55 to $0.60. 3 out of the last 4 years the CBOT to RBOB spread has reached at least -$0.80.

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————-

Grains: Matt Zeller Ethanol: Mike Blackford

2829 Westown Parkway, Suite 100 West Des Moines, IA 50266

[email protected] 515-273-4053

[email protected] 515-223-7439

Weekly Commodity RecapJanuary 23, 2012

Page 2: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

ENERGY Friday Recap: With the geopolitical threat fading by the day, the energy market removed a good piece of the supply-fear premium out of futures Friday on news the U.S. is easing tensions with Iran by backing down from their hardline stance against the nation’s nuclear enrichment program. This included a last-minute cancellation of the joint war game exercises with Israel, the removal of a large naval ship from the Persian Gulf, and an alleged “letter” to the Iranian government meant to get both sides back to the negotiating table instead of the boxing ring. Though the U.S. government will not explain exactly why all this has occurred, the market took the news that tensions were finally easing between both sides with energy prices subsequently falling as a result. The lack of ground-shaking news within the energy world allowed the easing geopolitical tension to underpin Friday’s trading. The result, of course, was decent losses for crude oil futures with a little bit less weakness for energy. Losses for WTI hovered around 2% at the close while product selling was modestly lighter with RBOB and heating oil finishing 1% to 1.5% below Thursday’s settlement price. There still seems to be a favoring of crack spreads (particularly RBOB) on the heels of the various refinery shut-downs and planned/unplanned maintenance seen over the past few weeks. This stays true to the seasonable trend that typically shows a decent amount of refined product appreciation against the various crude contracts (aka stronger cracker spreads). Throw in the drowning news for Petroplus (I am hearing that all 5 refineries are on the sales block) and the shocking closure of the 500,000 bpd HOVENSA refinery, and we can see why the market is a bit nervous about sup-plies heading into the RVP switch-over season for March (even in light of the weaker demand scenario). Natural gas was finally able to stop the free-fall Friday with its front-month contract sliding into positive territory for the first time ever (just kidding, 8 trading sessions). Though the front-month gains were not very impressive, there was a decent amount of forward-dated buying that had consumers locking up future needs at eye-popping prices below $3 per mmbtu (well below $3). As one trader put it to me, “consumers are buying extremely cheap call options down the road that basically act as a lotto ticket in case NG does break higher.” It makes sense to me considering the curve for NG is below $3 through the December time period, but I wonder what the odds are for NG to get back above $4 anytime soon? Though values are very cheap for NG (especially call options), does that mean that current fundamentals don’t justify prices at current levels? What a close for the DJIA! One would be naïve to believe stronger equity prices do not somehow influence the energy market. Losses for energy futures have been trimmed up post close here with the solid finish for the DJIA Friday and this week. Investors are growing a bit more comfortable with equity risk considering the surprising state of the U.S. economy (and considering most other global stock markets are not doing so hot). The DJIA and the S&P 500 Index are simply doing very well and grinding their way back up to levels not seen mid-July 2011. Remember that all of this is happening with a dollar that has been trending higher as well. Very impressive. Basis Commentary: Chicago ULSD cash markets were seen trading stronger again on Friday (to close out the week) after news that Citgo was experiencing opera-tional issues in their ULSD unit at their Lemont, IL refinery. Gulf Coast ULSD cash markets were seen trading slightly weaker on Friday to start a new scheduling cycle that was met with a bit of selling interest. We will keep an eye on the Gulf Coast import/export numbers this week and next to see if the closure of the Hovnesa’s St. Croix refinery helps to boost the demand for product out of the Gulf and USAC mar-kets to be sent to Central and South America. The rest of the cash markets finished the week on a light note with no large moves, even on the West Coast to note. After the third holiday week out of the previous four weeks we will have the API inventory statistics released at their normal time on Tuesday at 3:30pm CST and the EIA inventory report will return to its normal time on Wednesday at 9:30am CST Top Headlines: ---- The European Union agreed to ban Iranian oil imports starting July as a way to bring the Middle Eastern nation back to the negotiating table because of its nuclear enrichment program. The embargo is beginning in July to allow EU countries to find alternative oil suppliers. ---- Bondholders negotiating a debt swap with Greece have given their “maximum offer” and are awaiting the decision from the EU and IMF whether or not it will be accepted. The ongoing negotiations are expected to help investor and banking confidence in the region. ---- Total announced that is has formally abandoned its effort to sell the 221,000 bpd Lindsey, UK refinery and will instead focus its efforts to upgrade the performance of the refinery. The firm has failed to find a buyer for the facility for the past two years.

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Energies: Jack Hunter, Greg Evans, Chris Jagoda

1251 NW Briarcliff Pkwy St 800 Kansas City, MO 64131

[email protected] 816-410-3351

Weekly Commodity RecapJanuary 23, 2012

Page 3: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

CATTLE/LIVESTOCK Cattle Futures Commentary: Cattle futures opened sharply higher, but closing just mixed on Friday, a disappointing performance for the bulls who had ex-pected a sharply higher cash cattle trade would be enough to support values. Nearby Feb, April, and June futures all coming close, but ultimately failing to top previous contract highs. If anything, the inability to hold gains near the highs may actually give the technical traders cause to play futures from the short side now. Friday afternoon’s monthly Cattle on Feed report was essentially a nonevent. January 1 on feed, December place-ments, and December marketings all coming in very near pre-report expectations. Dec placements down 5.9% from last year, but still above the five year average for the month. Kansas placements down 15%, Texas down 5%, and Nebraska un-changed. Let’s look for a steady to firmer start to the week this morning with overnight grain, energy, and equity markets all supporting. Bigger picture, beef packers are starting the week with some of their worst spot margins in recent memory and the trade will want to see some support in the beef market this week, with smaller slaughter schedules again expected. Cash Cattle Markets: Last week's cash cattle trade took place at sharply higher values than the week prior, with $126-127 live trading in the South and $202-205 dressed trading in the North. Hog Futures Commentary: The lean hog market traded just mixed on Friday, slightly weaker in the nearbys and firmer in the deferreds, as futures continue to consolidate as we await cash hog and pork product markets to inch their way higher. Both of those markets traded slightly higher on Friday and posted weekly gains, as will be expected again this week. Interesting to see last week’s slaughter come in 2.221 mil head and up 2.4% from a year ago. Cumulatively since December 1, slaughter has run 3.1% above last year, larger than our most recent Hogs & Pigs data would have im-plied. This combined with heavy carcass weights has pushed more product through the pipeline than the industry had expected, but most now see both of these trends slowly coming to an end. Friday afternoon’s Cold Storage report looks slightly price-friendly as total pork supplies came in down 2.7% from last year, when the trade had expected an increase of 0.4%. Not a huge amount, 15 mil lbs, but enough that some will revise their export demand totals higher. Cash Hog Markets: Cash hogs traded at mostly steady-money on Friday, with the biggest move (a $0.25 loss) seen in the Eastern Corn Belt. All of the other re-gions were fractionally higher. Expectations are for a steady to firmer trade today.

Cattle/Livestock Ben Parks

1251 NW Briarcliff Pkwy St 800 Kansas City, MO 64131

[email protected] 800-255-6381

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 4: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

SOFTS ICE Coffee Futures Finish the Week Lower Arabica coffee futures finished lower on Friday at the end of a session considered as a consolidation. The most active contract for March de-livery settled at 225.40 cents per pound, lower by 125 points. Some volatility and low volume accompanied the prices at mid�morning following an advance of the London market after some buying of upside calls came in. After that, the market action remained slow. Markets in general paused ahed of the celebration of the Lunar New Year in China and talks in Greece to ease debt load. In coffee related news, coffee stocks in Brazilian cooperative may fall below 2.58 million bags, the lowest level since 2002, said the president of CNC . An inventory report will be released on February by the CNC. In other fundamental news, Anacafe reported that that Guatemala’s exports will increase 13% dur-ing the first 3 months of the year, however the harvest is still seen on at a lower pace. Over all this week the market remained nearly un-changed as the March position only rose by .25 points from last Friday. In external markets the activity was mostly to the downside also. Crude Oil was leading the way lower and currencies also followed the intra-day trend. Gold remained positive thorough out the day as did the Equities. In London, the Robusta market closed higher and posted strong gains. The main contract of March settled higher by $54, at $1,932 per ton. The market was mostly helped today by the purchasing of approximately 1,000 lots the March 1,950 calls by a fund. The action In the Euro also gave a little bit of support to the market as the US Dollar weakened at time and gave support. The activity on the fundamental side was quiet, while the technical side was suggesting that the market had been under oversold conditions. ICE Coffee Warehouse Stocks were �9,160 bags to 1,517,119. Pending Grading: 55,150 bags

Coffee: INTL Hencorp Hernando de la Roche

777 Brickell Avenue, Suite 1010 Miami, FL 33131

[email protected] 305-982-4600

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 5: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

COTTON In spite of a range of bearish signs on the demand side of the balance sheet, nearby cotton futures on the Intercontinental Exchange climbed four of the last five weeks to finish trading Friday at its highest settle in two months. For the week, futures rose four of the last five sessions, up a combined 3.13 cents to 98.60 cents per pound, with the March contract reaching its highest weekly close since October 28th. Seldom in recent memory has the market seemed so evenly split between bears on the demand side pulling prices lower versus bulls on the supply side pushing the market higher. But along with rumors of bullish supply-side changes to cotton’s balance sheet, this 1,300-point resurgence since mid-December owes much of its momentum to the rising tide of overall commodity prices. First on the demand side, the outlook for growth in mill consumption of cotton remains anemic at best, with both major and minor textile in-dustries hesitant to expand output as downstream demand remains dull. For largest cotton user China, the USDA already shaved four million bales off projected mill use this marketing year, down to just 44.0 million bales. If realized, 2011/12 would mark the third contraction in the last four years for Chinese mills. What’s more, recent evidence suggests even this dismal forecast may still be too optimistic. The news is similarly poor from Indian mills. High interest rates, weak downstream demand, and thin margins continue to weigh on Indian cotton yarn output, with November volume shrinking to the lowest in nearly three years. And the outlook for second-tier cotton consumers including In-donesia, Turkey, Pakistan, and the U.S. remains tilted to the downside as well, with few signs of optimism on the global horizon. On the supply side of the balance sheet, prospects for lower harvest sizes of both the global old crop and the new 2012/13 crop offer a dissent-ing view on the market. Most recently, in a muddled announcement, China’s National Bureau of Statistics (NBS) reported the 2011 crop at just 30.3 million bales, well below the USDA’s 33.5 million-bale estimate. We caution the NBS has repeatedly been too low on its estimates the last few years, but this latest target is so much lower that it suggests the USDA’s estimate is too high. Also bullish for prices are our own forecasts of lower Northern Hemisphere plantings this spring, along with prospects for lower acreage in China and sub-par winter precipita-tion over the dry Southern Plains of the U.S. At present, both sides of the global balance sheet look likely to ease lower, with arguments for higher prices dominating, at least for now. But perhaps a more persuasive driver for cotton prices over recent weeks and months has been the ebb and flow of the broader commodity market. Following the disjoint that erupted between cotton and commodity prices a year ago as cotton futures prices soared to unprecedented highs, a stronger correlation between the two has returned. Over the course of the cotton marketing year, prices for the two have trended in close step, as the graph below demonstrates. More particularly, rebounding cotton futures mirrored the climb with firmer commodity prices over the last five weeks. Looking ahead, during the relative calm of winter in the Northern Hemisphere, cotton prices may sway more on the influence of outside markets before attention turns to narrowing forecasts for spring plantings for the fiber.

Cotton: Gary Raines Fibers & Textiles

209 10th Avenue South Nashville, TN 37203

[email protected] 615-713-1153

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 6: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

DAIRY Cheese CME block and barrel cheese prices moved steadily lower during the holiday shortened week with modest carlot volumes changing hands. USDA Dairy Market News (DMN) reports that cheese production remains steady for this time of the year as plants finish up orders for the upcoming Super Bowl seasonal demand surge. However, sales of mozzarella are reported as less than expected, given the resumption of col-lege classes after the holiday break; however, most of the decline is attributed more to restaurants and other food service customers rather than to educational food services. On the international front, the Oceania cheddar price was slightly reported slightly higher over the previous 2-week period while the d/DT auction price (across all contracts) was 2.1% higher. DMN reports that Oceania prices are mostly holding steady as output is in close balance with demand with sales centering around regular and ongoing customer needs. The December USDA Cold Storage report (page 10) was mostly neutral to slightly bullish for cheese. Butter / Cream CME AA butter closed down three out of the four days this past week as production remains very active with cream availability reported as regionally mixed by DMN. Some churns are taking advantage of surplus volumes of cream to produce butter for storage in order to take ad-vantage of the decent carry structure currently offered in the futures forward curve. Demand is also stronger than expected; however, DMN does report some weakness in the West, particularly for premium brands. Buyers and sellers are already making plans for the upcoming East-er / Passover seasonal demand period, which will occur earlier than normal this year. International markets are mostly mixed, with EU markets weaker due to lower export demand as prices are still high relative to the world mar-ket price. Oceania showed some improvement in price with anhydrous milkfat up 2.8% on the g/DT auction market. December Cold Storage (p. 10) was bearish to butter. Milk Powder Mostly mixed market in milk powders this past week with dry buttermilk moving lower due to supply pressure from higher butter and butter-milk production. With the futures forward curve providing very little direction, there is considerable uncertainty regarding future prospects for NFDM and this is causing many buyers to refrain from making any longer term commitments. Some additional demand support is expected from the Class II sector as production of yogurt and cottage cheese is on the upswing. High heat product will also receive some support due to higher baking demands during the upcoming Easter / Passover holiday period. On the international front, prices were lower on the USDA biweekly series while the g/DT auction had SMP prices higher by 2.7% with but-termilk powder down 4.3% and WMP unchanged across all contracts. Whey Complex Same overall theme in the whey complex as in previous weeks with prices moving steadily higher. Prices for dry whey and WPC moved light-ly higher on contract formulations. DMN reports spot availability remains extremely limited with resale markets the only alternative for secur-ing additional needs. Resale prices continue to be reported as high as 80 cents per pound which has many market participants nervous regard-ing a repeat of the 2007 price spike followed by a price collapse with significant demand destruction occurring. Production varies regionally with cheese production which is higher in the East and lower in the West. The lactose price remained unchanged on the mostly range. Market participants indicate that despite the higher price, little demand pushback has been noted. On the international markets, EU sweet whey powder was slightly higher over the previous 2-week period. Many export buyers have looked to the EU as prices have been lower than other international markets. Futures forward curve values were significantly lower for the last 10 months of the year with a strong inverse carry indicative of the very strong spot demand for available product.

Dairy: David Bullock INTL FCStone Foods Division

300 Highway 169 South, Suite 350 St. Louis Park, MN 55426

[email protected] 952-852-2913

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 7: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

STEEL Raw Materials: Queensland’s New Railway Starts Moving Coal- QR National said Thursday it ran its first coal train services after expansion projects were recently completed. Completion was one month ahead of schedule and allows Queensland miners to now access Abbot Point Port, part of a larger expansion plan that will see QR National add 70 million tonnes of cargo capacity and raise coal export capacity for Queensland miners to 300 million tonnes/year by 2015. The Australian government is following by planning a massive expansion of the Abbot Point port to allow for that 300 million tonnes- the port currently offers only about 50 million tonnes/year at present capacity- overall an investment project that is largely reliant on continued Chinese demand for coal. US/Global: Global Steel Production for November- The numbers now in from the World Steel Association show continued year on year growth in steel output even in November and a solid year on year expansion when looking at the full Jan-Nov period. November output was at 115.5 million tonnes, up 1.1% year on year though down 6.4% from October. Total global production for the first 11 months of the year was 1.37 billion tonnes, up 7.5% year on year. See the email that included this attachment for a table that outlines the ten largest crude steel producing nations and the volumes and year on year changes. US Weekly Crude Steel Production- The AISI showed numbers yesterday that suggest US raw steel production leaped ahead by 5.7% (week on week) in the week ended December 17th. That brought total raw steel production in the US to about 1.94 million net tons last week which also marks a 17.5% higher number than in the same week of 2010. Capacity utilization at US facilities is estimated by AISI at about 78.55, up from 74.3% in the year prior as it would seem recent price hikes are keeping mills busy with new orders. Russian Steel Post-WTO- One important issue for Russian WTO entry was the fact that Russia will retain the ability to continue protective auto-sector tariffs, which should be a major help for the domestic industry as they will not lapse for another seven years, the hope then being that Russia’s domestic plants will be strong enough to stave off imports. One of the largest immediate benefits will be better legal remedies in cases brought against Russia on anti-dumping issues- before WTO membership the rights of those charged with AD remained limited. Early estimates are that membership could also boost GDP by as much as 3.7% over the next five years, and this does not fully account for the long-term benefits and increase credibility offered by WTO membership status- this is likely why steel producers like Severstal were part of the working group on WTO access. Asia: Japanese Crude Steel Output Down Significantly in November- The Japanese Iron and Steel Federation numbers showed that Japanese production peaked early in 2011- January actually, and that production was down again in November to 8.7 million tonnes, a 3.2% decline from November 2010 and a 8.3% decline from October levels. Wuhan Hikes HRC/CRC Prices- The Chinese producer released a statement yesterday saying that it will raise ex-works prices for hot and cold rolled coils but that other major flat products will see slights price cuts, all for the January delivery period. Wuhan does not release de-tails in these statements but estimates peg the company’s standard HRC (January ex-works price) around $635/tonne (excluding a 17% VAT). This follows a decision wherein Wuhan cut exworks prices on major steel products for December delivery. Flat-Rolled Inventory Optimization: No Change for today- though we have heard that yesterday Canadian producer ArcelorMittal Defasco was raising spot prices for flat-rolled products on demand that remains “very strong”. Despite extending lead times the producer warned that market prices remain lower than what would be needed to recover costs- new baseline prices are $727/ton ex-works for HRC. Spot prices in the Midwest also continue to show some strength with indicative deals heard to be in a range between $670 and $700/ton ex-works Indiana, but the trade publications are also suggesting some deals are be-ing head from service centers as low as $660/ton for HRC. The forward curve remains flat and we are looking at the inevitable question- will this be a re-peat of last year’s rally or will the shaky economic situation prove too much to sustain a drive higher?

Steel: Spencer Johnson, Dr. Mo Ahmadzedah

2829 Westown Parkway, Suite 100 West Des Moines, IA 50266

[email protected] 515-223-3786

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 8: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

EUROPEAN WHEAT/GRAINS European markets traded mostly higher Thursday in a general ag commodity rebound. There have been a few wheat tenders in the offering and filled lately with Egypt and Jordon buying. Weather continues to be the conundrum for traders who are still guessing the extent to which recent dryness will ultimately impact the SA supply situation. Europe however getting some good snow cover while NA and Canada are still awaiting adequate precipitation. It does however eleviate spring flood risk there however. The weaker dollar is supporting commodities gen-erally. Black sea supplies appear less available to the export markets. Funds were buyers. Weather: North America sees dry North, SA see some rains...Oz still wet to hamper remaining harvest, Ukraine gets additional snow cov-er...Conclusion: All in all, still neutral to bearish.

LONDON (Dow Jones)-- World corn production is expected to rise 4.2% from last season's 826.4 million metric tons in 2011-12, the Inter-national Grains Council said Thursday, increasing its previous estimate by 7.7 million tons. "Despite a smaller U.S. crop and a worsening outlook for South America, total maize (corn) production in 2011-12 is forecast to increase by 4%, to a record 861 million tons," the IGC said. "Harvests in China and Ukraine were especially large and, although forecasts have been re-duced this month, Argentina and Brazil are still expected to produce record crops," the IGC said in its montly report. The U.S. is expected to produce 313.9 million tons of corn--0.9 million tons more than predicted in November--while crops in South Amer-ican producers Brazil and Argentina are seen at 59 million tons and 23 million tons, respectively. European corn output is pegged at an un-precedented 65 million tons--0.3 million tons more than predicted in November, the London-based body said. World 2011-12 wheat output was also revised higher by 6.6 million tons to a record 689.8 million, the IGC said, citing better-than-expected results in the southern hemisphere, especially in Argentina and Australia but also sizeable upwards revisions to estimates for China and Ka-zakhstan, the IGC said. "Approximately half of the increase in the global supply figure is absorbed by greater feed use, as competitive prices relative to maize con-tinue to capture additional demand," said the IGC. But world wheat stocks at the end of the current crop year are revised higher to 204 mil-lion tons, just below the record of 2.6 million tons in 1999-2000, said the IGC. "Major exporters' stocks are projected to rise significantly in Kazakhstan and Ukraine, but those in the EU and U.S. are to stay broadly un-changed," added the IGC. In the Commonwealth of Independent States, Kazakhstan's wheat output for the 2011-12 crop year is forecast to hit 20 million tons, more than 2 million tons higher on the IGC's November estimate while Russia's output is pegged at 56.2 million tons. Ukraine's wheat output for the current crop year was also revised higher to 22.4 million tons, up from 21.5 million tons estimated in November.

European Wheat/Grains Jaime Nolan Miralles

5th Floor, Portview House Thorncastle St, Dublin 4, Ireland

[email protected] +353 1 6349140

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 9: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

BLACK SEA GRAINS Russia (USD/RUR = 31.39) Despite a gradual decline in Russian exports between September and November, December exports were a record at nearly 2.9 million MT vs. the previous record of 1.5 million MT in December of 2009. The brisk export pace has supported domestic prices despite a general de-cline in the macro environment. Strong prices are seen, particularly in the south of the country, as exporters close out contracts. Most of the small ports remain highly active, in particular Taman. Since the beginning of the export season in July, Russia has exported 18.6 million MT of grain according to the government. During every month thus far, grain exports have greatly surpassed levels in each of the past 3 years. Transshipment of Kazakh wheat through Russia is also at near record levels which should continue into 2012 and keep Russian ports busy through Q1. The winter crop is in favorable condition overall. Russia continues to receive more moisture than Ukraine, as such its winter crop entered dormancy in much hardier conditions. A snow cover exists in most all areas except for the regions in the south such as Rostov region and The Caucuses. Currently there is no prohibitive ice crust or layer anywhere in the country. Additionally, winter sowings were higher than in the previous year (+ 600k hectares) at 16.1 million hectares. The government has increased federal funding to agricultural pro-ducers this year by 4% and will keep in place the 10% discount on fuels for grain enterprises and producers. All of these factors combined have caused the government to maintain optimism regarding a larger crop in the 2011-2012 season. Though Russian wheat is still finding its way into the Egyptian tenders, it is filling a much smaller portion of them than it was 2 months ago. In one of the most recent ones, Russian wheat was actually 6-8$/MT higher than French wheat. The Egyptians bought 60,000 MT of Russian wheat vs. 120,000 MT of French wheat. We expect that over the next couple months, Russian wheat should trade near parity to French values. Given current global price lev-els, corn plantings should be at record levels this year, as should soy plantings. This is expected to be at the expense of Wheat and Barley. Prices: Corn (interior)= $165/MT, MW(EXW)=$183/MT, MW (FOB)=$250/MT(Novo.) $220/MT(Azov), FB(FOB)=$260/MT Ukraine (USD/UAH = 8.03) During December and in early January temperatures in the majority of the production regions saw warmer than normal temperatures as well as improved precipitation in the form of both rains and snow. This caused emergence rates to improve to about 85%. However moisture lev-els are still 30-40% less than optimal levels. Currently the weather is much colder, there is no protective snow cover on the crops. Warm and moist weather over the past 6 weeks caused growth to resume in winter crops thus not allowing them the crucial period to enter dormancy and strengthen them against much harsher weather ahead. As such, with temperatures dropping sharply and likely to remain cold through Jan and into Feb will likely expose the winter crop to winter kill. Already some 1.4-1.6 million hectares will need to be resown on areas that failed to emerge. These areas are likely to be resown in the spring with corn and oilseed crops as they continue to be much more profitable to producers. The rapeseed crop is in particularly poor condition this year, with emergence around 75% and of that nearly 35-40% in poor con-dition, total winter rapeseed production will be lower than even last years poor crop. These areas as well are likely to be reseeded with corn and sun or soybeans. Exports during December amounted to 2.47 million MT of grain, up nearly 500k MT from November, of which nearly 2 million MT was corn. The first two weeks of January featured sluggish and slow exports due to the Holidays, roughly 400k MT. The ma-jority of which is Corn. Month by month, corn exports are greatly outpacing the past three seasons. Jordan bought 100k MT of barley and shipments to Saudi should increase in the near future. Recent political developments may mean that agricultural subsidies to large agrihold-ings may stop as soon as 2013. The government has stated that large agriholdings are self sustainable and therefore government support should focus on smaller producers that are not as profitable. Rumors that Ukraine is running short on corn have caused concern in the market, however it seems more likely that producers are holding back for higher prices. Additionally, producers have been trying to unload poor quality corn causing exporters to bid up CPT prices to secure quality. FOB Black Sea Port prices: Corn=$250/MT (Jan), FW=$240/MT, MW=$255/MT(11.5%), FB=$270/MT, RS FOB= $570/MT, EXW=$520/MT, SO FOB = $1090/MT (FEB)

Eastern Europe Weekly Matt Ammermann, Dan Hofstad

300 Hwy 169 South, Suite 350 St. Louis Park, MN 55426

[email protected] 952-852-2905

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 10: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

BLACK SEA GRAINS Kazakhstan (USD/KZT = 148.346) Despite the bumper crop, 27 million MT net weight, Kazakhstan has been unable to realize greater export potential. Partially this is due to its reliance on Russian transshipment, particularly by rail. Russian rail lines have been swamped with domestic grain since the export ban was turned over last summer. Additionally Kazakhstan suffers from a lack of rolling stock. Exports in December were only half of expected vol-umes at 450k MT. As such the agricultural ministry has announced it will focus on reducing next years crop to 16-16.5 million MT to avoid severe supply gluts and price depression. The situation severely underlines Kazakhstan’s potential as a highly quality wheat producer and even more so the issues, particularly in logistics, that are hampering its growth. Export Prices: MW(11.5%) DAF Russia = $150/MT, MW(11.5%) Aktau Port = $173/MT. Bulgaria (USD/BGN 1.516) / Romania (USD/RON = 3.371) Romania increased corn exports to Egypt recently. A sign that the Black Sea corn market may no longer be dominated by the sole player Ukraine. In October Romania shipped roughly 140,000 MT of corn to Egypt and additional volumes were shipped primarily to Spain and Middle Eastern destinations. We should see the progression of Romania as a serious corn exporter. Farmers continue to expand planting of the crop, and its quality is quite good. Export Prices: Corn= $255/MT (FOB Constantsa) Bottom Line: Russian exports continue to be strong, thanks in part to Kazakh wheat, as does Ukrainian corn. The Ukrainian winter crop will be very poor this year especially with rapeseed, although the Russian crop should be very good.

Eastern Europe Weekly Matt Ammermann, Dan Hofstad

300 Hwy 169 South, Suite 350 St. Louis Park, MN 55426

[email protected] 952-852-2905

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 11: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

BRAZILIAN SOYBEANS PARANÁ The drought that strikes Paraná, characterized by poorly distributed rainfall and high temperatures, should cause a drop in soybean yield, especially in the northern and northwestern parts of the state. A 20% drop is estimate for the production of oilseeds. In the state, most crops (38%) are already during the fructification period and 10% are already maturing in preparation for harvest. The harvesting activities began this week, advancing 1% of the crops. RIO GRANDE DO SUL For the first time in years, the rains arrived in Rio Grande do Sul more significantly (in some areas). Volumes between 70 mm and 80 mm were observed in the region of Passo Fundo, Lagoa Vermelha and Iraí, which until then had their soybean crops affected by drought. In addition, there was also a relief in temperatures. Still, not all producing townships received the expected rain. Seeing that 49% of the crops are in vegetative development stage, it is possible to re-verse some of the critical situation in which the plants are. MATO GROSSO Mato Grosso was the first state to begin the harvest of soybeans in the country, and now faces obstacles because of the incessant rain. Unlike the South of Brazil, the drought is not a reality in the Midwest, which had adequate rainfall levels for the development of the crop. During harvest, however, heavy rainfall can affect the activities in the field. SOUTH AMERICAN WEATHER FORECAST FOR THE NEXT 10 DAYS After the occurrence of some rains over the weekend, both in Brazil and Argentina, the weather forecast for the next 10 days indicates the re-turn of dry weather in some regions, as shown on the maps below.

Brazilian Soybeans Planning & Research Department

Ala Oeste - Sala 203 Campinas, Sao Paulo 13091-611

[email protected] 55 19 2102 1335

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 12: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

AUSTRALIAN WHEAT/GRAINS No Report this week… PERTH (Dow Jones)--Western Australia's grain harvest has hit a record level after the latest deliveries pushed this crop year's total to 14.7 million metric tons, Cooperative Bulk Handling Ltd. said Wednesday. The harvest eclipsed the previous record of 14.69 million tons set in the year ended March 31, 2004, with more grain still to come in, the Perth-based company said in a statement. It also exceeded the pre-harvest state forecast of 13.5 million tons, the company said. CBH, which dominates the storage and handling of Western Australian grains--including wheat, barley and canola--faces a challenge in coming months to move the crops to port, Colin Tutt, general manager of operations, said. "It is timely that the state and federal governments took the decision last year to invest A$350 million in the grain transport network," he said. The harvest is expected to continue in some areas until the final week of January, with around another 200,000 tons expected to be delivered, Tutt said. Typically, 70% of the Western Australian harvest is wheat and deliveries to CBH account for 90% of total state production, nearly all of which is exported. CANBERRA (Dow Jones)--Raw sugar production in Australia next crop year could rise 15% to 4.5 million metric tons after expanding 8% to 3.9 million tons this rop year ending June 30, 2012, Commonwealth Bank of Australia forecast late Wednesday. The area of cane harvested is forecast to expand 5% next crop year "while improved agricultural yields and sugar extraction rates" to lift out-put to the best year since 2009-10, but still below the 2003-04 to 2009-10 annual average of 4.9 million tons, Luke Mathews, the bank's agri-cultural commodities analyst, said in an industry review. Australia is usually the third-largest global supplier of traded sugar, after Brazil and Thailand, with exports averaging 3.8 million tons a year in the period 2003-04 to 2009-10, or about three quarters of total production, according to the Australian Bureau of Agricultural and Resource Economics and Sciences. Exports have fallen since, reaching just 2.51 million tons in 2010-11, reflecting the impact of a weather-related sharp downturn in produc-tion.

Australian Wheat/Grains Brett Cooper

Level 10, 151 Macquarie Street Sydney, NSW 2000

[email protected] 02 8094 2000

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 13: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

ARGENTINE AG HIGHLIGHTS WEEKLY HIGHLIGHTS Rains returned to Argentina last weekend; however, amounts and coverage (only 40%) were less than expected in previous forecast. There was disparity between the areas that received rainfall. Models are showing some rain early this week with mains impacts in La Pampa and Santa Fe. Dryness will also remain significant in Argentina. The chance of rain needed to reverse the water deficit is less than 25%. Corn We downward adjust the total corn area for commercial use since Córdoba, Entre Rios and North Buenos Aires could not achieve 100% of its projected planted area. In turn and thanks to the recent precipitations, planting further expands into the norhtern provinces of Salta, Tucumán and Santiago del Estero reporting the highest planting progress over the last week. North-central Córdoba continues planting late-season corn, especially in those areas benefited by abundant rainfalls. On the other hand, harvest of early-season corn has begun in specific plots in northern Santa Fe. Yields range from 6.5 to 8.5 tons/ha. Northern La Pampa and western Buenos Aires report partial to total losses of early-season crops due to the lack of rainfalls and high temperatures. The development of late-season crops will depend on the rainfalls forecasted for the coming week. To date, planting is 91.4% complete. The total corn area is ex-pected to total 3.7M ha., down 40,000 ha from our previous report. Weekly progress stands at 6.6%. In absolute numbers, planting has expanded into 3.3M ha. Our weather outlook forecasts a slow storm front for the com-ing week. Those areas in urgent need of water will have to wait until until the midweek for moisture relief. Soybeans Precip over the last two weeks have helped replenish soil mois-ture fostering planting activities across the whole agricultural area. These rains provided relief to the northwest and center of Santa Fe, North and center of Cordoba, southeast of Santiago del Estero, northeast of San Luis and areas in the southwest and center of Buenos Aires. The amount of rainfalls ranged from 50 mm to over 100mm. However, water relief was insufficient in Southwest Córdoba, northeast Santa Fe, north-central Entre Rios and NE Buenos Aires. These areas have already reported partial and even total losses of some of the plots. To date, planting is 91.7% done. This includes first and second crops as well as reseeding due to heat and water stress. In abso-lute numbers, the area covered is slightly inferior to 17.3 M hectares. All soybean plantings for this season are expected to total 18.85M hectares. Weekly progress stands at 6.1%.

INTL FCStone Argentina Sarmiento 459 Buenos Aires

[email protected] 54-114-390-7530

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 14: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

MACRO-ECONOMIC HIGHLIGHTS Euro Crisis The Euro economic events this week is a classic inflection point that could change the way investors are positioned. As I finish writing my comments for the week, Greece officials and creditors are trying to reach an agreement for a 50 to 70% write-down of debt held by private creditors. Two representatives are negotiating of behalf of all creditors. The outcome is unlikely to end on a positive note. Disagreements be-tween the Greek officials and private creditors about the interest rate on swapped bonds, the maturity, and deferral of repayments continue to be leaked out of the meeting as of late Friday. Even if an agreement is reached late Friday, more than 30% of the private creditors may not go along with the deal. The key issues that were unresolved at the start of last week is a possible 70% write-off back on the table along with a lower coupon for bonds that are exchanged is being proposed by Greece in order to receive IMF funds. The stand-off between Greece and private creditors will likely drag on as long as possible due to private investors knowing the IMF has a precondition that the debt be written-off in order to receive additional funds. Charles Dallara and Jean Lemiere are co-chairs of the steering watch is the “voluntary” versus “involuntary” clause, and if a default event will trigger insurance payments on Greek Sovereign Debt Default Swaps. The approach being ne-gotiated is to reduce the Greek debt load by $100 billion. On January 17, Greek citizens took to the streets to protest any more budget cuts, which adds the possibility of political instability even if an agreement is reached. Another key issue is if Greek Credit Default Swaps will be triggered. My opinion is that any rational investor would say this is a credit de-fault. Watch for the confusion to continue over the next two weeks regarding the issue. The last major hurdle is why are public creditors look exempt from a write-off? The answer may be due to the ECB. The ECB alone holds $36 billion of Greek bonds, $90 billion of Italian bonds, $46 billion of Spanish bonds, $20 billion of Portuguese bonds and $19 billion of Ireland bonds. Given the ECB rules regarding sovereign debt purchases, the ECB bank officials seem to be nervous about buying more Euro sovereign bonds in the secondary market. The news that S&P downgraded nine countries and put thirteen Euro countries on credit watch with negative outlooks was taken very well by the market this week despite the negative news. France’s rating dropped to AA+, which also resulted in the EFSF debt downgrade on Monday to AA+. The EFSF issue will be important as the crisis continues the first half of 2012. In my opinion the two other important downgrades were Portugal down to BB (Junk) and Italy to BBB+. The Portugal news may force institutions to liquidate holdings soon. If the negative outlook for Italy continues, the rating is just two notches above BB (Junk). As far as the EFSF, the ratings drop by S&P according to institutional credit investors may cut the amount of funding power to $271 billion from the $440 billion by the fund to aid governments' and banks in the region. The EFSF is to be replaced by the ESM soon, and Merkel re-cently stated that Germany would support an increase in funding for the ESM. In the likely event that nations will still be able to borrow more money and “kick the can down the road” on the debt issue is important to financial and commodity asset prices. The amount of debt that is rolled over, and who will be the lender of last resort are key remaining issues. So far the ECB has allowed $489 billion in three year funding to the EU banks, the EFSF/ESM has potential borrowing power of $271 to $440 billion. The Euro countries have pledged $150 billion to in-crease IMF funding and I would predict that the $150 billion would be leveraged in Special Drawing Rights with the organization totaling another $500 billion. The ECB has purchased a total of $211 billion of Euro sovereign bonds from Spain, Portugal, Italy, Greece, and Portugal with a current loss estimated at $30 billion mainly due to Greece holdings. If the ECB, ESM, and IMF combine together to offer fu-ture funding options, then asset prices will stabilize. Adding the sovereign refinancing needs for the EU, plus bank refunding/capital needs for 2012 is a total of $2.5 trillion Euros. The ECB, EU, ESM, and IMF funding lines total roughly $1.489 trillion. That was before the IMF news last week of asking members to contribute another $600 billion. To date, The ECB has purchased $211 billion of sovereign bonds and offered a credit line to banks of $489 billion. The ECB has pledged to add an additional round of LTCO financing. If the Euro countries IMF, or ECB are unable to convince bond investors that they will be able to repay the sovereign debt borrowed, then a full blown world liquidity crisis will result. The prospect for sharply higher interest rates and sharply lower economic growth would result from current policies. If agreement's are reached on sovereign debt starting with Greece and Hungary, then the short-term effect on budget balancing measures will still result in lower end demand for 2012. The second option would be preferred versus the first option. The likely negative effect on the macro environment in the near future with slowing the end demand will result in a lower price of most commodities barring a supply shock due to weather.

Don Brown INTL FCStone Research

2829 Westown Parkway West Des Moines, IA 50266

[email protected] 515-273-4043

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 15: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

WEEKLY FX SUMMARY No Report this week

Charlotte Hampshire INTL Global Currencies

Phoenix House, 18 King William St London EC4V 7BP

[email protected] 0044 (0)207 220 6085

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 16: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

PRECIOUS METALS MARKET REVIEW FROM THE NEWS WIRES SINGAPORE, Jan 20 (Reuters) - Gold slipped on Friday as speculators booked profits from recent highs, but a steady euro and rising equities could limit declines as the metal heads for its third week of gains, its longest winning streak since November. Consumers in China helped bullion jump to its highest in more than a month this week, but purchases began to slow down ahead of the long Lunar New Year break which starts next week. Bullion has gained more than 5 percent so far this year. Spot gold slipped $2.30 an ounce to $1,654.49 by 0252 GMT. Bul-lion struck a record of around $1,920 last September. "Gold has a fairly good run so far this year, maybe this is time to consolidate a little. A pause here would probably be a healthy sign. After that, I think the next move is likely to be up towards $1,680," said Nick Trevethan, senior commodity strategist at ANZ bank in Singapore. "I think physical flows may slow a little next week. Chinese buyers will still take the time to come to the market if prices fall significantly. So, I think there's going to a floor under the market, initially at $1,650, but I can't see a big fall to below $1,600." Gold often tracks the fortunes of the euro and stocks because of its safe-haven status, which allows speculators to sell the metal for cash to cover losses in other markets, especially during the period of uncertainty in Europe. Silver tracked gold lower, as did plati-num and palladium the two metals used in auto catalysts. TECHNICAL COMMENTS AND OUTLOOK FROM INTL Gold ended at $1654.00 Thursday, a loss of $5.50 for the day. U.S. inflation data prompted bullion investors to take profits after a three-day rally pushed prices to their highest levels since mid-December. Gold hit a high of $1669 bid , its strongest since mid- December, before losing some of the gains due to weak U.S inflation data. Last few days gold trading in the range of $1640-$1670 levels. A break above $1670 area gold should target its 100- day moving average of $1695 area. Gold getting good support at $1640 levels, a break below these levels, we could see a selling rally towards $1625. Silver ended almost flat. After touching high of $30.90, silver ended at $30.53, a loss of 1 cent for the day. Silver trading within a tight trading range of $30-$31.00. With the Psychological support of $30, silver likely to test its 100 day moving average of $32.70 area.

Jeffrey Rhodes INTL Commodities

Jumeirah Lakes Towers P.O. Box 125942 Dubai, UAE

[email protected] 009 (714) 447-8501

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————

Page 17: Weekly Commodity Recap - Osage Coop ElevatorCommodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples

LME METALS Metals lost ground on Friday, but losses were rather modest, except for copper, which lost a substantial $145/ton as it retreated from a 4-month peak. A weaker Euro pressured the group after a round of indecisive debt talks with Greece weighed on sentiment. In this regard, nego-tiators flew out of Athens empty-handed on Saturday, leaving behind a technical team to work on more details, but it is unlikely that a deal will be clinched before today’s meeting of Eurozone finance ministers. From what we read, the talks have bogged down over the issue of how much of a coupon the new Greek bonds will carry, with Greece pushing for an 50 basis point reduction, while private bond-holders are stick-ing to their original offer of 4%. Existing bonds will be discounted by some 70%, higher than the 50% haircut that was initially thought to be in the cards. This greater reduction could generate further losses by some in the hedge fund community, as many have been picking up Greek bonds in recent weeks, betting that a 50% reduction was likely to be it. Even if a Greek deal is eventually reached, the plan must win approval from the IMF and the Eurozone ministers, which means that this issue may be with us for at least several more days. However, the impasse does not seem to be weighing heavily on the markets right now, as inves-tors sense the two sides are not that far apart and that an eventual agreement will be reached. Metals are now up across the board on account of a stronger Euro (now trading over $1.30), with copper recouping most of Friday’s losses. US stock futures are called to open higher as well, while energy prices are up by $1.00/brl, partially on news that EU foreign ministers agreed to impose an embargo on Iranian oil imports. En-ergy markets were also unnerved by a sharply deteriorating situation out of Nigeria, where it was reported that at least 120 people were killed late on Friday by bomb blasts set off by an Islamist armed group. Far less bullish, but going somewhat unnoticed, was a weekend statement issued by Iran’s Revolutionary Guard Corps, saying it considered the imminent deployment of US aircraft carrier group to the Gulf to be part of “routine activity”. Late on Sunday, in fact, a US aircraft carrier did in fact pass through the Strait of Hormuz without incident, leading us to believe that the whole thing was carefully choreographed in order to prevent any misunderstandings. Although the Greek issue seems to be front and center as far as the headlines are concerned, we suspect that investors are still more concerned about the situation in other countries. For now, none of these other bond markets are flaring up, and we suspect that as long as the authorities continue to make progress, investors will give them the benefit of the doubt. In fact, much of today’s EU ministers meeting will be devoted to issues outside of Greece, like implementing new budget rules and putting more color on the newly proposed financial firewalls. We still have our doubts these efforts will be sufficient to reassure the markets down the road, but for now, the optimists seems to be holding greater sway. The Chinese Lunar New Year lasts all this week, so Chinese markets will be closed, but the holidays did not get off to a good start, as heavy snow and rain pummeled much of China, hampering what a Bloomberg article “the world’s biggest annual human migration”. The Ministry of Railways added 289 more trains to accommodate the crush, while some 83.73 million people hit the roads yesterday despite the weather. Also out of China, more detailed breakdowns of the latest metals imports figures were released on Friday, showing that imports of refined copper rose 18.3% in December versus the previous month, but that overall inflows fell 3% in 2011 on account of much lower intake seen during the first half of the year. China imported 406,937 tons of refined copper in December, up a whopping 77.9% from a year earlier and exceeding the previous monthly record from June of 2009. Part of the surge was attributable to an attractive arbitrage, which first surfaced in October, resulting in metal landing later in the year. Metal also came in on account of a restocking effort to replenish badly drained inventory levels, while other units were brought in and used as collateral to circumvent tight yuan lending rules. Finally, part of the surge could be ex-plained by firms rushing to use up their December credit lines in order to receive close to the same allocation this year. Like copper, financing demand and improved arbitrage boosted imports of primary aluminum, zinc, and nickel last month, even as data showed domestic consump-tion of metals slowing heading into the year-end. Primary aluminum imports were up 50,943 tons in December, up 133.3% from a month ear-lier and 165% higher than December 2010 levels. On a more global scale, the latest data from the World Bureau of Metal Statistics shows all base metals were in surplus between January and November of last year. The copper market recorded a 46,200-tonne surplus during the period, compared with a 61,900-tonne deficit in 2010. World refined output was 17.85 million tons, with total demand coming in at 17.81 million tons. Aluminum supply outstripped demand by 859,900 tons, a 34,000-tonne increase over the surplus recorded in January to November 2010. Lead was oversupplied by 40,200 tons in the January to November period, compared to a 32,900-tonne deficit in the same period in 2010. The zinc surplus was 484,000 tons after a 2.6% jump in refined output and a 1.3% jump in global demand growth. The tin market recorded an 800-tonne surplus, with global tin demand esti-mated at 345,700 tons, up 1.6% on 2010.The nickel market was in an apparent surplus of 9,200 tons.

Edward Meir INTL FCStone Metals

708 Third Avenue, Suite 1500 New York, NY 10017

[email protected] 212-379-5508

Weekly Commodity RecapJanuary 23, 2012

INTL FCStone, Inc. and its affiliates assume no liability for the use of this information contained and expresses no solicitation to buy or sell futures, options on futures contracts, or OTC products. Commodity trading involves risks and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. Reference to and discussion of OTC products are made solely on behalf of INTL Hanley, LLC. Reproduction without authorization is forbidden. All rights reserved. —————————–—————————————————————————————————————————————————————————————————————————————————————————————————