Cme Group Inc. · NASDAQ:CME
Cme — Investor Presentation (June 2008)
15 slides from Cme's investor presentation, Jun 17, 2008
Slide 1: Fundamental Factors Affecting Agricultural Commodities
Fundamental Factors Affecting Agricultural Commodities Research & Product Development June 17, 2008
Slide 2: Outline
Outline • Review of key supply and demand factors affecting commodity markets • World stocks-to-use levels for corn, wheat and soybeans • Current events impacting corn, wheat and soybean prices • Impact of U.S. dollar depreciation on commodity prices • Index fund positions as a percentage of open in
Slide 3: Summary
Summary • Our Markets are Working • Many Factors Affect Commodity Prices • Basic Supply and Demand Principles • Weather and disease limiting supply • Growing demand from developing countries • Falling U.S. dollar • Biofuel production increases • Limited additional farmland in the short run • Restric
Slide 4: Agricultural Commodity Stocks Are Extremely Low
Agricultural Commodity Stocks Are Extremely Low World Current ratio versus the 10-year average ratio: Stocks-to-Use Ratio Corn at 13% vs. 22% 40% Wheat at 19% vs. 28% Soybean at 21% vs. 22% 35% Soybean Wheat Corn 30% 25% 21% 20% 19% 15% 13% 10% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Slide 5: Events Impacting Corn Prices Since June 2006
Events Impacting Corn Prices Since June 2006 Price $8.00 Global supply concerns increase, as consumption rises faster than production. World stocks-to-use ratio at historical low in 2007 at 14.2% and projected to decline further to 12.6% in 2008. Corn Price Battle for acreage due Prices stabilize du
Slide 6: Events Impacting Wheat Prices Since June 2006
Events Impacting Wheat Prices Since June 2006 Price $14.00 Australian crop cut almost in half for the second year in a row $10.50 due to drought. Late spring frost occurred in the U.S. Australian crop that damaged Wheat Price cut almost in half emerging crop. due to drought. 30 Day Avg $7.00 Spring
Slide 7: Events Impacting Soybean Prices Since June 2006
Events Impacting Soybean Prices Since June 2006 Price $18.00 Battle for 2008 acres and a very thin U.S. Wet and cool spring carry-out led prices to a historical high. turning into a hot and dry Following harvest, summer led to increased Soybean Price $15.00 prices continued to crop stress. In additi
Slide 8: Weak U.S. Dollar is a Key Driver of Increasing Commodity Prices
Weak U.S. Dollar is a Key Driver of Increasing Commodity Prices Cents per Bushel 600 Corn Prices Cents per Bushel 1400 Wheat Prices 1200 20% 500 1000 20% 400 800 600 300 400 200 200 Jan. 3, 2006 Mar. 31, 2008 Jan. 3, 2006 Mar. 31, 2008 Cents per Bushel 1600 Soybean Prices Nearby Corn Futures Nearby
Slide 9: Index Fund Net Long Positions Have Decreased in Corn Futures Market
Index Fund Net Long Positions Have Decreased in Corn Futures Market Index Net Long (Short) Positions Nearby Price as % of OI Corn Cents per Bushel 70% 700 60% 600 Though index fund 50% 500 positions as a percentage of open 40% 400 interest declined from 27% to 21% 30% 27% 300 over the last two years
Slide 10: Index Fund Net Long Positions Have Decreased in Wheat Futures Market
Index Fund Net Long Positions Have Decreased in Wheat Futures Market Index Net Long (Short) Positions Nearby Price as % of OI Wheat Cents per Bushel 100% 1,400 1,200 80% Though index fund positions as a 1,000 percentage of open 60% interest declined 49% 800 from 49% to 38% over the last two 38% 600
Slide 11: Index Fund Net Long Positions Have Remained Steady in Soybean Futures Market
Index Fund Net Long Positions Have Remained Steady in Soybean Futures Market Index Net Long (Short) Positions Nearby Price as % of OI Soybeans Cents per Bushel 70% 1,600 60% 1,400 Index fund positions 1,200 50% as a percentage of open interest 1,000 40% increased slightly from 24% to 26% 800 over th
Slide 12: Changes in Non-Commercial Positions in Corn Have Low Correlations to Price Changes
Changes in Non-Commercial Positions in Corn Have Low Correlations to Price Changes Corn Nearby Price Net Long (Short) Cents per Bushel 40% 700 600 Non-commercial net long positions 30% decreased as a 500 percent of open interest even as 400 the corn market 20% has rallied. The 300 correlation betwee
Slide 13: Changes in Non-Commercial Positions in Wheat Have Low Correlations to Price Changes
Changes in Non-Commercial Positions in Wheat Have Low Correlations to Price Changes Nearby Price Net Long (Short) Wheat Cents per Bushel 25% 1,200 Net positions for 20% 1,000 non-commercial participants have changed several 15% 800 times over this period from being 10% 600 net long to net short. The
Slide 14: Changes in Non-Commercial Positions in Soybeans Have Low Correlations to Price Changes
Changes in Non-Commercial Positions in Soybeans Have Low Correlations to Price Changes Nearby Price Net Long (Short) Soybeans Cents per Bushel 50% 1,600 1,400 Non-commercial 40% 1,200 participants continue to hold 1,000 net long positions 30% in soybeans. The 800 correlation 20% between changes 600
Slide 15: Summary
Summary When basic supply and demand principles are studied, it is clear that many factors affect commodity prices There is no evidence that the participation of non-commercials is adversely affecting grain and oilseed markets • Speculators help form efficient, liquid markets • Speculators have cont