8/7/2019 Texas Grain report

1/116

7(;$6*5$,175$163257$7,21678'

8/7/2019 Texas Grain report

2/116

7(;$6*5$,175$163257$7,21678'<

E\

6WHSKHQ)XOOHU7XQ+VLDQJ

8/7/2019 Texas Grain report

3/116

LL

8/7/2019 Texas Grain report

4/116

LLL

$&.12:/('*0(176,QGLYLGXDOVPDNLQJLPSRUWDQWFRQWULEXWLRQVWRWKLVVWXG\LQFOXGH6WHYH5RRSRIWKH7H[DV7UDQVSRUWDWLRQ,QVWLWXWH%HQ%RHUQHURIWKH7H[DV*UDLQDQG)HHG'HDOHUV$VVRFLDWLRQ0DWW%URFNPDQDWWKH7H[DV'HSDUWPHQWRI$JULFXOWXUH0LNH-RQHVRIWKH7H[DV5DLOURDG

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

(;(&87,9(6800$5

8/7/2019 Texas Grain report

5/116

LY

ZKHDWZHUHUHFHLYHGDW7H[DVORFDWLRQVLQ7KLVJUDLQZDVSULPDULO\GHVWLQHGIRU7H[DV*XOISRUWVDERXWSHUFHQWDQG1RUWK&HQWUDO7H[DVDUHJLRQWKDWLQFOXGHVWHUPLQDOHOHYDWRUVWKDWWUDQVKLSZKHDWSULRUWRLWVILQDOVKLSPHQWWR7H[DV*XOISRUWVDQGUHJLRQDOIORXUPLOOV7H[DVVLWHVUHFHLYHGDQHVWLPDWHGPLOOLRQEXVKHOVRIUDLOWUDQVSRUWHGJUDLQVRUJKXPLQZLWKPRVWGHVWLQHGWR7H[DV*XOISRUWV7H[DV0H[LFRERUGHUFURVVLQJVLWHVDQG7H[DVSRXOWU\

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

8/7/2019 Texas Grain report

6/116

Y

/DUJHTXDQWLWLHVRIUDLOWUDQVSRUWHGJUDLQDUHUHFHLYHGLQ7H[DVIURPRXWRIVWDWHRULJLQVIRUFRQVXPSWLRQE\LWVOLYHVWRFNSRXOWU\DQGGDLU\SRSXODWLRQVDQGIRUH[SRUWYLD*XOISRUWVDQG7H[DV0H[LFRERUGHUFURVVLQJVLWHVKHQFHWKHLPSRUWDQFHRIWKLVWUDQVSRUWDWLRQDQGLPSRUWHGJUDLQVXSSOLHVWR7H[DVDJULEXVLQHVV

7UHQGVLQ7H[DVIHHGJUDLQSURGXFWLRQVXJJHVWDFRQWLQXHGGHSHQGHQFHRQRXWRIVWDWH

JUDLQVXSSOLHV %HFDXVH0H[LFRLVDQLQFUHDVLQJO\LPSRUWDQWPDUNHWIRU7H[DVSURGXFHGJUDLQHIILFLHQWWUDQVSRUWDWLRQV\VWHPVDUHFULWLFDOIRU7H[DVFRPSHWLWLYHQHVVLQWKLVPDUNHW

0RWRUFDUULHUVDUHDFHQWUDOWRWUDQVSRUWDWLRQRI7H[DVIHHGJUDLQSURGXFWLRQFRUQJUDLQVRUJKXPVLQFHPRVWLVFRQVXPHGLQVWDWHEWKHSULPDU\WUDQVSRUWHURI7H[DVULFHSURGXFWLRQDQGFLPSRUWDQWIRU7H[DVZKHDWSURGXFWLRQ%XWEHFDXVHSULQFLSDOPDUNHWVDUHDWH[WHQGHGGLVWDQFHVWKHUHLVDGHSHQGHQFHRQUDLOURDGVWRDFFHVVWKHVHORQJKDXOPDUNHWV

7H[DVUXUDOKLJKZD\VDUHFULWLFDOIRUWKHPDUNHWLQJRI7H[DVJUDLQSURGXFWLRQ 7H[DVJUDLQKDQGOHUVEHOLHYHVHUYLFHRIIHUHGE\PRWRUVFDUULHUVLVVDWLVIDFWRU\ZKLOH

PDQ\DUHGLVVDWLVILHGZLWKVHUYLFHRIIHUHGE\&ODVVUDLOURDGV

&ODVVUDLOURDGFRPSDQLHVLQ7H[DVDUHVWULYLQJWRLPSURYHJUDLQVHUYLFHVFKHGXOHVZLWKYDU\LQJVXFFHVVKRZHYHUWUXFNVKDYHWKHFRPSHWLWLYHDGYDQWDJHRQWULSVOHVVWKDQPLOHVLQOHQJWK2QWKRVHURXWHVZKHUHWUDLQVUHPDLQFRPSHWLWLYHODUJHUJUDLQVKLSSHUVDUHDEOHWRWDNHDGYDQWDJHRIWKHORZHUUDWHVRIIHUHGRQXQLWDQGVKXWWOHWUDLQRSHUDWLRQVZKLOHVPDOOHUVKLSSHUVFDQWDNHXSJXDUDQWHHGGHOLYHU\SURJUDPVOLNH%16)VFHUWLILFDWHVRIWUDQVSRUWDWLRQ

5HFRPPHQGDWLRQV

7KH6WDWHVKRXOGVXSSRUWHIIRUWVWRHQKDQFHPXOWLPRGDOWUDQVSRUWDWLRQSODQQLQJLQ

7H[DVSDUWLFXODUO\WKRVHDFWLYLWLHVUHODWHGWRUDLORSHUDWLRQV6XFKVXSSRUWLVQHHGHGLQRUGHUWRDGGUHVVQRWRQO\WKHSUREOHPVWKDWDUHQRZIDFLQJUDLOSURYLGHUVRIDOOVL]HVEXWDOVRWKHLPSDFWVWKDWWKHVHSUREOHPVDUHKDYLQJRQWKHDJULFXOWXUDOVHFWRUZKLFKLVGHSHQGHQWRQHIILFLHQWWUDQVSRUWDWLRQ

7UXFNYROXPHVRQUXUDOKLJKZD\VPRYLQJJUDLQZLWKLQWKHGLVWULEXWLRQFKDLQZLOOFRQWLQXHWRJURZSUREDEO\VLJQLILFDQWO\7KLVJURZWKZLOOKDYHDQDGYHUVHLPSDFWRQWKHFRQGLWLRQRIUXUDOKLJKZD\VDQGEULGJHV7KHSUREOHPVKRXOGEHDGGUHVVHGE\HQKDQFLQJDFWLYLWLHVLQWKUHHDUHDVILUVWZLWKLQVWDWHWUDQVSRUWDWLRQSODQQLQJVHFRQGLQWKHIXQGLQJQHHGVIRUWKHUXUDOKLJKZD\DQGEULGJHV\VWHPDQGWKLUGLQWKHFRQVWUXFWLRQDQGFRQQHFWLYLW\RIWKH7H[DV7UXQN6\VWHP

$JULFXOWXUDODQGWUDQVSRUWDWLRQSODQQHUVQHHGPRUHH[WHQVLYHDQGWLPHO\GDWDRQJUDLQIORZVLQRUGHUWRIRFXVRQWKRVHDUHDVRIWKHVWDWHPRVWLQQHHGRIWUDQVSRUWDWLRQ

LQYHVWPHQWDQGVHUYLFHLPSURYHPHQW$GDWDEDVHVKRXOGEHGHVLJQHGVRDVWRDGGUHVVWKHDJULFXOWXUDOIORZVDVVRFLDWHGZLWKJUDLQFRWWRQDQGOLYHVWRFNLQRUGHUWRSURYLGHDFRPSUHKHQVLYHDSSURDFKWRUXUDOWUDQVSRUWDWLRQQHHGVLQ7H[DV7KLVVWXG\ZDVQRWGHVLJQHGWRDGGUHVVWKLVQHHGDQGIXUWKHUZRUNVKRXOGWKHUHIRUHEHXQGHUWDNHQWRGHWHUPLQHWKHW\SHRIGDWDEDVHKRZGDWDZRXOGEHFROOHFWHGDQGZKLFKDJHQF\VKRXOGPDQDJHDQGDGPLQLVWHULW

8/7/2019 Texas Grain report

7/116

YL

8/7/2019 Texas Grain report

8/116

YLL

7$%/(2)&217(176([HFXWLYH6XPPDU\ LLL*ORVVDU\RI7HUPV [L

,,QWURGXFWLRQ ,,7H[DV*UDLQ3URGXFWLRQDQG$VVRFLDWHG7UHQGV

&RUQ *UDLQ6RUJKXP :KHDW 5LFH

6XPPDU\RI7H[DV*UDLQ3URGXFWLRQDQG$VVRFLDWHG7UHQGV ,,,7H[DV*UDLQ&RQVXPSWLRQ3RSXODWLRQVDQG$VVRFLDWHG7UHQGV

)HG&DWWOH

+RJV %URLOHUV 'DLU\

6XPPDU\RI7H[DV*UDLQ&RQVXPSWLRQ3RSXODWLRQVDQG$VVRFLDWHG7UHQGV ,97H[DV*UDLQ)ORZ3DWWHUQV

+LVWRULF7H[DV*UDLQ)ORZ3DWWHUQV 5DLO7UDQVSRUWHG*UDLQ)ORZ3DWWHUQV,QYROYLQJ7H[DV

&RUQ *UDLQ6RUJKXP :KHDW 5LFH

7H[DV*UDLQ)ORZ3DWWHUQV%DVHGRQ6XUYH\ &RUQ *UDLQ6RUJKXP :KHDW 5LFH

97UHQGVLQ7UDQVSRUW0RGH8VH%DVHGRQ6XUYH\ 9,3HUFHLYHG3HUIRUPDQFHRI7UXFNDQG5DLO0RGHV%DVHGRQ6XUYH\ 9,,6XPPDU\RI*UDLQ7UDQVSRUWDWLRQLQ7H[DV 9,,,5DLOURDGVDQG0RWRU&DUULHU*UDLQ7UDQVSRUWDWLRQLQ7H[DV ,QWURGXFWLRQ &ODVV5DLOURDG5HVSRQVHVWR6XUYH\6HUYLFH,VVXHV %XUOLQJWRQ1RUWKHUQ6DQWD)H%16) 8QLRQ3DFLILF83

8/7/2019 Texas Grain report

9/116

YLLL

6KRUWOLQH5DLO6HUYLFH 7UXFNLQJ ,;(PHUJLQJ7UHQGVLQ7UDQVSRUWDWLRQ *UDLQ,VD*OREDOO\7UDGHG&RPPRGLW\

5DLO6HUYLFH )XWXUH5DLO,VVXHV &RQWLQXDO*URZWKLQ*UDLQ7UXFNLQJ *UDLQ7UDQVSRUWDWLRQ'DWDEDVH 5XUDO5DLO7UDQVSRUWDWLRQ'LVWULFWV ;2EVHUYDWLRQVDQG5HFRPPHQGDWLRQV 2EVHUYDWLRQV 5HFRPPHQGDWLRQV 5HIHUHQFHV

$SSHQGL[$5DLO7UDQVSRUWHG*UDLQ)ORZV,QYROYLQJ7H[DV $SSHQGL[%5DLOURDG5DWH(TXDWLRQV $SSHQGL[&6XUYH\,QVWUXPHQWDQG5HVSRQVHVWR6XUYH\ $SSHQGL['7UXFNLQJ6XUYH\5HVXOWV

8/7/2019 Texas Grain report

10/116

L[

/,672)7$%/(67DEOH (VWLPDWHG5DLOURDG6KLSPHQWVRI&RUQIURP9DULRXV6WDWHVWR7H[DV

%($5HJLRQV 7DEOH (VWLPDWHG,QWUDVWDWH5DLOURDG6KLSPHQWVRI7H[DV&RUQ 7DEOH (VWLPDWHG5DLOURDG6KLSPHQWVRI*UDLQ6RUJKXPIURP9DULRXV6WDWHV

WR7H[DV%($5HJLRQV 7DEOH (VWLPDWHG,QWUDVWDWH5DLOURDG6KLSPHQWVRI7H[DV6RUJKXP 7DEOH (VWLPDWHG5DLOURDG6KLSPHQWVRI:KHDWIURP9DULRXV6WDWHVWR7H[DV

%($5HJLRQV 7DEOH (VWLPDWHG,QWUDVWDWH5DLOURDG6KLSPHQWVRI7H[DV:KHDW 7DEOH (VWLPDWHG5DLOURDG6KLSPHQWVRI5RXJK5LFHIURP9DULRXV6WDWHVWR

7H[DV%($5HJLRQV 7DEOH (VWLPDWHG,QWUDVWDWH5DLOURDG6KLSPHQWVRI7H[DV5RXJK5LFH

7DEOH (VWLPDWHG3HUFHQWRI&RUQ6KLSPHQWVWR9DULRXV0DUNHWVE\&RXQWU\(OHYDWRUVDQG3HUFHQW6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI&RUQ5HFHLSWV6KLSPHQWVE\7HUPLQDO(OHYDWRUVIURPWR

9DULRXV0DUNHWVDQG3HUFHQW5HFHLYHG6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI&RUQ5HFHLSWVIURP9DULRXV6WDWHVE\7H[DV)HHG

0LOOVDQG3HUFHQW5HFHLYHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI*UDLQ6RUJKXP6KLSPHQWVWR9DULRXV0DUNHWVE\

&RXQWU\(OHYDWRUVDQG3HUFHQW6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI*UDLQ6RUJKXP5HFHLSWV6KLSPHQWVE\7HUPLQDO(OHYDWRUV

IURPWR9DULRXV0DUNHWVDQG3HUFHQW5HFHLYHG6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG5HFHLSWVRI*UDLQ6RUJKXPIURP9DULRXV6WDWHVE\7H[DV)HHG

0LOOVDQG3HUFHQW5HFHLYHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI:KHDW6KLSPHQWVWR9DULRXV0DUNHWVE\&RXQWU\

(OHYDWRUVDQG3HUFHQW6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI:KHDW5HFHLSWV6KLSPHQWVE\7HUPLQDO(OHYDWRUVIURPWR

9DULRXV0DUNHWVDQG3HUFHQW5HFHLYHG6KLSSHGE\7UXFNDQG5DLO 7DEOH (VWLPDWHG3HUFHQWRI5RXJK5LFH6KLSPHQWVWR9DULRXV0DUNHWVE\5LFH

'ULHUVDQG3HUFHQW6KLSSHGE\7UXFNDQG5DLO 7DEOH &RXQWU\(OHYDWRUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHV

LQ7UXFN6KLSPHQWV 7DEOH &RXQWU\(OHYDWRUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHVLQ

5DLOURDG6KLSPHQWV 7DEOH )HHG0LOOV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHVLQ7UXFN

*UDLQ5HFHLSWV 7DEOH )HHG0LOOV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHVLQ5DLOURDG

*UDLQ5HFHLSWV 7DEOH 5LFH'ULHUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHVLQ7UXFN6KLSPHQWV 7DEOH 5LFH'ULHUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ&KDQJHVLQ5DLOURDG6KLSPHQWV 7DEOH 3HUFHSWLRQVRI0RWRU&DUULHU3HUIRUPDQFHE\&RXQWU\(OHYDWRU2SHUDWRUV

%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

8/7/2019 Texas Grain report

11/116

[

7DEOH 3HUFHSWLRQVRI0RWRU&DUULHU3HUIRUPDQFHE\)HHG0LOO2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH 3HUFHSWLRQVRI0RWRU&DUULHU3HUIRUPDQFHE\7HUPLQDO2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH 3HUFHSWLRQVRI0RWRU&DUULHU3HUIRUPDQFHE\([SRUW(OHYDWRU2SHUDWRUVDQG5LFH

'ULHU2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW 7DEOH $YHUDJH3HUFHSWLRQVRI5DLOURDG3HUIRUPDQFHE\&RXQWU\(OHYDWRU2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH 3HUFHSWLRQVRI5DLOURDG3HUIRUPDQFHE\)HHG0LOO2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH 3HUFHSWLRQVRI5DLOURDG3HUIRUPDQFHE\([SRUW(OHYDWRU2SHUDWRUVDQG5LFH'ULHU2SHUDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH 3HUFHSWLRQVRI5DLOURDG3HUIRUPDQFHE\7HUPLQDO(OHYDWRUV%DVHGRQ3HUIRUPDQFH6FDOHZKHUH3RRUDQG([FHOOHQW

7DEOH &RXQWU\(OHYDWRUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ(IIHFWRI5DLOURDG6HUYLFHRQ)DUP%LG3ULFH

7DEOH )HHG0LOOV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ(IIHFWRI5DLOURDG6HUYLFHRQ*UDLQ%LG3ULFH 7DEOH 7HUPLQDO(OHYDWRUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ(IIHFWRI5DLOURDG

6HUYLFHRQ%LG3ULFH 7DEOH 5LFH'ULHUV5HVSRQVHWR4XHVWLRQV5HJDUGLQJ(IIHFWRI5DLOURDG6HUYLFH

RQ5RXJK5LFH3ULFHRU3URILW 7DEOH 7UHQGV,GHQWLILHGLQ5HFHQW5DLO5HVHDUFK 7DEOH 7KH6KULQNLQJ865DLOURDG1HWZRUNVLQ9DULRXV$JULFXOWXUDO6WDWHV 7DEOH /RQJ7HUP,PSOLFDWLRQVIRU86$JULFXOWXUH 7DEOH %($V5HIHUHQFHGLQ7KLV5HSRUW

/,672)),*85(6)LJXUH 7H[DV5HJLRQV )LJXUHD 3URGXFWLRQDQG/RFDWLRQRI7H[DV&RUQ )LJXUHE 3URGXFWLRQDQG/RFDWLRQRI7H[DV6RUJKXP )LJXUHF 3URGXFWLRQDQG/RFDWLRQRI7H[DV:KHDW )LJXUHG 3URGXFWLRQDQG/RFDWLRQRI7H[DV5LFH )LJXUHD 0DUNHWLQJVDQG/RFDWLRQRI7H[DV)HG&DWWOH )LJXUHE 0DUNHWLQJVDQG/RFDWLRQRI7H[DV+RJ3URGXFWLRQ )LJXUHF 3URGXFWLRQDQG/RFDWLRQRI%URLOHUVLQ7H[DV )LJXUHG 4XDQWLW\DQG/RFDWLRQRI0LON&RZVLQ7H[DV )LJXUHD 7H[DV*UDLQ)DFLOLWLHV,QYROYHGLQ7UDGHRI&RUQ*UDLQ6RUJKXPDQG

:KHDWZLWK3ULQFLSDO,QWHUIDFLOLW\*UDLQ)ORZV )LJXUHE 7H[DV5LFH)DFLOLWLHVZLWK3ULQFLSDO,QWHUIDFLOLW\)ORZV )LJXUH %XUHDXRI(FRQRPLF$QDO\VLV%($$UHDV )LJXUH 86*UDLQDQG2LOVHHG0RGDO6KDUHV )LJXUH &ODVV5DLOURDG3HUIRUPDQFH )LJXUH 5DLOURDG6KDUHRI86&RUQ6R\EHDQDQG:KHDW6KLSPHQWV )LJXUH 7\SHVRI6KLSPHQW3DWWHUQVIURP&RXQWU\(OHYDWRUVWR+RXVWRQ7H[DV

8/7/2019 Texas Grain report

12/116

[L

*/266$5

8/7/2019 Texas Grain report

13/116

[LL

VHUYHDVDVVHPEO\SRLQWVIRUWKHUHFHLYLQJZHLJKLQJVWRULQJDQGWUDQVIHUULQJRIIDUPHUSURGXFHGJUDLQ

([SRUWHOHYDWRUV)DFLOLWLHVWKDWWUDQVVKLSWUXFNUDLODQGEDUJHFDUULHGJUDLQIURPLQODQGVLWHVWREXONFDUULHUVIRUPDULWLPHWUDQVSRUW

)HHGPLOOV)DFLOLWLHVWKDWSURFHVVJUDLQIRUOLYHVWRFNGDLU\DQGSRXOWU\FRQVXPSWLRQ

)ORXUPLOOV)DFLOLWLHVWKDWSURFHVVZKHDWWRSURGXFHIORXUIRUKXPDQFRQVXPSWLRQ

,QWHUPRGDO7KHXVHRIWZRRUPRUHPRGHVWRFRPSOHWHWKHPRYHPHQWRIDVKLSPHQWRIIUHLJKWRUDSDVVHQJHUWULSIURPRULJLQWRGHVWLQDWLRQ

,QWHUVWDWHVKLSPHQW7UDIILFWKDWRULJLQDWHVLQRQHVWDWHDQGWHUPLQDWHVLQDQRWKHU

,QWUDVWDWHVKLSPHQW7UDIILFWKDWRULJLQDWHVDQGWHUPLQDWHVLQWKHVDPHVWDWH

/LQHKDXOUDLOURDG$UDLOURDGSULQFLSDOO\LQYROYHGLQWKHPRYHPHQWRIIUHLJKWIURPRQHWRZQRUFLW\WRDQRWKHU

/RDGFHQWHU$FHQWUDOL]HGORFDWLRQZKHUHJUDLQFDQEHVWRUHGDQGORDGHGUDSLGO\RQWRUDLOFDUV

6XFKFHQWHUVFUHDWHDGYDQWDJHVRIVFDOHDQGDOORZXQLWDQGVKXWWOHWUDLQVWRRSHUDWHDWPD[LPXPHIILFLHQF\

5LFHGULHUV)DFLOLWLHVWKDWGU\QHZO\KDUYHVWHGULFHJUHHQULFHVRWKDWLWPD\EHVWRUHG

5LFHPLOOV)DFLOLWLHVWKDWSURFHVVURXJKULFHIRUKXPDQFRQVXPSWLRQ

5RXJKULFH1HZO\KDUYHVWHGULFHWKDWKDVEHHQGULHG

5XUDO5DLO'LVWULFWV5XUDO5DLO7UDQVSRUWDWLRQ'LVWULFWVDUHDVSHFLDOJRYHUQPHQWHQWLW\DXWKRUL]HGXQGHUWKHUDLOGLVWULFWODZSDVVHGLQ$UWLFOHFRI7H[DV5HYLVHG&LYLO6WDWXHV$PRQJRWKHUFKDUDFWHULVWLFVWKHVHGLVWULFWVFDQEHHVWDEOLVKHGE\RQHRUPRUHFRXQWLHVKDYHHPLQHQWGRPDLQSRZHUFDQFRQVWUXFWQHZUDLOOLQHVRUDFTXLUHDQG

UHKDELOLWDWHH[LVWLQJUDLOOLQHVFDQEHXVHGWRGHYHORSUDLOVHUYHGLQGXVWULDOSDUNVLQWHUPRGDOIDFLOLWLHVDQGWUDQVORDGLQJIDFLOLWLHVFDQLVVXHUHYHQXHERQGVWRILQDQFHDFTXLVLWLRQVDQGFRQVWUXFWLRQPXVWFKDUJHUHQWVWKDWDUHVXIILFLHQWWRPDLQWDLQWKHLUSURSHUWLHVDQGSD\RIIWKHLUERQGVDQGFDQQRWOHY\RUFROOHFWDGYDORUHPWD[HV7KHUHDUHFXUUHQWO\HOHYHQUDLOGLVWULFWVHVWDEOLVKHGLQ7H[DV

6KRUWOLQHUDLOURDG$UDLOURDGFRPSDQ\ZKRVHRSHUDWLRQDOVFRSHLVOHVVWKDQPLOHV

6KXWWOHWUDLQ$KHDY\XQLWWUDLQZLWKWRQFDUVDQGWKHODWHVWORFRPRWLYHRSHUDWLQJRQVFKHGXOHVWKDWUHTXLUHIDVWWXUQDURXQG6KXWWOHWUDLQVDUHPRVWHIILFLHQWZKHQURXWHGWKURXJKORDGFHQWHUV

67%6XUIDFH7UDQVSRUWDWLRQ%RDUGWKHIHGHUDOERG\FKDUJHGZLWKHQIRUFLQJDFWVRI&RQJUHVV

DIIHFWLQJLQWHUVWDWHUDLOWUDIILF

6:$3V$%XUOLQJWRQ1RUWKHUQ6DQWD)H%16)SURJUDPZKHUHE\WKHFRPSDQ\OHDVHVDSULYDWHO\RZQHGUDLOFDUDWPDUNHWUDWHVDQGEULQJVLWLQWRLWVV\VWHPWUHDWLQJLWDVDFRQWUROOHGFDU%16)FRPPLWVWRDIL[HGWXUQDURXQGIRUWKHSHULRGRIWKHOHDVHDQGWKHFXVWRPHUFRPPLWVWRORDGLQJLW/LNH&27V6:$3VFDQEHWUDGHGRQWKHVHFRQGDU\PDUNHW

8/7/2019 Texas Grain report

14/116

[LLL

7HUPLQDOHOHYDWRU$ODUJHHOHYDWRUZDUHKRXVHIDFLOLW\ZLWKWKHFDSDFLW\WRWUDQVIHUJUDLQWRUDLOFDUVEDUJHVRUVKLSVIRUWUDQVSRUWWRGRPHVWLFRUIRUHLJQPDUNHWV7HUPLQDOHOHYDWRUVUHFHLYHPXFKRIWKHLUJUDLQUHFHLSWVIURPVPDOOHUFRXQWU\HOHYDWRUV

7H[DV7UXQN6\VWHP$KLJKZD\V\VWHPFRQVLVWLQJRIPLOHVWKDWLVSDUWRIDQDQQXDOO\UHYLHZHG\HDUSODQIRUWKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQWRSURJUDPKLJKZD\

SURMHFWV7KHSULPDU\JRDORIWKH7UXQN6\VWHPLVWRPRUHHIILFLHQWO\PRYHSHRSOHE\XSJUDGLQJKLJKZD\VRQWKHV\VWHPIURPWZRODQHVWRGLYLGHGKLJKZD\V7KLVKLJKZD\V\VWHPILUVWDSSURYHGLQLQFOXGHVDQGFRPSOHPHQWVWKH,QWHUVWDWH+LJKZD\6\VWHP

OEUDLO7KHPD[LPXPJURVVZHLJKWRIUDLOFDUVRQUDLODERXWWRQV7KLVLVQRWWKHZHLJKWRIWKHUDLO

8QLWWUDLQV$QHQWLUHXQLQWHUUXSWHGORFRPRWLYHDQGFDUVHWXVXDOO\FRPSULVLQJRYHUJUDLQFDUV

:D\ELOO7KHGRFXPHQWUHODWLQJWRDVSHFLILFIUHLJKWVKLSPHQW7KHGRFXPHQWW\SLFDOO\VKRZVWKHIRUZDUGLQJDQGUHFHLYLQJVWDWLRQVWKHQDPHRIWKHFRQVLJQRUDQGFRQVLJQHHWKHFDU

LQLWLDOVDQGQXPEHUWKHURXWLQJWKHGHVFULSWLRQDQGZHLJKWRIWKHFRPPRGLW\LQVWUXFWLRQVIRUVSHFLDOVHUYLFHVWKHUDWHWRWDOFKDUJHVDGYDQFHVDQGZD\ELOOUHIHUHQFHIRUSUHYLRXVVHUYLFHVDQGWKHDPRXQWSUHSDLG

8/7/2019 Texas Grain report

15/116

[LY

8/7/2019 Texas Grain report

16/116

7(;$6*5$,175$163257$7,21678'

8/7/2019 Texas Grain report

17/116

VRUJKXPSURGXFWLRQWHQGVWREHJHRJUDSKLFDOO\GLVSHUVHGUHODWLYHWRFRUQSURGXFWLRQ/HDGLQJSURGXFWLRQUHJLRQVLQFOXGHWKH+LJK3ODLQVSHUFHQW1RUWKDQG6RXWK&HQWUDO7H[DVSHUFHQW/RZHU9DOOH\SHUFHQWDQG8SSHU&RDVWSHUFHQW)LJXUHE$ERXWKDOIRIWKH+LJK3ODLQVVRUJKXPSURGXFWLRQLVLUULJDWHGZKLOHFRPSDUDWLYHO\PRGHVWSRUWLRQVDUHLUULJDWHGLQUHPDLQLQJ7H[DVUHJLRQVH[FHSWLQWKH/RZHU9DOOH\ZKHUHRQHWKLUGRIWKHSURGXFWLRQLV

LUULJDWHG>VHH)LJXUH@:KHDW7H[DVZKHDWSURGXFWLRQH[KLELWHGQRWUHQGGXULQJWKHVDIWHUGHFOLQLQJDERXWRQHWKLUGGXULQJWKHV6WDWHZLGHZKHDWSURGXFWLRQDYHUDJHGDERXWPLOOLRQEXVKHOVLQ/HDGLQJSURGXFWLRQUHJLRQVLQFOXGHWKH+LJK3ODLQVSHUFHQW/RZ3ODLQVSHUFHQWDQGWKH1RUWK7H[DVSHUFHQWUHJLRQV)LJXUHF$ERXWKDOIRIWKH+LJK3ODLQVZKHDWSURGXFWLRQLVLUULJDWHGZLWKPRGHVWVKDUHVRISURGXFWLRQLUULJDWHGLQUHPDLQLQJ7H[DVUHJLRQV5LFH

7H[DVULFHSURGXFWLRQLQDYHUDJHGPLOOLRQKXQGUHGZHLJKWFZW5HFHQWSURGXFWLRQOHYHOVDUHDERXWSHUFHQWRI7H[DVULFHSURGXFWLRQOHYHOVDWWDLQHGGXULQJWKHHDUO\VDQGDERXWSHUFHQWRI7H[DVULFHSURGXFWLRQOHYHOVDWWDLQHGLQWKHHDUO\V)LJXUHG7H[DVULFHSURGXFWLRQLVFRQFHQWUDWHGLQWKH8SSHU&RDVWSHUFHQWDQG6RXWK&HQWUDOSHUFHQWSURGXFWLRQUHJLRQV6XPPDU\RI7H[DV*UDLQ3URGXFWLRQDQG$VVRFLDWHG7UHQGV

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

,,,7H[DV*UDLQ&RQVXPSWLRQ3RSXODWLRQVDQG$VVRFLDWHG7UHQGV 7KLVVHFWLRQGHVFULEHVWKHPDMRUJUDLQFRQVXPLQJSRSXODWLRQVLQ7H[DVDQGWKHLUFKDQJHVRYHUWLPH7H[DVLVWKHOHDGLQJSURGXFHURIIHGFDWWOHLQWKH8QLWHG6WDWHVWKHVWDWHDOVRUDQNVVL[WKLQEURLOHUSURGXFWLRQDQGPLONFRZQXPEHUVVHYHQWKLQHJJSURGXFWLRQDQGVHYHQWHHQWKLQKRJDQGSLJQXPEHUV,QDGGLWLRQ7H[DVOHDGVWKHQDWLRQLQEHHIFRZVKHHSDQGODPESRSXODWLRQV

8/7/2019 Texas Grain report

18/116

)HG&DWWOH

)HGFDWWOHSURGXFWLRQLQ7H[DVLQFUHDVHGE\DERXWSHUFHQWGXULQJWKHVDQGVLPLODUO\E\DERXWSHUFHQWGXULQJWKHGHFDGHRIWKHV)LJXUHD,QDQG7H[DVIHHGORWVPDUNHWHGDERXWPLOOLRQKHDGRIIHGFDWWOH1HDUO\SHUFHQWRI7H[DVIHGFDWWOHSURGXFWLRQLV

ORFDWHGLQWKH+LJK3ODLQV)LJXUHD3UHFLVHHVWLPDWHVRIJUDLQFRQVXPSWLRQDUHGLIILFXOWJLYHQWKDWJUDLQSULFHVIHGFDWWOHSULFHVDQGRWKHUIDFWRUVLQIOXHQFHJUDLQFRQVXPSWLRQ$VXUYH\RIIHHGORWVDQGQXWULWLRQLVWVXQGHUWDNHQGXULQJWKHPLGVHVWLPDWHGWKDWFDWWOHIHGLQWKH7H[DV+LJK3ODLQVFRQVXPHGDERXWOEEXRIJUDLQKHDGZKLOH:HVWDQG6RXWK7H[DVIHGFDWWOHJUDLQFRQVXPSWLRQZDVHVWLPDWHGDWOEEXDQGOEEXUHVSHFWLYHO\%DVHGRQWKHVHFRQVXPSWLRQSDUDPHWHUVDQGRQIHGFDWWOHPDUNHWLQJVDQQXDOJUDLQFRQVXPSWLRQLVHVWLPDWHGWREHDERXWPLOOLRQEXVKHOV%HHIFRZVVWRFNHUVDQGIHHGHUVLQ7H[DVDUHHVWLPDWHGWRDQQXDOO\FRQVXPHDERXWPLOOLRQEXVKHOVRIJUDLQ&RUQDQGJUDLQVRUJKXPDUHWKHSULQFLSDOJUDLQVXVHGWRIDWWHQFDWWOHWKRXJKGXULQJVHOHFWHGSHULRGVZKHDWPD\EHLQFOXGHGLQWKHDQLPDOVUDWLRQ

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

8/7/2019 Texas Grain report

19/116

6XPPDU\RI7H[DV*UDLQ&RQVXPSWLRQ3RSXODWLRQVDQG$VVRFLDWHG7UHQGV

,QVXPPDU\7H[DVLQFOXGHVLPSRUWDQWJUDLQFRQVXPLQJSRSXODWLRQVWKDWDQQXDOO\FRQVXPHLQH[FHVVRIPLOOLRQEXVKHOVRIJUDLQ5DWLRQVRIWKHFRQVXPLQJSRSXODWLRQVLQFOXGHVLJQLILFDQW

TXDQWLWLHVRIFRUQDQGJUDLQVRUJKXP7KHPRVWLPSRUWDQWFRQVXPLQJSRSXODWLRQVDUHORFDWHGLQWKH+LJK3ODLQVDQG(DVW7H[DVUHJLRQVZKLFKLQFOXGHFRPSDUDWLYHO\ODUJHQXPEHUVRIIHGFDWWOHSRXOWU\PLONFRZVDQGKRJV2WKHU7H[DVDUHDVZLWKVXEVWDQWLDOJUDLQFRQVXPLQJSRSXODWLRQVLQFOXGHWKH1RUWKDQG6RXWK&HQWUDOUHJLRQV)LJXUH

,97H[DV*UDLQ)ORZ3DWWHUQV7KLVVHFWLRQLGHQWLILHVQRWRQO\LPSRUWDQWLQWUDDQGLQWHUVWDWHJUDLQWUDQVSRUWDWLRQFRUULGRUVEXWDOVRUDLODQGPRWRUFDUULHUXVHRQWKHVHFRUULGRUV$UHYLHZRISUHYLRXVJUDLQIORZVWXGLHVFRPPRGLW\IORZVWXGLHVDQGGDWDEDVHVUHYHDOHGRQO\PRGHVWLQIRUPDWLRQRQFXUUHQWJUDLQIORZSDWWHUQVDQGXWLOL]HGWUDQVSRUWDWLRQPRGHV%HFDXVHFXUUHQWFRPPRGLW\IORZVWXGLHVW\SLFDOO\

DJJUHJDWHQXPHURXVFRPPRGLWLHVDQGRIWHQIRFXVRQRQHPRGHLWLVGLIILFXOWWRLGHQWLI\JUDLQPRYHPHQWVDQGPRGDOVSOLWV*KDUHLE/DPNLQDQG%XUNH86'27&RQVHTXHQWO\WKHSHUVSHFWLYHRQ7H[DVJUDLQIORZSDWWHUQVDQGXWLOL]HGWUDQVSRUWPRGHVZDVREWDLQHGE\UHYLHZLQJVWXGLHVFDUULHGRXWLQWKHVE\DQDO\]LQJWKH0DVWHU5DLOURDG:D\ELOOILOHIRUDQGE\H[DPLQLQJUHVXOWVRIDVXUYH\GLVWULEXWHGWR7H[DVJUDLQKDQGOHUVLQVXPPHU)LJXUHDLGHQWLILHVJUDLQKDQGOLQJILUPVLQ7H[DVDQGWKHDQWLFLSDWHGJUDLQIORZVDPRQJWKHVHILUPV7KHVFKHPDWLFLVJHQHUDOO\DSSOLFDEOHWRIHHGJUDLQVFRUQVRUJKXPDQGZKHDW)HHGJUDLQVDUHSULPDULO\GHVWLQHGIRUOLYHVWRFNGDLU\SRXOWU\FRQVXPSWLRQDQGH[SRUWZKLOHPRVWZKHDWPRYHVWRIORXUPLOOVIRUXOWLPDWHKXPDQFRQVXPSWLRQDQGH[SRUW)LJXUHD)LJXUHESURYLGHVDSHUVSHFWLYHRQ7H[DVULFHKDQGOLQJILUPV0RVW7H[DVULFHLVWUDQVSRUWHGIURPIDUPWRQHDUE\GULHUVIRUUHGXFWLRQRIPRLVWXUHFRQWHQWDIWHUGU\LQJWKHULFHNHUQHOEHFDXVHLWVWLOOLQFOXGHVLWVKXOOLVUHIHUUHGWRDVURXJKULFH5RXJKULFHPD\EHGLUHFWO\H[SRUWHGWRSRUWHOHYDWRURUWRWKH0H[LFRERUGHURULWPD\EHWUDQVSRUWHGWRDPLOOIRUSURFHVVLQJ7KHPLOOHGULFHLVH[SRUWHGRUPRYHGLQWRGRPHVWLFFRQVXPSWLRQFKDQQHOV)LJXUHE

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

8/7/2019 Texas Grain report

20/116

WUDQVSRUWHGE\UDLOURDGVZLWKPRVWRIWKHFRUQH[SRUWVRULJLQDWLQJLQWKH+LJK3ODLQV$ERXWSHUFHQWRI7H[DVHOHYDWRUVFRUQVKLSPHQWVWR7H[DVIHHGPLOOVZHUHFDUULHGE\UDLOURDGV7KHPLGV7H[DVJUDLQVRUJKXPIORZVWXG\VKRZHGWKDWQHDUO\KDOIRI7H[DVHOHYDWRUVVRUJKXPVKLSPHQWVZHUHWR7H[DVH[SRUWHOHYDWRUVKRZHYHUWKHSRUWLRQGHVWLQHGIRUWKHH[SRUW

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

8/7/2019 Texas Grain report

21/116

&RUQ7DEOHLGHQWLILHVUDLOWUDQVSRUWHGFRUQIORZVIURPLGHQWLILHGVWDWHVWR%($UHJLRQVLQ7H[DVLQ,Q%($UHJLRQVLQ7H[DVUHFHLYHGRYHUPLOOLRQWRQVPLOOLRQEXVKHOVRIFRUQ7KLVFRUQRULJLQDWHGLQWZHOYHGLIIHUHQWVWDWHVLQFOXGLQJ7H[DVDQGZDVGHVWLQHGWR

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

SRXOWU\SRSXODWLRQV*RQ]DOHV&RXQW\DQGDOVRLQFOXGHV/DUHGRWKHSULQFLSDOJDWHZD\IRURYHUODQGFRUQH[SRUWVWR0H[LFR$UHYLHZRIWKH:D\ELOOGDWDVKRZHGDVLPLODUJHRJUDSKLFDOGLVWULEXWLRQRI7H[DVFRUQUHFHLSWVVKLSPHQWVKRZHYHULQYROYHGIORZVZHUHDERXWWZRWKLUGVRIWKRVHLQ,QUDLOURDGVWUDQVSRUWHGDERXWPLOOLRQWRQVPLOOLRQEXVKHOVRIFRUQIURP7H[DVRULJLQVWR7H[DVGHVWLQDWLRQVLQWUDVWDWH7DEOH7KHSULQFLSDOLQWUDVWDWHFRUQPRYHPHQWVLQYROYHGVKLSPHQWVIURP%($WR%($PLOOLRQWRQVIURP%($WR%($PLOOLRQWRQVDQGIURP%($WR%($PLOOLRQWRQV%($+LJK3ODLQVUHFHLYHGDERXWWZRWKLUGVRIDOOUDLOWUDQVSRUWHGFRUQUHFHLSWVZKLOH%($ZDVWKHGHVWLQDWLRQIRUDERXWSHUFHQWRIUHFHLSWV%($VDQGVKLSSHGDSSUR[LPDWHO\DQGSHUFHQWUHVSHFWLYHO\RIDOOLQWUDVWDWHFRUQVKLSPHQWV7DEOHV$$$$DQG$$SSHQGL[$SURYLGHPRUHGHWDLOHGUDLOWUDQVSRUWDWLRQLQIRUPDWLRQDERXWPDMRUFRUQPRYHPHQWV,QUDLOURDGVVKLSSHGDQHVWLPDWHGPLOOLRQWRQVPLOOLRQEXVKHOVRIFRUQIURPFHQWUDO1HEUDVND%($WRWKH7H[DV+LJK3ODLQV%($7DEOH$7KLVDPRXQWZDVWKHODUJHVWLQWHUUHJLRQDOFRUQIORZLQYROYLQJD7H[DVUHJLRQLQ$SSUR[LPDWHO\WZRWKLUGVSHUFHQWRIWKLVPRYHPHQWLQYROYHGFDUVSHUVKLSPHQWWKHDYHUDJHUDLOUDWHIRUWKHVHVKLSPHQWVZDVWRQEX$QHVWLPDWHGDQGSHUFHQWRIVKLSPHQWVLQYROYHGDQG!FDUVUHVSHFWLYHO\7KHDYHUDJHUDWHIRUDOOVKLSPHQWVZDVWRQ7DEOHV$$$DQG$VKRZVLPLODULQIRUPDWLRQIRUDGGLWLRQDOFRUQVKLSPHQWVWR7H[DVGHVWLQDWLRQV

*UDLQ6RUJKXP,QDQHVWLPDWHGPLOOLRQWRQVPLOOLRQEXVKHOVRIUDLOWUDQVSRUWHGJUDLQVRUJKXPZHUHUHFHLYHGDW7H[DV%($VIURPILYHVWDWHVLQFOXGLQJ7H[DV7DEOH7KHSULQFLSDOVRUJKXPRULJLQDWLQJVWDWHVZHUH.DQVDVSHUFHQW7H[DVSHUFHQWDQG1HEUDVNDSHUFHQW$ERXWRQHWKLUGSHUFHQWRIWKHVKLSPHQWVZHUHWR%($DUHJLRQKDYLQJDQLPSRUWDQWSRXOWU\SRSXODWLRQ*RQ]DOHV&RXQW\DQGDPDMRUERUGHUFURVVLQJLQWR0H[LFR/DUHGR%($VDQG

8/7/2019 Texas Grain report

22/116

UHFHLYHGDQHVWLPDWHGDQGSHUFHQWRIVRUJKXPUHFHLSWVUHVSHFWLYHO\7KHVHWZRUHJLRQVLQFOXGHSRUWVDW+RXVWRQ*DOYHVWRQ%HDXPRQW1RUWK7H[DVSRUWVDQGSRXOWU\SRSXODWLRQV%($ZKLFKVXUURXQGVWKH&RUSXV&KULVWLSRUWUHFHLYHGLQDQHVWLPDWHGPLOOLRQWRQVRIUDLOWUDQVSRUWHGVRUJKXP7KH86'$HVWLPDWHVVRUJKXPH[SRUWVIURP1RUWKDQG6RXWK7H[DVSRUWVWREHDQGPLOOLRQWRQVUHVSHFWLYHO\DERXWSHUFHQWRIWKHWRWDO86

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

8/7/2019 Texas Grain report

23/116

,QJHRJUDSKLFDOZKHDWGLVWULEXWLRQSDWWHUQVZHUHVLPLODUWRWKRVHLQKRZHYHUIORZVZHUHDERXWSHUFHQWRIIORZV$QHVWLPDWHGPLOOLRQWRQVPLOOLRQEXVKHOVRILQWHUVWDWHZKHDWVKLSPHQWVRULJLQDWHGLQ7H[DVGXULQJ$SSUR[LPDWHO\SHUFHQWRIWKHRXWRIVWDWHVKLSPHQWVRULJLQDWHGLQWKH

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

8/7/2019 Texas Grain report

24/116

$SSHQGL[%FRQWDLQVDQHFRQRPHWULFDQDO\VLVRIIDFWRUVDIIHFWLQJUDLOURDGUDWHVLQ7H[DV7KHDQDO\VLVHPSOR\VGDWDIURPWKH0DVWHU5DLOURDG:D\ELOOILOH7H[DV*UDLQ)ORZ3DWWHUQV%DVHGRQ6XUYH\

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

8/7/2019 Texas Grain report

25/116

*UDLQ6RUJKXP5HVSRQGHQWVWRWKHFRXQWU\HOHYDWRUVXUYH\LQWKH+LJK3ODLQVSHUFHQWSURGXFWLRQVKDUHLQGLFDWHWKDWDERXWSHUFHQWRIWKHLUVRUJKXPVKLSPHQWVZHQWWR7H[DVIHHGHUVDQGWKDWDOOVXFKVKLSPHQWVZHUHWUDQVSRUWHGE\WUXFN7DEOH6LPLODUO\FRXQWU\HOHYDWRUVLQWKH/RZ3ODLQV

(GZDUGV3ODWHDX1RUWK&HQWUDODQG8SSHU&RDVWUHJLRQVRI7H[DVVKLSSHGLPSRUWDQWTXDQWLWLHVRIVRUJKXPE\WUXFNWR7H[DVIHHGHUV7H[DV*XOISRUWVDQG0H[LFRZHUHLPSRUWDQWGHVWLQDWLRQPDUNHWVIRUFRXQWU\HOHYDWRUVLQWKHHDVWHUQKDOIRI7H[DV,QWKH1RUWKDQG6RXWK&HQWUDOUHJLRQVSHUFHQWQHDUO\RQHIRXUWKRIFRXQWU\HOHYDWRUVVRUJKXPVKLSPHQWVZHQWWR7H[DV*XOISRUWVZKLOHDQHVWLPDWHGSHUFHQWRI8SSHU&RDVWSHUFHQWVKLSPHQWVZHQWWR7H[DV*XOISRUWV6RXWK&HQWUDOHOHYDWRUVLQGLFDWHWKDWDERXWSHUFHQWRIVRUJKXPVKLSPHQWVZHQWWR0H[LFRZKLOHWKH/RZHU9DOOH\SHUFHQWHOHYDWRUVHVWLPDWHWKDWDERXWSHUFHQWRIVRUJKXPVKLSPHQWVZHQWWR0H[LFR,QJHQHUDOWUXFNVZHUHWKHSULPDU\WUDQVSRUWHUVRIVRUJKXPWR*XOISRUWVDQG0H[LFRWKRXJKWKHDFWXDOPRGDOVSOLWYDULHVE\UHJLRQ,Q1RUWK&HQWUDO7H[DVWKHWUXFNDQGUDLOPRGHVWUDQVSRUWVLPLODUTXDQWLWLHVWR*XOISRUWVZKLOHUDLOZDVHVWLPDWHGWRWUDQVSRUWSHUFHQWRIWKHUHJLRQVVRUJKXPH[SRUWVWR0H[LFR,QWKH6RXWK&HQWUDO8SSHU

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

8/7/2019 Texas Grain report

26/116

HOHYDWRUVLQWKHHDVWHUQKDOIRI7H[DVLQGLFDWHWKDWDERXWKDOIRIWKHLUZKHDWUHFHLSWVRULJLQDWHLQ7H[DVZLWKRWKHUNQRZQVXSSOLHVFRPLQJIURP2NODKRPDSHUFHQWDQG.DQVDVSHUFHQW7DEOH)URPWRSHUFHQWRIWKHVHIORZVZHUHWUDQVSRUWHGE\WUXFN7HUPLQDOHOHYDWRUVLQ(DVW7H[DVVKLSSHGDERXWSHUFHQWRIWKHLUZKHDWVKLSPHQWWR*XOISRUWVDQGSHUFHQWWRIORXUPLOOV$OOVKLSPHQWVWR*XOISRUWVZHUHUDLOFDUULHGZKLOHDOOVKLSPHQWVWRIORXUPLOOVZHUH

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

8/7/2019 Texas Grain report

27/116

UHDVRQIRULQFUHDVHGWUXFNXVHZKLOHUDLODEDQGRQPHQWDQGFKDQJHLQPDUNHWORFDWLRQZHUHRIIHUHGE\DQGSHUFHQWRIWKHUHVSRQGHQWVUHVSHFWLYHO\DVWKHUHDVRQVIRULQFUHDVHGWUXFNXVDJH)RUWKRVHZKRKDGGHFUHDVHGWKHLUWUXFNVKLSPHQWVZRUVHWUXFNVHUYLFHDQGEHWWHUUDLOVHUYLFHZHUHFLWHGE\DQGSHUFHQWRIWKHUHVSRQGHQWVUHVSHFWLYHO\DVWKHUHDVRQVIRUWKHGHFUHDVHGWUXFNXVH

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

)HHGPLOOVXUYH\UHVXOWVDOVRVXJJHVWDQLQFUHDVHGXVHRIWUXFNDQGDGHFUHDVHGXVHRIUDLOURDGVLQJUDLQSURFXUHPHQWZKLOHULFHGULHUUHVXOWVVHHPWRVXJJHVWWKHRSSRVLWH7DEOHVDQG+RZHYHUIRUERWKVXUYH\VWKHUHWXUQVDUHVSDUVHFRQVHTXHQWO\VRPHFDXWLRQLQLQWHUSUHWDWLRQLVUHTXLUHG

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

8/7/2019 Texas Grain report

28/116

7DEOHLQFOXGHVDYHUDJHSHUIRUPDQFHVFRUHVRIIHUHGE\7H[DVFRXQWU\HOHYDWRURSHUDWRUVIRUUDLOURDGVHUYLFHLQILYH7H[DVUHJLRQVVWDWHZLGHDYHUDJHSHUIRUPDQFHVFRUHVDUHDOVRSURYLGHG,QJHQHUDOWKHVFRUHVVXSSOLHGE\FRXQWU\HOHYDWRUVUHJDUGLQJUDLOURDGSHUIRUPDQFHZHUHFRQVLGHUDEO\ORZHUWKDQWKRVHRIIHUHGIRUPRWRUFDUULHUSHUIRUPDQFH2QO\WKUHHRIWKHUDLOURDGVVWDWHZLGHSHUIRUPDQFHVFRUHVZHUHQHDUWKH\LQFOXGHHTXLSPHQWTXDOLW\ZLWKDVFRUHRI

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

8/7/2019 Texas Grain report

29/116

WKHVHIRXUJUDLQV&RUQSURGXFWLRQLQUHFHQW\HDUVKDVUHSUHVHQWHGDERXWSHUFHQWRIWKHWRWDOSURGXFWLRQRIWKHVHIRXUJUDLQVZKLOHJUDLQVRUJKXPZKHDWDQGULFHKDYHUHSUHVHQWHGDERXWDQGSHUFHQWUHVSHFWLYHO\RISURGXFWLRQ&RUQDQGJUDLQVRUJKXPDUHIHHGJUDLQVWKDWDUHODUJHO\FRQVXPHGE\OLYHVWRFNSRXOWU\GDLU\SRSXODWLRQVZKLOHZKHDWDQGULFHDUHIRRGJUDLQVWKDWDUHSULPDULO\GHVWLQHGIRUKXPDQFRQVXPSWLRQ*UDLQFRQVXPSWLRQE\WKH

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

8/7/2019 Texas Grain report

30/116

RIIHUHGE\WUXFNVDQGUDLOURDGV5HVXOWVVKRZWUXFNWREHDQH[WUHPHO\LPSRUWDQWWUDQVSRUWHURI7H[DVSURGXFHGJUDLQZLWKUDLOURDGVSOD\LQJLPSRUWDQWUROHVIRUVHOHFWHGJUDLQVRQSDUWLFXODUFRUULGRUV,QWKH+LJK3ODLQVDOHDGLQJ7H[DVJUDLQSURGXFLQJUHJLRQPRVWFRUQDQGJUDLQVRUJKXPSURGXFWLRQLVPDUNHWHGWR7H[DVIHHGHUVDOOVKLSPHQWVDUHWUXFNWUDQVSRUWHG%\FRQWUDVW+LJK3ODLQVZKHDWSURGXFWLRQLVGHSHQGHQWRQERWKWUXFNDQGUDLOPRGHV7UXFNLV

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

8/7/2019 Texas Grain report

31/116

9,,,5DLOURDGVDQG0RWRU&DUULHU*UDLQ7UDQVSRUWDWLRQLQ7H[DV

7KLVVHFWLRQH[DPLQHVWKHVHUYLFHVSURYLGHGE\ERWKUDLOURDGVDQGWKHPRWRUFDUULHULQGXVWU\LQWKHPRYHPHQWRI7H[DVJUDLQV7KHILUVWSDUWEDVHGRQDOLWHUDWXUHUHYLHZRI86UDLOURDGVHUYLFHVGLVFXVVHVWKHFKDQJLQJQDWXUHRIWKHLQGXVWU\IROORZLQJGHUHJXODWLRQWKHEXVLQHVVDSSURDFK

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

,QWURGXFWLRQ

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

8/7/2019 Texas Grain report

32/116

7KHSULFHFRQWURODQGLQIOH[LELOLW\LQDGMXVWPHQWVRPHKDYHDUJXHGFRQVWUDLQHGWKHLQQRYDWLRQWKDWZRXOGKDYHORZHUHGFRVWVDQGNHSWWKHUDLOURDGVPRUHFRPSHWLWLYH*HOOPDQ 5HJXODWRU\UHIRUPEHJDQZLWKWKH5HJLRQDO5DLO5HRUJDQL]DWLRQ$FWRISDVVHGSULPDULO\WRUHVWUXFWXUHWKHQRUWKHDVWHUQQHWZRUNIROORZLQJWKHFROODSVHRIWKH3HQQ&HQWUDO5DLOURDG7KLV

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

8/7/2019 Texas Grain report

33/116

+RZGRWKHVHLVVXHVDIIHFWWKHJUDLQLQGXVWU\LQJHQHUDODQG7H[DVLQSDUWLFXODU")LUVWWKH\SURYLGHDFRQWH[WIRUXQGHUVWDQGLQJWKHUDLOVHUYLFHLVVXHVIDFLQJWKHLQGXVWU\DQGSHUKDSVRIIHUVRPHZD\VWRLPSURYHWKHVHUYLFH6HFRQGWKHSRWHQWLDOIRUWKHUDLOLQGXVWU\WRVHUYH7H[DVVKLSSHUVKDVEHHQVXEVWDQWLDOO\UHGXFHGWKURXJKUDLOOLQHDEDQGRQPHQW7DEOHVKRZVWKHORVVRIUDLOQHWZRUNVVLQFHLQYDULRXVDJULFXOWXUDOVWDWHVLQFOXGLQJ7H[DV0RVWQXPEHUVDUH

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

7KHUHVWRIWKLVVHFWLRQFRPSULVHVWKUHHSDUWV7KHILUVWSDUWUHSRUWVPDWHULDOJDWKHUHGIURPLQWHUYLHZVZLWKVWDIIDW%XUOLQJWRQ1RUWKHUQ%16)8QLRQ3DFLILF83DQGWKH$PHULFDQ$VVRFLDWLRQRI5DLOURDGV$$5WKHVHFRQGSDUWSURYLGHVVRPHLQIRUPDWLRQRQVKRUWOLQHVZKLOHWKHILQDOVHFWLRQVXPPDUL]HVVRPHRIWKHNH\LVVXHVDVWKH\UHODWHWRWKHJUDLQLQGXVWU\

&ODVV5DLOURDG5HVSRQVHVWR6XUYH\6HUYLFH,VVXHV

%XUOLQJWRQ1RUWKHUQ6DQWD)H%16)

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

8/7/2019 Texas Grain report

34/116

,QUHVSRQVH%REEFRXQWHUHGWKDWFRPSODLQWVWR%16)DERXWODFNRIFDUDYDLODELOLW\ZHUHXQZDUUDQWHGJLYHQWKDWFHUWLILFDWHVRIWUDQVSRUWDWLRQ&27VDQG6:$3FHUWLILFDWHVZHUHDYDLODEOHWRVKLSSHUVZKRZRXOGWKHQEHLQDSRVLWLRQWRSUHRUGHUWUDQVSRUWDWLRQDVSDUWRIWKHLUEXVLQHVVSUDFWLFHV0RGHUQUDLOWUDQVSRUWDWLRQIDYRUHGWKRVHVKLSSHUVWKDWZHUHDEOHWRGHYHORS

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

8/7/2019 Texas Grain report

35/116

SHUIRUPHGWKURXJKDJUDLQGHVNPDLQWDLQHGKRXUVDGD\GD\VDZHHN%16)EHOLHYHVWKLVSURFHVVLVXQLTXHLQWKHUDLOURDGLQGXVWU\GHWDLOVDUHDYDLODEOHRQWKHFRPSDQ\:HEVLWH7KHDLPRIWKHJUDLQGHVNLVWRSURYLGHDQRQWLPHVHUYLFHRISOXVRUPLQXVKRXUVWKRXJKVXFKDVHUYLFHOHYHOPLJKWDWWUDFWKLJKHUUDWHV

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

WKLVFRQFHSW$VDQLQGHSHQGHQWSULYDWHHQWLW\RSHUDWLQJZLWKRXWVXEVLGLHVLWKDVKDGWRUHDFKDUHDVRQDEOHOHYHORIUHWXUQRQFDSLWDODQGKDYLQJDWWDLQHGWRWKDWOHYHOZDVFRPPLWWHGWRGRLQJZKDWHYHUZDVQHFHVVDU\WRVXVWDLQLW5HVRXUFHDOORFDWLRQIDYRUVKLJKZD\VEHFDXVHRIWKHLQKHUHQWFURVVVXEVLGL]DWLRQWKDWRFFXUVLQPRVWVWDWHQHWZRUNV7KHSURYLVLRQRIKLJKZD\VIXQGHGWKURXJKWKHJDVROLQHWD[SODFHGLQWRDKLJKZD\WUXVWIXQGUHVXOWVLQVXEVWDQWLDODQQXDOLPSURYHPHQWVWRWKHKLJKZD\LQIUDVWUXFWXUH7KLVKDVWREHPDWFKHGDJDLQVWWKHSUREOHPVRISURYLGLQJVXLWDEOHFDSLWDOUHLQYHVWPHQWRQWKHSDUWRIWKHUDLOURDGV$WDWLPHZKHQ7['27LVXQGHUWDNLQJVLQJOHLQWHUFKDQJHSURMHFWVFRVWLQJLQH[FHVVRIPLOOLRQ%16)LVGHOD\LQJWKHFRQVWUXFWLRQRIDUHSDLUDQGPDLQWHQDQFHIDFLOLW\DW$OOLDQFHDQGLVFXWWLQJEDFNRQLWVLQWHUPRGDOLQYHVWPHQWRQHRILWVJURZWKDUHDV

8QLRQ3DFLILF83

%LOO(LOEUDFKW*HQHUDO'LUHFWRURI/RJLVWLFVSURYLGHGLQIRUPDWLRQRQ8QLRQ3DFLILF83JUDLQRSHUDWLRQV:LWKUHJDUGWRVKLSPHQWVL]HV83KDVDUDWHVWUXFWXUHLQSODFHWRKDQGOHVPDOOHUXQLWJUDLQPRYHPHQWV7KHVHUDWHVDUHQRWDVORZDVWKHXQLWWUDLQUDWHVEDVHGRQWKHRSHUDWLQJHIILFLHQFLHVRIWKHODWWHUV\VWHP:KHQFRPSHWLQJZLWKWUXFNVWKHFRPSDQ\ILQGVLWGLIILFXOWWREHFRPSHWLWLYHRQPRYHPHQWVWKDWDUHOHVVWKDQPLOHVEDVHGRQWKHFXUUHQWUDLOFRVWVWUXFWXUH:KLOH83LVFRQVWDQWO\ORRNLQJDWVKRUWOLQHRSSRUWXQLWLHVLWLVLPSRVVLEOHWRJHQHUDOL]HDERXWVXFKRSSRUWXQLWLHVHDFKPXVWEHHYDOXDWHGRQDFDVHE\FDVHEDVLV83LVVHQVLWLYHWRFRPSODLQWVDERXWJUDLQVHUYLFHOHYHOVIURPVRPHVKLSSHUVDQGKDVPDGHDQHIIRUWRYHUWKHSDVW\HDUVWRLPSURYHRYHUDOOWUDQVSRUWDWLRQVHUYLFHIRUJUDLQ)RUH[DPSOHWKHFRPSDQ\QRZKDVDFURVVIXQFWLRQDOTXDOLW\WHDPWKDWPHHWVZHHNO\WRDGGUHVVWKRVHLVVXHVWKDWKDYHSRWHQWLDOIRULPSURYLQJWKHOHYHORIVHUYLFHIRUJUDLQVKLSSHUV:LWKUHVSHFWWRUXUDOUDLOGLVWULFWV83KDVUHFHQWO\FRPSOHWHGDVDOHWRWKH1RUWKHDVW7H[DV5XUDO5DLO'LVWULFW$OWKRXJKWKHOLQHLVQRWFRPPHUFLDOO\YLDEOHIRUDVWDQGDORQHVKRUWOLQHRSHUDWLRQDWWKLVWLPHWKH557'VLQYHVWPHQWZLOOSUHVHUYHWKHUDLOURDGIRUSRVVLEOHIXWXUHXVH7KHFRQFHSWRIUXUDOUDLOGLVWULFWVDOORZVVWDWHJRYHUQPHQWVWRSUHVHUYHWKRVHOLQHVLWVHHVILWWRUHWDLQZLWKRXWDVNLQJSULYDWHRSHUDWRUVWRORVHPRQH\WU\LQJWRFRQWLQXHVHUYLFHRQOLQHVWKDWFDQQRWMXVWLI\

8/7/2019 Texas Grain report

36/116

LQYHVWPHQWDQGRSHUDWLRQ3URYLGLQJDGHTXDWHHTXLSPHQWIRUJUDLQWUDQVSRUWDWLRQLVDUHDOFKDOOHQJHDQGKDVLQWKHSDVWUHVXOWHGLQHTXLSPHQWXQGHUXWLOL]DWLRQ$VDQH[DPSOHIRURIWKHSDVWPRQWKVDURXQGJUDLQFDUVKDYHEHHQLGOHUHSUHVHQWLQJDSRWHQWLDOUHYHQXHVWUHDPRIVRPHPLOOLRQSHUPRQWK83IHHOVWKDWLWLVLQHIILFLHQWWRKDYHWKLVOHYHORIXQGHUXWLOL]DWLRQLQLWVJUDLQHTXLSPHQW:LWKUHJDUGWRUDLODEDQGRQPHQWWKHEDVHFDXVHLV

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

6KRUWOLQH5DLO6HUYLFH

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

8/7/2019 Texas Grain report

37/116

7UXFNLQJ

$VLQRWKHUVWDWHV7H[DVWUXFNLQJLVH[WUHPHO\FRPSHWLWLYHZLWKPDQ\RSHUDWRUVH[KLELWLQJORZUDWHVRIUHWXUQRQWKHLULQYHVWHGFDSLWDO)RUWKRVHRSHUDWRUVKDYLQJIL[HGDJULFXOWXUDOFRQWUDFWVLHQRFRPSHQVDWLRQIRUULVLQJFRVWVWKHVLWXDWLRQKDVEHFRPHHVSHFLDOO\GLIILFXOWLQUHFHQW

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

8/7/2019 Texas Grain report

38/116

7KHWUXFNVXUYH\DOVRLQGLFDWHGWKDWORJLVWLFDOFRRUGLQDWLRQLVDOVRDVRXUFHRILQHIILFLHQF\6RPHVXJJHVWLRQVIURPWKHVXUYH\UHVSRQGHQWVLQFOXGHGEHWWHUFRRUGLQDWLRQRIURXWLQJEHWZHHQILUPVWRDYRLGURXWHRYHUODSSLQJDQGEHWWHUFRRUGLQDWLRQRIORDGGHOLYHU\EHWZHHQEURNHUVDQGVKLSSHUV7KHVXUYH\DOVRLQGLFDWHGDODFNRIFRRUGLQDWLRQEHWZHHQWUXFNLQJDQGUDLO2QO\WZRUHVSRQGHQWVUHSRUWHGFRRUGLQDWLQJWKHLUJUDLQGHOLYHULHVZLWKUDLOILUPV7ZRRWKHUUHVSRQGHQWVUHSRUWHG

SUREOHPVZLWKWU\LQJWRFRRUGLQDWHZLWKUDLODQGWKDWUDLOZLOOQRWFRRSHUDWHZLWKWUXFNLQJILUPVEHFDXVHLWVHHVWKHPDVLWVFRPSHWLWLRQ$QRWKHUSUREOHPSODJXLQJWKHWUXFNLQJLQGXVWU\LVLQFUHDVHGIXHOFRVWV$OOUHVSRQGHQWLQGLFDWHGWKDWWKH\KDYHLQFUHDVHGRUZHUHSODQQLQJWRLQFUHDVHWKHLUUDWHVWRFRYHUWKHIXHOFRVWLQFUHDVHV0RUHLQIRUPDWLRQRQWKHWUXFNLQJVXUYH\LQFOXGLQJUHVSRQVHVWRWKHTXHVWLRQVLVSURYLGHGLQ$SSHQGL['

,;(PHUJLQJ7UHQGVLQ7UDQVSRUWDWLRQ7KHUHVXOWVRIERWKWKHJUDLQVKLSSLQJVHUYLFHVXUYH\DQGWKHPRWRUFDUULHUVXUYH\KDYHDOUHDG\

EHHQUHSRUWHGLQHDUOLHUVHFWLRQV*HQHUDOO\UDLOVHUYLFHLVQRWKLJKO\UDWHGDQGLVLQIDFWFRQVLGHUHGLQIHULRUWRWKDWRIIHUHGE\PRWRUFDUULHUVRYHUDQXPEHURINH\JUDLQURXWHVLQ7H[DV7RDVVLVWLQWKRVHGHYHORSLQJSXEOLFSROLF\ZLWKUHVSHFWWRWKHJUDLQVKLSSLQJLQGXVWU\ZHRIIHUWKHIROORZLQJVHULHVRILVVXHVWKDWDUHWHUPHGHPHUJLQJWUHQGV7KHVHWUHQGVLGHQWLI\VHYHUDOFULWLFDODUHDVWKDWZLOOLPSDFWJUDLQWUDQVSRUWDWLRQLQ7H[DV:KHUHSRVVLEOHZHVXJJHVWDQDSSURDFKRUOLQHRILQTXLU\WKDWPD\VWLPXODWHDSXEOLFSROLF\LQLWLDWLYH

*UDLQ,VD*OREDOO\7UDGHG&RPPRGLW\

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

,WLVWKHUHIRUHHVVHQWLDOLQWKLVQHZO\HPHUJLQJJOREDOJUDLQPDUNHWWKDWVKLSSHUVXQGHUWDNHWKHLUEXVLQHVVZLWKDUHFRJQLWLRQRIWKHQHHGWRIRUHFDVWWKHLUWUDQVSRUWDWLRQUHTXLUHPHQWVDVDFFXUDWHO\DVSRVVLEOH7KRVHJUDLQKDQGOHUVZKRFDQFOHDUO\UHODWHWUDQVSRUWDWLRQQHHGVWRWKHLUPDUNHWLQJDFWLYLWLHVLUUHVSHFWLYHRIVL]HZLOOVWDQGWKHJUHDWHVWFKDQFHRIEHLQJDEOHWRREWDLQUDLODQGWUXFNWUDQVSRUWDWLRQVHUYLFHVZKHQWKH\PRVWQHHGWKHP

8/7/2019 Texas Grain report

39/116

5DLO6HUYLFH

%HFDXVHWKHEXVLQHVVPRGHODGRSWHGE\WKH&ODVVUDLOURDGVLQWKH86KDVIDYRUHGVXEVWDQWLDOFRVWFXWWLQJDQGKDVIRFXVHGRQNH\FRPPRGLW\URXWHVLWLVOLWWOHZRQGHUWKDWWKHVPDOOHUJUDLQHOHYDWRURZQHUKDVEHHQPDUJLQDOL]HGLQWKHSURFHVV7KLVFKDUDFWHULVWLFLVQRWD7H[DV

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

)XWXUH5DLO,VVXHV ,WLVZRUWKUHFDOOLQJWKHLPSOLFDWLRQVRIFXUUHQWUDLOURDGSROLF\RQWKH86DJULFXOWXUDOVHFWRU3UDWHUDQG.OLQGZRUWKJLYHQWKDWDOODUHSHUWLQHQWWRUDLOVHUYLFHLQ7H[DV7KHVHSROLF\LPSOLFDWLRQVVKRZQLQ7DEOHFRPSULVHILYHPDMRULVVXHV)LUVWFKDQJHVLQGRPHVWLFSURFHVVLQJDQGRIIIDUPIHHGLQJFRPELQHGZLWKVWDWLFH[SRUWVDQGWKHORVVRIVPDOOHUJUDLQHOHYDWRUVVXJJHVWWKDWWKHUHZLOOEHDGHFUHDVLQJUDLOURDGPDUNHWVKDUHLQJUDLQV6HFRQGWKHUHLVDQH[SHFWDWLRQRIKLJKHUUDWHVIRUDJULFXOWXUDOVKLSSHUVUHVXOWLQJIURPGLIIHUHQWLDOSULFLQJORZUDWHVRIUHWXUQDQGWKHGLIILFXOW\LQJHWWLQJIXUWKHUFRVWHIILFLHQFLHVRXWRIWKHFXUUHQWV\VWHP7KLUGWKHUHLVDOLNHOLKRRGRILQFUHDVHGFRVWVWRDFFHVVUDLOVHUYLFH7KLVLQFUHDVHPD\FRPHWKURXJKDYDULHW\RIVWUDWHJLHVLQFOXGLQJUHTXLULQJRWKHUVWREXLOGWKHXQLWWUDLQWHUPLQDOVFKDUJLQJKLJKHUGHPXUUDJHDQGUHTXLULQJWUXFNLQJDQGVKRUWOLQHUDLOURDGVWROLQNLQWRWKHJUDLQORDGFHQWHUV7KHUHLVDOVRWKHOLNHOLKRRGRIKLJKHUH[WHUQDOFRVWVWRUXUDOKLJKZD\QHWZRUNVWKDWZLOOFDUU\WKHKLJKHUIORZVRIJUDLQWUXFNV

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

8/7/2019 Texas Grain report

40/116

RUJDQL]DWLRQDOFKDQJHV,WVKRXOGQRWEHIRUJRWWHQWKDWUDLOURDGVDUHSULYDWHHQWLWLHVWKDWPXVWPDNHDQDGHTXDWHUHWXUQRQLQYHVWPHQWDQGDSURILWIRUWKHLUVKDUHKROGHUV7KH\DUHQRWSXEOLFXWLOLWLHVWKH\FDQQRWEHH[SHFWHGWRZDLWORQJSHULRGVXQWLOJUDLQPRYHVRUWRSURYLGHDOOVKLSSHUVZLVKLQJWRPRYHJUDLQDWWKDWWLPHZLWKWKHQXPEHUVRIFDUVWKDWDUHQHHGHG2QHSRVVLEOHFRXUVHRIDFWLRQWRLPSURYHUDLOURDGVHUYLFHLVWRHGXFDWHVKLSSHUVRQKRZWKH\PLJKWEHVWWDNHDGYDQWDJH

RIWKHQHZVHUYLFHVSURYLGHGE\WKHUDLOURDGLQGXVWU\&RQWLQXDO*URZWKLQ*UDLQ7UXFNLQJ

7KHWUXFNLQJRIJUDLQLQ7H[DVZLOOFRQWLQXHWRJURZLQWKHIXWXUHVHUYLQJORFDOPDUNHWVUHJLRQDOIHHGPLOOVORDGFHQWHUVIRUXQLWWUDLQVDQGRWKHUFRQVXPHUVUHTXLULQJIDVWIOH[LEOHVHUYLFH%HFDXVHPDQ\FRXQWU\HOHYDWRUVUHO\ZKROO\RQWUXFNLQJWRVWD\LQEXVLQHVVDQ\JURZWKLQWKHLUEXVLQHVVZLOOUHVXOWLQDQLQFUHDVHLQUHJLRQDOWUXFNLQJ 7KHUHLVVWURQJHYLGHQFHWKDWWUXFNLQJSULFHVZLOOULVHGULYHQE\DQLQFUHDVHLQYHKLFOHRSHUDWLQJFRVWV7KLVSULFHLQFUHDVHPD\DIIHFWWKHYLDELOLW\RIWKRVHHOHYDWRUEXVLQHVVHVWKDWFDQQRWSDVVRQ

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

8/7/2019 Texas Grain report

41/116

5XUDO5DLO7UDQVSRUWDWLRQ'LVWULFWV

7KHFUHDWLRQRIUXUDOUDLOWUDQVSRUWDWLRQGLVWULFWV557'ZDVEDVHGRQOHJLVODWLRQHQDFWHGLQDPHQGHGLQZKLFKIRFXVHGRQPLWLJDWLQJWKHQHJDWLYHLPSDFWVRIUDLODEDQGRQPHQWE\DOORZLQJWKHSXUFKDVHRIUDLOOLQHVWKDWZHUHVFKHGXOHGIRUDEDQGRQPHQW$UXUDOUDLO

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

RIFDSLWDOWKDW&ODVVUDLOURDGVFXUUHQWO\IDFHDOVRVXJJHVWVWKDWRWKHUVZLOOQHHGWRDGGUHVVQHZLQYHVWPHQWLQUDLOVWRUDJHIDFLOLWLHVLQFOXGLQJJUDLQ7KHUHVSRQVLELOLW\IRUDGGUHVVLQJVXFKQHHGVDVUDLOVWRUDJHLQFOXGLQJJUDLQVPD\XOWLPDWHO\IDOORQWKHVKRXOGHUVRIFRXQW\FRXUWVPXQLFLSDOLWLHVVKLSSHUVDQGYHQWXUHFDSLWDOJURXSV $UHFHQW/%-6FKRRORI3XEOLF$IIDLUVUHSRUWLGHQWLILHGH[HPSODU\VWDWHUDLOIUHLJKWSURJUDPVLQWKH8QLWHG6WDWHV,WRIIHUHGWKHIROORZLQJFRPPHQW

0DQ\VWDWHVIDFHOHJDFLHVRIOLPLWHGLQYROYHPHQWLQUDLOPDWWHUV6RPHVWDWHVKDYHVWDWXWHVSURKLELWLQJVWDWHDVVLVWDQFHWRWKHUDLOLQGXVWU\7KH\PXVWGHDOLQWKHSUDFWLFDOUHDOPRIZKDWLVSRVVLEOH:DVKLQJWRQV*UDLQ7UDLQSURMHFW9LUJLQLDVDQG1RUWK&DUROLQDV5XUDO,QGXVWULDO$FFHVV3URJUDPVDQG7HQQHVVHHV7UDQVSRUWDWLRQ(TXLW\)XQGDUHUDLOIUHLJKWSURJUDPVOLPLWHGLQVFRSHWKDWKDYHPHDVXUDEOHEHQHILWVWRWKHLUUHVSHFWLYHVWDWHVDQGFLWL]HQV7KHLUPRGHOVVHUYHDVH[DPSOHVWKDWLWLVSRVVLEOHWRILQGIXQGLQJWRILQDQFHRSHUDWHDQGLPSOHPHQWVXFFHVVIXOUDLOIUHLJKWSURMHFWV/%-

$OWKRXJK557'VDUHQRW\HWDSURJUDPWKH\GRUHSUHVHQWDQLQQRYDWLYHDSSURDFKWRVRPHUXUDOUDLODQGWUDQVSRUWDWLRQQHHGV,QDQ\HYHQWLWLVWREHKRSHGWKDWDPRUHLPDJLQDWLYHZD\RILQFOXGLQJUDLOIUHLJKWLQ7H[DVVWDWHWUDQVSRUWDWLRQSODQQLQJLVXQGHUWDNHQLQWKHQHDUIXWXUH

;2EVHUYDWLRQVDQG5HFRPPHQGDWLRQV7KLVVHFWLRQVXPPDUL]HVREVHUYDWLRQVUHJDUGLQJJUDLQWUDQVSRUWDWLRQLQ7H[DVDQGFORVHVE\UHFRPPHQGLQJPHDVXUHVWKDWFRXOGHQKDQFHJUDLQWUDQVSRUWDWLRQHIILFLHQFLHV2EVHUYDWLRQV

N /DUJHTXDQWLWLHVRIJUDLQIURPWKH&RUQ%HOWDQG&HQWUDO3ODLQVDUHUDLOWUDQVSRUWHGWR7H[DVIRUFRQVXPSWLRQE\7H[DVOLYHVWRFNSRXOWU\DQGGDLU\LQGXVWULHVDQGIRUH[SRUWYLD7H[DVSRUWV7KHVHJUDLQVXSSOLHVDUHFULWLFDOWR7H[DVDJULFXOWXUHDQGDJULEXVLQHVV

8/7/2019 Texas Grain report

42/116

N 7UHQGVLQ7H[DVIHHGJUDLQSURGXFWLRQVXJJHVWDFRQWLQXHGGHSHQGHQFHRQRXWRIVWDWHJUDLQVXSSOLHVIRU7H[DVOLYHVWRFNSRXOWU\DQGGDLU\LQGXVWULHV

N 0H[LFRLVDQLPSRUWDQWJUDLQPDUNHWIRU86DQG7H[DVSURGXFHGJUDLQV7KLVPDUNHWLVOLNHO\WREHFRPHPRUHLPSRUWDQWDVDUHVXOWRIJURZWKLQ0H[LFRVSHUFDSLWDLQFRPHDQGZLWKWKHFRPSOHWHLPSOHPHQWDWLRQRI1$)7$SURYLVLRQV%HFDXVHWUXFNDQGUDLOPRGHVDUHLPSRUWDQWIRUWKHH[SRUWRIJUDLQWR0H[LFRHIILFLHQWWUDQVSRUWDWLRQV\VWHPVDUHFULWLFDOIRU7H[DVFRPSHWLWLYHQHVVLQWKHJURZLQJ0H[LFDQJUDLQPDUNHW

N 7UXFNVDUHFHQWUDOWRWKHPDUNHWLQJRI7H[DVSURGXFHGIHHGJUDLQVFRUQVRUJKXPVLQFHVXFKJUDLQVDUHSULPDULO\GHVWLQHGIRUFRQVXPSWLRQE\7H[DVOLYHVWRFNSRXOWU\DQGGDLU\LQGXVWULHV7KHH[FHSWLRQDUHIHHGJUDLQH[SRUWVWR7H[DV*XOISRUWVDQG0H[LFRZKLFKDUHGHSHQGHQWRQERWKWUXFNDQGUDLOPRGHV7H[DVULFHSURGXFWLRQLVHQWLUHO\GHSHQGHQWRQWUXFNWUDQVSRUWDWLRQH[FHSWIRUURXJKULFHH[SRUWVWR0H[LFR7H[DVZKHDWSURGXFWLRQLVFRPSDUDWLYHO\GHSHQGHQWRQUDLOURDGWUDQVSRUWDWLRQIRUSXUSRVHVRIDFFHVVLQJH[SRU