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Olam is a leading global integrated supply chain manager and processor of agricultural products and food ingredients

Presence across 16 platforms, 5 agri-commodity segments across 4 value chain steps

Over 18,000 employees operate in over 65 countries delivering to over 12,300 customers worldwide

Olam is listed on the Singapore Stock Exchange

In 2007 Olam purchased Qld Cotton

Cotton:

#1 private ginner

#2 merchant globally

Who is Olam?

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1989 Start-Up1 product - Cashews1 country - Nigeria1 end Market4 customers2 employeesS$0.15m Book ValueS$0.15m Mkt. Value

FY 201320 products65 countries 50 end markets12,300 customers18,000 employeesS$15.7 bn turnoverS$444.6 mm PATS$6.3 bn Mkt. Cap

Transitioned from a Trader to an Integrated Supply Chain Manager

Sales CARG of 51% and PAT CAGR of 48% over the last 21 years

History of Olam

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ST

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Managing Risk at Every Stage

Integrated from farm to factory gate

OR

IGIN

End-to-end Supply Chain Capability

MarketingSolutions& Services

Farming Origination Logistics ProcessingTrading &Distribution

Our Business: Supply Chain Manger of Agricultural Raw Materials

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A$513 per bale

Futures

Exchange RateBasis

Components of the cotton price

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A Futures contract is a contract between two

parties to buy or sell a specific quantity and

quality of a product at a given price for delivery

at a specified time

Futures contracts were originally used solely by

producers and consumers for hedging. They are

now also used for speculating by individuals and

large companies

Futures Contracts

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Futures Contracts

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• Cotton Futures are the most volatile of the three components of the price and therefore needs to be the most closely monitored

• Every cent movement in the Futures price will change the cotton price by approximately $5 per bale

• The Australian $/bale price is calculated using the closing price of the May contract - if this is not available we use July or December

Impact on Cotton Price

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• Basis is the difference between the cash price and the futures price.

• It occurs due to differences between the product that the Futures contract represents and the worth of the product in the marketplace

• This is a variable cost

Basis

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Example:July 2014 Futures 85.61 US cents/lbQC 2014 Cash Price 90.36 US cents/lb

2014 Buy Basis = Cash price - Futures = 90.36 – 85.61 = 4.75 US cents/lb This is referred to as a basis of 475 pts ‘on’

Calculation of Basis

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• A basis will generally strengthen (increase) on weaker NYF price

• A strengthening of basis generally signals improving demand in the export market – this generally occurs in a weaker market

• A basis will generally weaken (decrease) in a firm NYF price. This generally indicates a lack of demand in the export market.

Relationship between Basis and Futures

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• The exchange rate is the value of one currency relative to another - eg 1 AUD equals 0.8915 USD

• The exchange rate trades 24 hours a day starting the day in New Zealand and then moving to Australia, London and then New York

• The exchange rate can be traded with all banks

Exchange Rate

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Exchange Rate

High @ 1.0545 (11th April 2013)Low @ 0.8684 (24th January 2014)Average @ 0.9548 V Today @ 0.8965

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Price = (Futures price +/- Basis ) x 500 lb/bale Exchange Rate

= (0.8561 + 0.0475) x 500 lb/bale 0.8867

= A$510 / bale

Calculation of Cotton Price

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1. Cash Fixed Bales•1,000 bales @ AU$510/bale•14 days after ginning payment OR•Call Pool payment (75% July/25% Dec)

2. On-Call Fixed Bales• 1,000 bales @ 90.65 US c/lb• FX to be fixed prior to FND • 14 days Payment OR Call Pool Payment

3. Balance of Crop• Flexibility regarding number of bales • Discounted from cash price

Marketing Contract Types

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Production

Price

Managing Risk

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Thank you!

Elissa Wegener0400 681146

Luke Chappel0428 799 446

Meg Laidlaw0427 816 315