Transitions in the Canadian Market

James ReaAVP Bulk Product Sales

American Fats & Oils Association Annual Meeting 2012

Agenda

Major Transitions• Deregulation of the Canadian Wheat Board

• Rationalization of Origination Assets/Players

• Canola and the Expansion of the Canola

Processing Industry

• Acreage – Crops and Returns

Deregulation

Deregulation of the Market• Canadian Wheat Board monopoly ends

after 77 years (1935-2012)• Open Market as of August 1, 2012• Canadian Wheat Board’s Participation

Going Forward?

• Wheat/Barley account for 37 MMT or ~50%

of Cdn Grain/Oilseed production

Rationalization - Grain Handling Capacity

Crop Year No. of Elevators

Capacity in MMT

No. of 100 Rail Car Loaders

1990-1991 1,567 14 31999-2000 969 12 502010-2011 340 11 106

Down 78% Down 3MMT

Western Canada

Dramatic increase in handling and loading efficiency over 2 decades

Rationalization of Major Asset Owners

Saskatchewan Wheat Pool1923-2007

Manitoba Pool Elevators1926-1998

Alberta Wheat Pool

1923-1998

United Grain Growers Limited

1917-2001

Richardson International

1857-

Cargill1865-

Agricore Cooperative

Limited1998-2001

Agricore United2001-2007

Viterra2007-2012

Cargill1865-

Glencore1974-

1998 2001 2007 2012

United Grain Growers Limited

1917-2001

Cargill1865-

Today

Cargill1865-

Richardson International

1857-

Richardson International

1857-

Richardson International

1857-

Saskatchewan Wheat Pool1923-2007

Cargill1865-

Saskatchewan Wheat Pool1923-2007

Richardson International

1857-

Rationalization - Country Elevators

Pre-Glencore Capacity Distribution

50+ and Other Car Eleva-tors100+ Car ElevatorsN u m b e r o f C a r E l e v a t o r s

# of 100+ Car Elevators 39 31 12 8 4 4 4# of 50+ Car Elevators 25 6 15 2 3 9 11

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Viterra Richardson Cargill LDC Paterson P&H Other

Appr

oxim

ate

Ele

vato

r Cap

acity

(m

t)

Conventional Elevator Capacity

50-56 Car Loader Capacity

100+ Car Loader Capacity

Rationalization - Country Elevators

Post-Glencore Capacity Distribution

50+ and Other Car Eleva-tors100+ Car ElevatorsN u m b e r o f C a r E l e v a t o r s

# of 100+ Car Elevators 41 29 12 8 4 4 4# of 50+ Car Elevators 11 20 15 2 3 9 11

05N u m b e

-

500,000

1,000,000

1,500,000

2,000,000

RichardsonGlencore Cargill LDC Paterson P&H Other

Appr

oxim

ate

Ele

vato

r Cap

acity

(m

t)

Conventional Elevator Capacity

50-56 Car Loader Capacity

100+ Car Loader Capacity

Crush and the Canola S&D

Crop Year   2008/09 2009/10 2010/11 2011/12 2012/13Acreage Seeded 16,160 16,125 17,608 18,645 21,337

Acreage Harvested 16,048 15,680 16,922 18,010 20,852

Yield (Bu/Acre) 35 36.2 33.3 35.5 28.2

             

Carry In   1,744 1,944 2,688 2,198 793

Production   12,643 12,888 12,773 14,500 13,336Imports   120.5 127.9 223.7 92 100

             

Supply   14,507 14,959 15,685 16,790 14,230             

             Domestic   4,280 4,788 6,310 7,000 6,500Seed/Feed   377 320 73 268 300

Exports   7,907 7,163 7,104 8,729 6430

             

Disposition   12,564 12,271 13,487 15,997 13,232             

Carryout   1,944 2,688 2,198 793 1,000             

Stocks/use   15.47% 21.91% 16.30% 4.96% 4.06%

Final production not yet known

Canola Crush Capacity (MMT)

20082012

Current2016

Forecast

ADM 2.2 2.5 2.7

Bunge 1.8 2.5 3.0

Richardson 0.4 1.3 2.1

Cargill 0.8 1.6 2.4

LDM 0.0 0.9 0.9

Viterra/Glencore 0.3 0.3 0.3

Other 0.0 0.3 0.7

Total 5.5 9.4 12.1

Canada/U.S. North - Approx

Canadian Crush and Oil Production

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

CrushOil Production

2012 Canadian Crush Capacity ~ 7.5MMT

CANOLA OIL EXPORTS

TOTAL CANOLA OIL EXPORTS FROM CANADA2006 2007 2008 2009 2010 2011

United States 729,975 764,324 1,048,300 1,002,404 1,092,071 1,520,557Other 4,332 4,672 10,906 4,208 22,643 48,959Mexico 29,784 31,202 22,548 3,984 5,126 54,477EU 290,368 56,161 211 8 28,015 182,675China 65,832 280,913 232,792 441,267 988,114 578,395Asia - non China 110,433 128,875 107,924 96,552 109,411 154,729

Totals 1,230,724 1,266,147 1,422,681 1,548,423 2,245,380 2,539,792

Growth in Canadian Canola Acres

0

5,000

10,000

15,000

20,000

25,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

• Expecting canola acres to remain in the 19-21 million range for the next 3-5 yrs

Acreage Shift 2004 - 2012

2004 20120

5000

10000

15000

20000

25000

30000

WheatOatsBarleyCanolaSoybeansDry PeasCornOther

000’s Acres

Return Per Acre

Commodity Per Acre Return Acres (Million)

Canola $110 - $150 21.3

Wheat(excl Durum) $30 - $90 19.0

Peas $70 - $80 3.2

Barley $20 - $80 7.4

Durum $30 - $90 4.6

Corn $230 - $290 3.6

Oats $30 - $70 3.0

Soy Beans $200 - $290 4.3

Summary

• 2012/13 – Canadian Open Market Volumes Increase Dramatically

• Grain and Oilseed handling in Canada has been extensively rationalized over the past 20 years

• Strong Oil Demand Driving Investments in Canola Processing

• Canadian Canola acres have doubled in the past 10 years as Farm-gate returns advance Canola seed production