Food Outlook PreviewShort-Term Outlook for Agricultural Commodities

Price Trends Since January 2011

300

350

400

US$/MT

Russian export Ban

+ 84%

+ 82%

+ 102%

•Floods in Pakistan•Rains in Canada and USA•Rains and Floods in Australia

USDA planting and stocks figures

A Turbulent Season for Grain Prices

100

150

200

250

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May

Wheat Maize Barley 2010 2011

USDA Production Cut

•Political Tensions•Oil price surge•Declining Dollar•Winter wheat – uncertain growing conditions in US & China

+ 102%

FAO-IGG

Meeting

Cereal Supply and Demand

Major Grain Policy Developments

July 2010 to May 2011

•Oct-2010 : Tariff introduced on durum wheat imports to encourage consumption of domestic supplies.

•Jan-2011: Tariff suspended on durum wheat import for an indefinite period after price surge.

•Jan/Feb-2010: Suspension of custom duties and taxes for the period Jan-Aug 2011, VAT suspension and Tax exemption on company profits after political tensions in the country due to price surge.

Algeria

•Nov-2010: VAT reduction to support 70 000 small farmers, including 50 000 wheat producers.

•Nov-2010: Export quotas extended for 2010/2011 wheat and maize crop, and carried on until Apr-2011

Argentina

•Oct-2010: Government increase of minimum support price of white wheat by 5.5 percent to CNY •Oct-2010: Government increase of minimum support price of white wheat by 5.5 percent to CNY 1900 (USD 285) per tonne.

•Feb-2011: In order to slow inflation in the grain market, the government requested the major state-linked grain buyers to suspend purchases

•Mar-2011: Government allocation of 13 billion CNY (USD 2 billion) to combat drought damages, which has strongly affected wheat producers in Eastern regions.

China

•April 2011: Government approved 10 billion Egyptian pounds ( USD 168 million) to help slow rising food pricesEgypt

•Feb-2011: The European Commission suspended the import duties applied to low/medium quality wheat and feed barley in order to maintain sufficient supply of animal feed (effective until 30 June 2011).EU

•Jul-2010: Food subsidies for an amount of 457 000 tonnes of food grain has been distributed to Above Poverty Line (APL) families.

•Mar-2011: Introduction of measures aiming at creating additional storage capacity for foodgrain in the rural sector by supporting rural godowns and their size.

India

Prices, Risks & Uncertainties Ahead

Short-term Uncertainties

�The final outcome of 2011 harvests�The lifting or continuation of export restrictions�Political Instability in North Africa & ME region �Price developments in other commodity markets, oilseeds in particular�Outside factors: Oil prices, GDP, $, Japan, etc...

High & Volatile Prices to Continue into 2011/12

�Outside factors: Oil prices, GDP, $, Japan, etc...

Why grain prices remain volatile?

�Lower stocks than in the past�More production from less stable regions (in terms of yields) �Few exporters making up the bulk of export supplies�Export restrictions permissible �Growing links with outside markets: Energy and Financial

Special Features

•Summary of the current regulatory dialogue on position limits: The Dodd-Frank Wall Street Reform and Consumer Protection ActProtection Act

•Investor participation in Futures markets: comparing 2008 to 2011

•Managed Money versus Commercials

-20%

-10%

0%

10%

20%

30%

40%Net length as % of Open Interest

Commecial

Managed Money

Swap Dealers

Managed Money versus Commercials

-60%

-50%

-40%

-30%

Jun 2006 Dec 2006 Jun 2007 Dec 2007 Jun 2008 Dec 2008 Jun 2009 Dec 2009 Jun 2010 Dec 2010

0

5

10

15

20

25

30

35

Jun 2006 Dec 2006 Jun 2007 Dec 2007 Jun 2008 Dec 2008 Jun 2009 Dec 2009 Jun 2010 Dec 2010

USA (CME) Maize (cent/ton)

USA (CME)

Maize (cent/ton)

Market Indicators

•Food Import Bills 2011

•FAO Food Price Indices for May 2011

•Review of the Ocean Freights

•Trends in Fertilizer and Crude Oil Prices

•Evolution of the US Dollar Exchange Rate

FAO Food Price Indices