USSEC Overview and U.S. Soy Export Market Outlook

TEGMA Fall Symposium, St Louis, MO Sept 16, 2016Jim Sutter, CEO, U.S. Soybean Export Council

About USSEC The international marketing arm

of the U.S. Soy family

USSEC’s Focus:

• Differentiating and creating preference for U.S. Soy by promoting its intrinsic and extrinsic advantages – Intrinsic: Enhanced Amino Acid and Energy Content– Extrinsic: Reliability of U.S. Exporters, U.S. Infrastructure & Contract

Sanctity• Ensure that Market Access issues do not limit U.S. export

opportunities.– Offensive: Sustainability Advantage– Defensive: Biotech Approvals, MRL Issues, etc.

U.S. Soybean Export Council

• Funded by the soybean farmers checkoff, U.S. Department of Agriculture – Foreign Agriculture Service (USDA-FAS) and U.S. Industry Contributions

• Involved annually in 80 countries with approximately 125 staff and contractors

• Non-profit trade association with 90 member companies

• Founded in 2005 building on 50 years on U.S. soy farmer international Investments thru American Soybean Association (ASA) and the United Soybean Board (USB). USSEC was formed to create an independent International Marketing Organization.

U.S. Soybean Export Council (USSEC)

• Governed by a 15 member board of directors: (4) USB, (4) ASA, (2) allied industry and (5) exporter

• Independent 501-C-6 Trade Association. • In 2016, USSEC is managing investments of roughly $41 Million

USSEC’s members

Knewtson Soy Products

Boots on the ground

USSEC operational platforms

Trade services Market accessTechnical services

Global animal feeding is and will remain the top customer of U.S. Soy

International Soy Growers Alliance

• U.S. Secretariat in 2014 - 2016• Face to face meetings take place ~1X per year with conference call

and email dialogue more frequently• Consensus Group – focus on Biotech Approval Issues, Market Access

Issues• Strength of the Group comes in representation of 90+% of the

World’s Export Supply of Soybeans

Why growers use biotech crops – changing the discussion Internationally!

• Total increase in soybean farm income in 2013 $2.51 Billion

• Average cost saving per hectare in 2013 $62.00

• Net impact on farm income in 2013 including yield gains $144.53/hectare

• Average yield increase in 2013 with 2nd generation soybean traits 11 percent

Source: GM Crops: global socio-economic & environmental impacts 1996-2013. PG Economics UK, April 2015

96% of the world’s consumers live outside of the United States

Soybean Production: U.S., Argentina, Brazil, China and India2000/01 – 2015/16 and USDA Forecast for 2016/17

0

20

40

60

80

100

120

140

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

MM

T

Argentina Brazil USA China India

U.S. Domestic Use and Exports of Soybeans, Soymeal and Soyoil2006/07 – 2015/16 and USDA Forecast for 2016/17

1,441

1,5151,599

1,927 1,8611,716 1,735

2,056

2,313 2,373 2,433

1,6121,507

1,402 1,397 1,414 1,449 1,375 1,4051,538 1,559 1,612

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Milli

on B

ushe

ls

Exports Consumption

Roughly 60% of U.S. Soy production is exported as beans, meal or oil.

Some projections show this growing to 2/3 in 5 years.

Global Production and Consumption of Soybeans2000/01 – 2014/15 and USDA Forecast for 2015/16 and 2016/17

176 185197 187

216 221237

221 212

261 265240

269283

320 313330

172184 191 189

205 215 226 230 221238

251 258 262276

301316

329

0

50

100

150

200

250

300

350

MM

T

Production Consumption

Global Soybean Consumption2000/01 – 2016/17 and Trend to 2026/27

0

50

100

150

200

250

300

350

400

450

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

MM

T

If trend continues, the world will need 80 MMT additional soybeans in a decade

Annual Growth in Global Soybean Consumption2000/01 – 2014/15 and USDA Forecast for 2015/16 and 2016/17

12.211 12.92

6.982

-2.01

15.31

10.551 9.92

4.34

-9.01

15.0013.24

2.541.15

11.72

24.75

15.4012.37

-15

-10

-5

0

5

10

15

20

25

30

MM

T

Key Markets and Outlook

• China• Asian Sub-Continent (ASC) – India, Pakistan, Bangladesh, Nepal and

Sri Lanka• Others – some highlights

World’s Largest Soybean ImportersForecast for 2015/16 Marketing Year

1.12

1.25

1.35

1.40

1.75

2.20

2.20

2.30

2.30

2.55

2.60

3.25

3.95

13.70

82.50

0 10 20 30 40 50 60 70 80 90

Bangladesh

Pakistan

Vietnam

Korea, South

Iran

Russia

Turkey

Egypt

Indonesia

Taiwan

Thailand

Japan

Mexico

European Union

China

MMT

Soybean Imports by China and Rest of World1995/96 – 2015/16 and USDA Forecast for 2016/17

0

10

20

30

40

50

60

70

80

90

100

95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 2013/14 2015/16

MM

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China Rest of World

China’s Soymeal Consumption1971/72 – 2014/15 and USDA Forecast for 2015/16 and 2016/17

0

10

20

30

40

50

60

70

80

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

MM

T

China’s Consumption of Palm Oil, Peanut Oil, Rapeseed Oil, and Soybean Oil2001/02 – 2014/2015 and USDA Forecast for 2015/16

2.02 3.10 3.57 4.32 4.97 5.14 5.22 5.62 5.93 5.80 5.84 6.39 5.75 5.40 5.752.152.24 2.10

2.222.26 2.01 2.02 2.18 2.23 2.43 2.59

2.752.79 2.81 2.83

4.213.66

4.364.76 4.55 4.34 4.14

4.855.64 5.97 6.26

6.32 7.03 7.66 7.70

4.14

6.397.16

7.207.61 8.67 9.69

9.49

10.4411.11

11.9412.55

13.6614.28

15.03

0

5

10

15

20

25

30

35

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

MMT

Palm Oil Peanut Oil Rapeseed Oil Soybean Oil

China: Soy Consumption Growth

Source: China Statistical Year Book

China: Soybean Import

Source: U.S. Department of Agriculture / National Grain & Oil Information Center

China conclusions

• Complex Market – many intertwined factors – price and relationship both count.

• U.S. Soybean Trade is a ‘shining star’ among many more complicated Trade Issues.

• We work hard to maintain the relationship and believe we are on the right track – 12 people on our full-time China Team.

• Increased China Soy Production but faster growing Demand – expect see growth of 3 – 5 Myl MT imports per year through 2020.

ASC region

• We operate in 5 ASC countries – India, Bangladesh, Pakistan, Nepal and Sri Lanka

• India: Strategy was to reduce exports and competition by increasing internal consumption - This has yielded definite results. Region is now being prepared for opening import gates (next steps).

• Other countries: Strategy is direct marketing, taking advantage of rapid growth in demand and demonstrating preference for U.S soy

Middle class population – a driver in India

Working age, median age - India

With 365 million 10-24 year olds, India has the worlds largest youth population

Source: FICCI & Ernst & Young; in Financial Express 2013

Country Young population

China 269 millionIndonesia 67 million U.S 65 millionPakistan 56 millionBangladesh 48 million

Source: UN Population Fund (UNFPA) In: State of the World Population Report, 2014

Urbanization in South Asia

Country Population(2015)

Percent in Urban locations

Urbancount

Rate ofUrbanization

Bangladesh 168.95 M 34.30 59.95 M 3.55%India 1.26 B 32.70 412 M 2.38%Nepal 31.55 M 18.60 5.86 M 3.18%Pakistan 199.08 M 38.80 77.24 M 2.81%Sri Lanka 22.05 M 18.40 4.14 M 0.72%TOTALS 1.68 B 33.27 559.19

• Rural – Urban migration is rapid so is messy• However looks positive as this factor helps drive GDP growth• South Asia needs to develop more cities• Government is addressing new initiatives to better manage

this significant urbanization in ASCSource: CIA, 2015: World Fact Book

Rapidly changing meal consumption trend in ASC

2011-12 2014-15 % Change

World 177.94 202.57 13.84 %

ASC 4.56 7.16 57.01 %

Change is four times higher in ASC than in rest of the World

Based on USDA data, February 2016

Soymeal consumption trends in ASC (TMT)Country 2011/12 2014/15 2015/16 (E)Bangladesh 604 894 1,054Pakistan 435 1,356 2,200Sri Lanka 144 180 215Nepal 85 121 150India 3,300 4,610 5,080TOTALS 4,568 7,161 8,699

2011/12 12/13 13/14 14/15 15/16 Change

7,720 7,920 6,640 5,600 5,160 - 2,560India’s SBMProduction

USDA , February 2016

10.60 MMT beans are required to produce this

meal quantity Indian meal production is on

decline Y/Y

Soymeal demand in ASC by 2020

S.No Demand Sector Quantity Reference

1 Pakistan Poultry 1.420 Industry, WPSA (PK)2 Pakistan Aquaculture 0.200 USDA, WISHH

3 India Aquaculture 0.913 USSEC4 India Broiler 3.930 CLFMA5 India Layer 1.200 CLFMA6 India poultry breeder 0.453 USSEC7 Bangladesh Aquaculture 0.624 World Fish, USAID, USSEC, WISHH8 Bangladesh Poultry 0.696 Oil World, FAO OECD, WPSA (BG)9 Sri Lanka Poultry 0.186- 0.214 Industry; Livestock & Economics Dept10 Nepal Poultry 0.186 Nimbus, FAO11 Soy in ASC food use 0.857 USSEC (Ratan)

TOTAL 10.66 = 12.80 MMT SoybeansForecasted by USSEC using 2015 baselines from references mentioned

Growth in ASC animal feed; corresponding meal requirement by 2020Country * 2015 Feed

Production (MMT)

Rank ASC feed Growth

2016 2017 2918 2019 2020

India 29.43 5 9% 32.07 34.95 38.09 41.51 45.24Pakistan 6.20 30 9% 6.75 7.35 8.01 8.73 9.51Bangladesh 3.05 48 7% 3.26 3.48 3.72 3.98 4.25Sri Lanka 0.77 74 5% 0.80 0.84 0.88 0.92 0.96Nepal 0.75 76 6% 0.79 0.83 0.88 0.93 0.98TOTALS 40.20 44.57 47.45 51.58 56.07 60.94SBM@18% 8.02 8.54 9.28 10.09 10.96SBM@20% 8.91 9.49 10.31 11.21 12.18

•Alltech Feed Survey 2015 used as baseline for computation•Note: The 10.96 tallies with 10.66 MMT in the previous slide•Working to increase animal feed inclusions by just 2% creates an additional opportunity of 1 MMT, based on data above; also bringing in new businesses means more feed and soy

ASC aqua feed and soybean meal usage

Feed/SBM Use 2015 2017 2020

India Aqua Feed 1.46 2.14 2.80

India SBM use 0.408 0.692 0.913

BG Aqua Feed 1.50 2.33 3.54

BG SBM use 0.270 0.411 0.624

ASC Aqua feed Total 2.96 4.47 6.34

ASC SBM Total 0.678 1.1 1.5

India source: Forecasted by USSEC, program is closely managed by USSEC Bangladesh source: Computed by USSEC from World Fish, CGIAR, USAID 2013

U.S. soybean and meal imports into Pakistan and Bangladesh as percentage of totals

Country Total imports (TMT)

Share of U.S Soy (%)

Bangladesh 697 87% (603)

Pakistan 538 58% (314)

USDA , November 2015

Country Total imports (TMT)

Share of U.S Soy (%)

Sri Lanka 175 57% (100)

Soybeans Soy Meal

Pakistan’s Imports of Soybeans and Soymeal2004/15 – 2014/15 and USDA Forecast for 2015/16 and 2016/17

0.00 0.01 0.04 0.00 0.00 0.00 0.01 0.00 0.00 0.01

0.54

1.25

1.75

0.2270.307 0.35

0.219 0.273 0.246 0.2750.435

0.682

0.9241.036

0.60.7

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MM

T

Soybeans Soymeal

Bangladesh’s Imports of Soybeans and Soymeal2004/15 – 2014/15 and USDA Forecast for 2015/16 and 2016/17

0.13 0.130.20

0.130.19

0.100.05

0.26

0.40

0.570.70

1.121.20

0.211 0.189

0.3170.243 0.275

0.417

0.554

0.375 0.3630.258

0.3640.482

0.3

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MM

T

Soybeans Soymeal

ASC conclusions

• Rapidly changing environment – “wild west” mentality with many new to International Trade involved.

• Fast growing markets in Pakistan & Bangladesh driven first by changes in India and now their own internal demand growth.

• Sri Lanka is strong U.S. preference market – hope to emulate in other Countries.

• India will be slow to change – but eventually see them as importer –a few years away.

Top Markets for U.S. Soy2015/16 Marketing YearRank Soybeans Soymeal Soyoil1 China Mexico Mexico2 Mexico Philippines Peru3 Japan Colombia Dominican Rep.4 Netherlands Thailand Korea5 Indonesia Canada Colombia6 Germany Dominican Rep. Morocco7 Taiwan Venezuela Guatemala8 Spain Guatemala Venezuela9 Vietnam Ecuador Canada10 Bangladesh Peru Jamaica

The Americas

• Number 1 Soymeal and Soyoil Markets is Mexico!!!• Several other rapidly growing markets:

– Colombia – helped by FTA– Multiple smaller markets – intrinsic and extrinsic advantages seem to make

a difference!

Mexico’s Imports of Soybeans and Soymeal2000/01 – 2014/15 and USDA Forecasts for 2015/16 and 2016/17

4.384.51

4.23

3.803.64 3.67

3.843.61

3.333.52 3.50

3.613.41

3.84 3.823.95 4.00

0.320.45

0.690.79

1.25

1.73 1.78

1.401.52

1.21

1.50 1.55

1.301.51

1.802.00

2.10

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17

MMT

Soybeans Soymeal

Southeast Asia

• Philippines and Thailand– Strong meal markets – Preference for U.S. Soy

• Indonesia – large whole soybean market for Tempe production• Dynamic part of the world – look for continued growth – but heavy

spot for competition

Southeast Asia’s Imports of Soybeans and Soymeal2000/01 – 2014/15 and USDA Forecasts for 2015/16 and 2016/17

3.444.08 3.86

3.36 3.703.22 3.55 3.59 3.67

4.22

5.69 5.80 5.576.15

6.92 7.15 7.50

5.125.99

6.766.06

6.97

8.28

9.46 9.23 9.55

10.7211.13 11.42

12.49

13.75

15.1115.72

17.62

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

MM

T

Soybeans Soymeal

EU and MENA

• Europe – strong Bean Demand last year • Developing markets in Egypt, Turkey and Russia – all with Market

Access challenges• Stay tuned

EU Imports of Soybeans and Soymeal2000/01 – 2014/15 and USDA Forecasts for 2015/16 and 2016/17

17.6818.78

17.02

14.75 14.59 14.0115.18 15.14

13.21 12.68 12.47 12.07 12.5413.29 13.42 13.70 13.00

17.8

20.0 20.622.1 22.0

22.9 22.4

24.6

21.2 20.921.9

20.9

16.918.1

19.220.4

21.2

0

5

10

15

20

25

30

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

MM

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Soybeans Soymeal

North Africa’s Imports of Soybeans and Soymeal2000/01 –2014/15 and Forecast for 2015/16 and 2016/17

0.500.69 0.63 0.68

1.26 1.20

1.77

1.47

1.961.83 1.74 1.74 1.80 1.83

2.562.45

3.08

1.78

2.071.83

1.97

1.491.62

1.761.60 1.61

2.02

2.49 2.49

3.043.25

3.00

4.12

3.70

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17

MMT

Soybeans Soymeal

Middle East’s Imports of Soybeans and Soymeal2000/01 –2014/15 and Forecast for 2015/16 and 2016/17

1.75 1.812.03

2.37

3.29

2.89

3.523.79

3.17

3.88

3.52

2.20

2.55

2.98

4.80

5.255.50

2.532.27

2.52

2.99

2.382.17

2.602.91

3.853.67

4.30

4.954.81

5.28

4.35 4.34 4.27

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 2016/17

MMT

Soybeans Soymeal

Why International Customers Choose U.S. Soy

The U.S. Soy industry provides a Total Quality Experience …

… Quality high performing soy products delivered by the most reliable, consistent and sustainable soy supply chain in the world.

U.S. Soy Total Quality Experience

U.S. Soy Total Quality Experience

U.S. Soy Performance Advantage

• U.S. soy delivers a reliable and high-quality nutrient profile that provides customers the performance advantage they need.

• The U.S. soy industry delivers a consistent supply year-round lending to greater consistency of the end product for our customers.

• Expert support can help improve product performance. Soy experts located around the globe representing the U.S. soy industry provide customers with the latest soy research and information.

Soybeans as a protein source

• Amino acid profile gives a distinct protein advantage.• Soybeans are one of the few plants that provide a complete

protein with all 8 amino acids.• Soybeans are the world’s predominant protein source.• Overall digestibility of essential amino acids in SBM is greater,

which means that less protein is needed to satisfy the amino acid needs of the animal.

The performance advantage of U.S. Soy

Eleven feeding studies demonstrated that U.S. soybean meal gave better overall performance when compared to meals from other origins in terms of: • Feed efficiency• Average daily gain • Cost per unit of live weight Producers can significantly lower feeding costs as well as increase nutrient density of diets by using U.S. dehulledsoybean meal.

The performance advantage of U.S. Soy

In eighteen studies with broilers and layers, U.S. soybean meal provided superior overall feed conversion over soybean meals from other origins. • Better live-weight gain• Lower cost per unit of production (meat or eggs)Producers can considerably reduce feed costs increasing the profitability of the poultry enterprise.

Better digestibility translates to better livestock performance.

U.S. Soy Total Quality Experience

Complete delivery confidence

• Beyond quality soy products, customers of the U.S. soy industry experience a supply chain that delivers the consistent support, information and infrastructure needed.

• The U.S. Soy family aims to ensure that the soy industry and its customers have the freedom and infrastructure to operate.

RailroadsShuttle train system | Volume and speed

River systemPlays a vital role in moving grain into the global marketplace competitively

PortsExport Infrastructure - Capacity Expansion | Driven by Asian demand | Freight spreads favor PNW | Combination cargo capacity | Efficient operations | Anticipated yield & production growth

The world depends on our efficient delivery structure.

U.S. Soy total quality experience

Long-term partner

• It is our priority to continue delivering the highest quality experience possible.

• The U.S. soy industry invests funds to meet our customers’ needs with quality soy products and services to enhance and expand our markets.

• U.S. industry support and trade organizations provide promotion, support and collaboration on industry challenges.

• The U.S. soy industry is committed to helping meet the estimated 50 percent increase in protein by 2030 that will be required to feed our growing world.

Every day, U.S. farmers make a sustainability commitment to the environment, to our families and to a hungry world.

Why do farmers care?Growing family businesses … for generations | Enhancing diversity

and reducing inputs | Meeting customer demands | Improving profitability

Sustainability matters to our customers … and to their customers

• Ensures reliable, consistent, long-term supply• Meets end consumers’ growing environmental demands• Reduces impacts on planet and people• Keeps international markets open• Sustainability helps customers achieve financial benefits

USDA has made a commitment to conservation for 80 years• $6.5 billion annual investment in programs• 12,000 employees ensure compliance• 2,200 conservation offices

U.S. farmers are dedicated to innovation and best practices

Note: Data is presented in an index form, where the year 2000 = 1 and a 0.1 change is equal to a 10% difference. Index values allow for comparison of change across multiple dimensions with differing units of measure.

INDEX OF PER BUSHEL RESOURCE IMPACTS TO PRODUCE SOYBEANS, UNITED STATES, 1980-2011

In fact, for the past 20 years, we increased our crop yields while decreasing negative

environmental impacts

More than 95% of U.S. soybean acres participate in USDA conservation programs and a comprehensive auditing and data

collection system verifies U.S. sustainability

U.S. soy producers are world leaders in conservation.

U.S. Soybean Sustainability Assurance

Protocol Directives

Biodiversity and High Carbon Stock

Production Practices

Public Labor Health and Welfare

Continuous Improvement and Environmental Protection

Growing global demand forsustainability verification

• SSAP positively benchmarked by the 3rd Party ITC (WTO) as meeting the requirements of the European Feed Manufacturers’ Federation (FEFAC) Soy Sourcing Guidelines.

• These guidelines now accepted by the Consumer Goods Forum as a means of demonstrating sustainability.

U.S. Soy Shipments with an SSAP Certificate gaining momentum

• Allows customers to meet sustainability goals and supplier guiding principles

• Differentiates Customers utilizing Sustainable U.S. Soy from their competition

6,844

851,932

5,094,257

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

FY14 FY15 FY16 (YTD)

Met

ric T

ons

Certified-Sustainable U.S. Soy

Knewtson Soy Products

Increasing number of exporters shipping certified-sustainable U.S. Soy

While the U.S. Soybean Export Council (USSEC) does not guarantee the forecasts or statements of USSEC Staff or Contractors, we have taken carein selecting them to represent our organization. We believe they are knowledgeable and their presentations and opinions will provide listeners withdetailed information and valuable insights into the U.S. Soy and U.S. Ag Industry. We welcome further questions and always encourage listeners toseek a wide array of opinions before making any financial decisions based on the information presented. Accordingly, USSEC will not accept anyliability stemming from the information contained in this presentation.

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