Independent, Unbiased, Authoritative Serving the Oilseed, Oil & Meal Industries, Trade, Organizations & Associations World Supply, Demand and Price Outlook for Oilseeds & Veg. Oils - - Impacts on the EU Thomas Mielke, ISTA Mielke, Oil World, Germany International Oilseed Producers’ Dialog Organized by the UFOP in Berlin on 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Some Introductory Remarks Comments to ISTA Mielke GmbH : Independent; no supply & demand engagement, no involvement in trading (futures + cash); Since 1958 analyzing and projecting global supply, demand and price developments Oil World publications: readers in 100 countries In June 2008 new releases: - - the new comprehensive ANNUAL a special biodiesel report Visit us on the Internet at

Internet: © ISTA Mielke, Oil World, Hamburg Prices jumping to new territory ! 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Current fundamentals - - the most bullish ever registered. Global Outlook for Oilseeds & Products 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Boost by 78 Mn T in 17 years or 4.6 Mn T on average. But accelerated growth by 7.8 Mn T per annum in the past 3 years. Strong Demand

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008 World Production of 17 Oil & Fats Set to rise by Mn T in 2008/ compared to an increase of 7.4 Mn T in 07/08

Internet: © ISTA Mielke, Oil World, Hamburg 11 June Huge Global Demand Growth since , due to biofuels -High price and demand rationing 2007/08 Bio-Fuels and 17 Oils/Fats

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Conflict: Food versus Fuel Rising demand for Biofuel takes away acreage for food output Skyrocketing veg oil prices have already reduced demand of veg oils for fuel by 2.5 – 3.5 Mn T (Germany, oth EU, USA, Argentina, Malaysia, other Asia, Turkey...) Potential for price setback is limited

Internet: © ISTA Mielke, Oil World, Hamburg Rising Dependence on Palm Oil Palm oil best suited to cover growing world food demand and to cover rapidly rising biofuel requirements. Huge output increases seen in next 5 years Palm oil usage to surge by 3.6 Mn T in 2007/08 and world Stocks up by 0.5 Mn Exports of 32.8 Mn T will account for 54% of world export in 2007/08 Lack of logistics (storage, transportation, ports,...) of increasing concern But rising resistance against palmoil 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 19 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Total: Mn haTotal: Mn T Oil Palm 4.5%Palmoil & Palmkerneloil 34.2% Soya Oil 30.1%Soya 40.5% 10 OILSEEDS: World Harvest. Area and Veg. Oil Output in 2006/07 Internet:

Internet: © ISTA Mielke, Oil World, Hamburg World Trade 61 Mn T in 2007/08 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg CHINA: Oilseed Output down by 5 Mn T in the 2007/08 Season 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 19 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg The Global Outlook of Oilseeds and of Oils & Fats Fundamentals for oilseeds and vegetable oils point to the most bullish situation ever registered. Acreage Fight Between Grains and Oilseeds 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Early Oil World Forecast for 2008/09: Area +11 Mn ha and Output +29 Mn T 10 Oilseeds 419 Mn T (up 29) Soya 243 Mn (up 20) Rape 52 Mn T (up 4) Sunseed 31 (up 3) Cottonseed 44 (up 1) Groundnuts shelled 24 Mn (unchanged) Palmkernels 12 Mn T (up 1) World Supply & Demand of Oilseeds 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Annual Usage growth accelerated to 15 Mn T lately Global Outlook of Oilseeds & Products Consumption in Mn T : 252 in 94/95 and 406 in 07/08 = = = = average 12 Mn T per annum (+15 in the lastest 3 seasons ) 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008 But even with 29 Mn T higher Output, World Supplies to rise only 13 Mn T in 2008/09 due to low opening stocks

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Oilseed Stocks reduced by 16 Mio T in 2007/ Concern about 2008/09 19 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg

Impacts from Bio-Fuels Politically driven Growth in Demand of Vegetable Oils for Biodiesel Production Exceeds what the Market can produce (time lags & limitations) Competition for acreage intenfying (between garins and oilseeds) Repercussions on the food markets

Internet: © ISTA Mielke, Oil World, Hamburg 4.0 billion bushel or 32% of the US corn crop likely to be used for ethanol production in 2008/09 Implications from Corn and Ethanol 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Fight for Acreage is pulling Prices higher 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Crude Mineral Oil Prices 14 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg 19 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg Mounting Overcapacity in 2007 and 2008 Too ambitious Government Targets 19 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg

Biodiesel Production Targets Total world demand of vegetable and animal oils & fats for biofuels - - based on already announced biofuel production or mandatory admixture targets - - will be about as follows: 21.5 Mn T for the year Mn T for Mn T for 2017 This is sharply more than can globally be produced for biofuel usage from oils & fats 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg We estimate that for the 4 oils & fats analysed (soya oil, rapeseed oil, palm oil and tallow) actual world consumption for biofuels can reach at best : Mn T per annum in 5 years ending 2015 (which already assumes high prices and demand rationing for food of about 2 Mn T per annum), Mn T per annum in the 5 years ending 2020 (assuming demand rationing via high prices in the food sector by 3-4 Mn T per annum) 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Projected World Consumption for Biofuels 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Basis our assumptions and currently announced targets there is an estimated deficit of Mn T per annum in the 5 years ending 2015 and of at least Mn T per annum in the 5 years ending 2020 Bullish impact on prices ! 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Vegetable Oils can cover only a minimal Portion of Crude Oil Usage (0.3% currently)

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 11 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Outlook: Production of Soybeans until the 2010/11 Season

Internet: © ISTA Mielke, Oil World, Hamburg SOYBEANS : World Production by Country ( Mn T ) 26 May 2008

Internet: © ISTA Mielke, Oil World, Hamburg SOYBEANS: World Production, 5-Year Averages (Mn T)

Internet: © ISTA Mielke, Oil World, Hamburg RAPESEED & CANOLA: World Production by Country ( Mn T ) 26 May 2008 The long-term Outlook for Rapeseed & Canola

Internet: © ISTA Mielke, Oil World, Hamburg RAPESEED & CANOLA: World Production, 5-Year Averages (Mn T)

Internet: © ISTA Mielke, Oil World, Hamburg Prices Conclusions World market prices of oilseeds and vegetable oils are likely to stay unusually high, as long as:.. stocks of oilseeds, oils and grains are so low.. the structural global production deficit persists.. and the too high and growing biodiesel admixture targets remain in place worldwide Only moderate downward potential of the current very high oilseed and vegetable oil prices in the medium term and - - longer term - - the risk of higher prices, unless Government targets for biofuels are scaled down 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Very low stocks of oilseeds, oils and grains worldwide at the end of the 2007/08 season. There is no room for any weather problems in If it occurs, significant price rally likely. Heavy rain and losses pushed US corn futures to new price highs on June 12 ($ 7.55 for Dec 08) Factors to Watch 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 16 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg 16 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg The Argentine farm crisis. - - Nationwide strike & disruption of exports. (Arg. is key exp.) Supply Growth limited medium to longer term by - - shortage of land, water - - climate change (impacts ? ?) Factors to Watch 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Inflation fears have provided upward momentum for commodity prices in general and agricultural prices in particular. Mineral oil prices surged to record US $ 139 in June 2008 (but appears overvalued). PRICES of oilseeds and veg oils linked to energy prices. Also, production costs up steeply (for inputs, field work, transportation,..) Increasing importance of funds (huge investm.) Factors to Watch 12 June 2008

Internet: © ISTA Mielke, Oil World, Hamburg Prices of veg. oils and meals will set new records in Jan/Dec Only moderate downward potential for prices in Higher prices ahead again in June 2008

Independent, Unbiased, Authoritative Serving the Oilseed, Oil & Meal Industries, Trade, Organizations & Associations Thank You for Your Kind Attention ! Thomas Mielke If I can be of any assistance to you in the futures, you may contact me at: or office phone wwww.oilworld.biz