PNWA International Trends For Northwest Grain Markets By Amer Y. Badawi Vice President Columbia Grain International, Inc.

Global Seaborne Dry Bulk Trade Grain Market Review Transportation Trends & Challenges Topics

GLOBAL SEABORNE DRY BULK TRADE

Dry Bulk Seaborne Trade Iron ore Iron ore Coal, Coke Coal, Coke Grains, Agribulks Grains, Agribulks Bauxite, Alumina, Phosphate Rock Bauxite, Alumina, Phosphate Rock Sugar Sugar Fertilizer Fertilizer Scrap, Steel Products, Pig Iron Scrap, Steel Products, Pig Iron Cement Cement Forest Products Forest Products

Seaborne Bulk Profile Clarkson Research & other

Seaborne Dry Bulk Trade Forecast Clarkson Research & other Historical Forecast adjustment from 6% to 3% growth.

IRON ORE

Iron Ore Trade volume

COAL

Thermal Coal Trade volume

Coking Coal Trade volume

GRAIN MARKET OVERVIEW

General Outlook for Grain 08/09 World Consumption up by 30MT (1.8%) to 1,714 MT. Almost entirely due to rise in Ethanol use; set to reach 124 MT. Slight increase in direct food consumption 0.6%. Trade Forecast up 4.1%

Grain Imports by Region PNW’s Geographical Advantage

World Grain Exports

Grain Exports from The “big 5”

WHEAT

Wheat Outlook  08/09 World Production: 679 MT 68 MT or 11% above last year’s. 28 MT in EU.  08/09 World consumption: 631 MT.  World Stocks: to go up by 19 MT, to 131 MT. US stocks to double, to 16 MT.  Shipments by 5 Major Exporters are forecast to increase by 1.8 MT, to 78.4 MT.  Shipments by US to fall by 10.1 MT to 24.5 MT due to greater export availabilities in other countries.

WORLD WHEAT PRODUCTION - MMT COUNTRYCY 2004CY 2005CY 2006CY 2007CY 2008 USA CANADA AUSTRALIA ARGENTINA FS INDIA PAKISTAN EGYPT IRAN AFHGANISTAN SYRIA IRAQ CHINA WORLD

IGC World Wheat Export

Price Trend?

Chicago Wheat Futures

CORN

TRANSPORTATION

Handymax Fleet Size

Bulk Carrier Unit Profile Total 6,903

Bulk Carrier DWT Profile 2. 5 B i l l i o n M e t r i c t o n s / Y e a r

Vessel Size DWT Profile Vessel Size Trend

Freight Deadweight Growth Fleet up 45%, in 7 years!

34 Handymax Fleet Age

Bulk Carrier Size/Age Profile Percent

36 Handymax Historical Earnings

Historical high earnings have been behind the Huge ship-building boom

Historical Earnings $/day

Global markets turmoil. effect on global economies, banks, ship mortgage, and …Psychology.

Baltic Panamax Index 2002 to date

Order book represents 70% of current fleet dwt capacity!

Rail Service

Major Rail Serving the US Burlington Northern Santa Fe (BNSF) Union Pacific (UP) CSX Corporation (CSX) Norfolk Southern (NS) Plus Two Canadian Railroads Canadian Pacific (CP) Canadian National (CN)

BNSF UP NS CSX CP CN North American Rail System

Grain Origination

Source: Association of American Railroads

Rail Shuttle Service… What it means to Grain Exporters?

Columbia Grain’s Newest Shuttle Facility Kasa Point, Montana 21,773 metric tons of storage Load shuttle in 10 hours Need for facility upgrade, i.e. spend more $$

Sits on 54.6 Hectares Loop is 1.5 miles Kasa Point

More cargo in one train?! Weather & Predictability issues

Barge Service Snapshot

Barge Statistics 725 MMT transported each year by barge in the U.S. 65 MMT Grains, 9% of total movement. Over 28,000 barges in the system. Over 60% of America's grain EXPORTS move by barge along the nation's inland waterways. Source: Army Corp of Engineers and the American waterways Association

Outlook & Trends for Pacific Northwest?

Delivered Cost Counts!

USA & PNW

Major U.S. Grain Load Ports 07/08 TOTAL U.S. EXPORTS: 6 year average volume 100 MMT Columbia River 24.5 MMT Duluth 4.1 MMT Houston 11.8 MMT New Orleans 67.2 MMT PNW Gulf of Mexico Great Lakes

Major U.S. Wheat Load Ports 07/08 TOTAL U.S. EXPORTS: 6 year average volume 25 MMT Columbia River 11.5 MMT Duluth 1.8 MMT Houston 7.2 MMT New Orleans 5.5 MMT PNW Gulf of Mexico Great Lakes

Columbia River Grain Output

U.S. Grain Movement by Mode

Columbia River Grain Movement by Mode

Challenges

Geography Rules

6 Weeks Ago EGYPT The world’s largest Wheat Importer PNW: Wheat $350 + Freight $88 = $439 USG: Wheat $290 + Freight $90 = $380 Black Sea: Wheat $280 + Freight $45 = $325 S. France: Wheat $280 + Freight $30 = $310 Australia: Wheat $242 + Freight $65 = $307 $ per ton

This Week EGYPT The world’s largest Wheat Importer PNW: Wheat $200 + Freight $45 = $245$194 USG: Wheat $195 + Freight $25 = $220$160 Black Sea: Wheat $200 + Freight $20 = $220$105 S. France: Wheat $220 + Freight $20 = $240$70 Australia: Wheat $190 + Freight $40 = $230$77 $ per ton

Is the Columbia River deep enough?

How big & deep is a Panamax? 60,000 Tons 40’ 65,000 Tons 43’ 72,000 Tons 47’ 78,000 Tons 50’

43” on the Columbia River expected in Already about 13,000MT short of full Panamax load… today.

$45 $35 $ per ton What will full load mean in $$? Freight Columbia River to EGYPT

Most Notable Trends Ship SizeFleet Size Freight ValueCommodity Value

Thank you!