U.S. WHEAT the world’s reliable choice CHINA – MARKET BRIEFING U.S. Wheat Associates CHINA FEBRUARY 2008

China – Population: 1.3 billion

China Economy: Fastest Growing Major Economy ( 2007 growth 11.5% %) (Billion US$) Source: China National Statistics Bureau Exchange (2007), growth rate

High Per Capita GDP Growth (Unit: US$) Source: China National Statistics Bureau Exchange (2007), growth rate

China – Wheat area: PRC 23.5 MHa / USA 23.4 MHa

Dalian Xiamen Shenzhen Zhanjiang Lianyungang Huangpu Fangcheng Qinhaungdao Xingang Nantong Zhangjiagang Shanghai Ningbo China - 15 MAJOR PORTS 15 MAJOR PORTS Yantiai Qingdao

China Wheat Situation

China accounted for 49% of world stocks in 1999/2000, down to 29% Chinese vs. Rest of the World Ending Stocks

China’s Soybean Supply / Demand

China’s Rice Supply / Demand

China’s Corn Supply / Demand

China – Wheat Area and Production

China Wheat Production - Major Producer Provinces (Unit: MMT) Source: China National Grain & Oil Information Center (CNGOIC) * Estimate

China Wheat Yield - By Major Province (Unit: MT/Ha) Source: China National Grain & Oil Information Center (CNGOIC) * Estimate

China Daily Grain Market Price : Source: China National Grain & Oils Information Center Exchange since Sep since Nov since Jul since Aug since Jan 2008

U.S. FOB PNW Prices

SRW and Soft White Prices

Ocean Freight Rates for Grains

U.S. WHEAT the world’s reliable choice China Wheat Imports - Calendar Year – by Country (Unit: MMT) Source: China Customs Statistics

U.S. WHEAT the world’s reliable choice China Flour Imports - Calendar Year – by Country (Unit: TMT) Source: China Customs Statistics

China’s US Imports Purchases and actual imports: Containerized and bulk vessel shipments *(July – June) HRW – 0.5 SW/WW-5.8 NS/DNS-3.3 SRW – 57.3 SW/WW-178 NS/DNS-188 SRW – HRW – 0.3 SW/WW-10.5 NS/DNS-0.7 SRW –

U.S. WHEAT the world’s reliable choice China Wheat Exports - Calendar Year – by Country (Unit: MMT) Source: China Customs Statistics

U.S. WHEAT the world’s reliable choice China Wheat Exports - *Crop Year – by Country (Unit: MMT) Source: China Customs Statistics *Crop Year from June to next May

U.S. WHEAT the world’s reliable choice China Flour Exports - Calendar Year – by Country (Unit: 10 TMT) Source: China Customs Statistics

U.S. WHEAT the world’s reliable choice China Flour Exports - * Marketing Year – by Country (Unit: 10 TMT) Source: China Customs Statistics *Marketing Year from July to next June

China’s flour consumption estimates – 70 MMT

Market Quality Segments High Medium Low Medium Low Market Pressure CurrentFuture High

QSR Expansion (Quick Service Retail) Western-Style Fast Food Source: China Food Industry Association and internet Quick Service Retail Chains (QSR) # of outlets May 2004 # of outlets January 2005 # of outlets June 2007 Growth % 07 vs 05 KFC1,0001,4001, % McDonald’s % Pizza Hut % Dico’s %

HRW & HWW Use – China ( HWW or higher protein ) Western Pan Bread (only pan loaf tested in OVA) Sweet Breads European Hearth Breads Dumpling (Jiao Zi) Wrappers Premium Grade Chilled and Fresh Noodles

Policies Affecting Wheat Domestic & int’l price differential TRQ Value added tax - VAT Milling wheat and flour exports VAT, TRQ Flour exports to other Asian markets Animal & plant quarantine rules Dockage and non-wheat seeds TCK and KB fungus Insects MRL’s for pesticides Food labeling requirements

US Wheat Activities Trade servicing and information Weekly price report Crop and harvest progress reports Supply & demand reports Industry & Government relations Publications Chinese or dual language Sino – America Baking School Instructor training (USA, Europe, Asia) Baking technical servicing Milling technical servicing Wheat procurement training Overseas Varietal Analysis Asian products collaborative

U.S. WHEAT the world’s reliable choice Questions / Answers