Global Market Dynamics February 7, 2013

Commodity

Global Grain Prices Volatile & High 3 Grains

Live Hog Prices 4

World Corn Prices 5

World Soybean Meal Prices 6

US Corn Price ($/bu) – Structural Shift 7 All Time High

What are the Factors Causing This? Low Grain Stocks Weather Problems in US & South America China Impact Government Bio-Fuel Policy Plateauing Yields 8 Grains

Global Grain Stocks are Still Tight: Commodities to Remain High * 2012 Source: USDA 9 Ending Stocks Very Tight

Feb 5, 2013 Feb 2012Feb 2011 July 2012 Major Change in US Weather Situation 10

Weather Extremes -- Global Warming or Extreme Event? 11

China – Major Influence in Commodities 12 China

Source: Financial Times, Morgan Stanley 13 China

China Crop Dynamics 14 China

China/Hong Kong Pork Imports <2% Up 282% Since China

16 China’s Influence on Soybeans China

Corn Usage for Ethanol – 10% Blend 17 Gov’t needs to review mandate and modify it

Ethanol Mandate Hitting Blend Wall 18

World Crude Demand While US Moves toward Energy Independence, Asian Demand May Prevent Lower Prices 19

Planted Corn Acres – Steady Increase 20

Trends in Corn Yields Since Down 17% from 2011

Corn Balance Sheet Changes 22

Soybean Planted Acres – Stuck In Neutral 23

Trends in Soybean Yields Since USDA Down 19% from 2011

US Soybean Balance Sheet --- Heading to zero 25

Outlook

SOI Values -- El Nino / La Nina Update

2013/14 Corn Balance Sheet Scenarios

2013/14 Soybean Balance Sheet Scenarios

Mexico Economy Snapshot Source: USDA, EIA 30

Mexico Agriculture Snapshot Source: USDA, EIA 31

Protein

Global Protein Consumption Pork

Per Capita Pork Consumption 34 Pork

U.S. Pork Exports – Significant Demand Factor *China includes: China/HK and Taiwan*Includes pork and pork variety meats Estimated 24% of Production : 4,892 Million PoundsJan-Nov 2012: 4,502 Million Pounds Jan – Nov 2012 Up 2% 2011 Up 18% 23% of Production 2012 Exports will be key in sustaining current prices 2012 USDA Forecast: 3%

US Pork Exports

US Ham Exports 37

US Monthly Ham Exports to Mexico 38

US Hog Breeding Herd – Sept Stabilized – Moderate Expansion 39

Lowest Cattle Inventory Since Truman 40

Global Protein Outlook Cutback in EU pork of 3 – 5% Stable pork production in US and Canada China +/- 0.5% ??? Global beef production down 3 – 5% Global chicken production up 1 – 2% Global pork production flat to down 0.5%

Social Media & Public Concerns LFTB Beef Cage Free No Antibiotics No Hormones Gestation Crate Free These changes in current production systems will add cost and reduce supply 42

Key Takeaways US needs good weather for ideal crop on largest acreage since 1930s. Corn could approach $4 - $5/bu South American soybean crop important to keep meal prices in check. China to be the wildcard

Water….The New Oil Total volume of water on Earth is 1.4 billion km3 97.5% saltwater, 2.5% freshwater 70% of freshwater in icecaps or permanent snow cover 30% of freshwater is stored underground, < 1% in rivers and lakes 70% of water used for irrigations, 22% for industry, 8% for domestic use By 2025, 1.8 bln people will be living in regions with absolute water scarcity By 2025, 66% of world population living under water stress conditions Water Resources Water Uses (m3/inhab/yr) = Cubic meters per inhabitant per year Total Actual Renewable Water = maximum yearly amount of water available for a country at a given moment % of Freshwater Resources Withdrawn = % of freshwater withdrawn from total actual renewable water resources Ag Water Withdrawal = Amount of water withdrawn by ag sector as a % of all water withdrawn Water Scarcity