2. Global Grain Harvests

3. Summary of Global Grain Harvests

4. The 3 Main Grain Markets are hugely dependent on each other

5. July 26 th 2012 US warns drought will push up food prices in 2013 So how does the US Corn Price relate to the price of a loaf of Kingsmill ? Corn is the worlds main feed (Human & Animal) and fuel crop Corn / Soya / Wheat are interchangeable for feed use. In normal years farmers plan the highest value crop, this current crop year it was Corn The crop has failed in the US (the key grower) so is in short supply. Those that need corn will chase a reduced availability, increasing price Others will switch to soya & wheat, but the price for these will follow corn UK wheat prices follow world prices, our costs go up. August 1 st 2012 Pain felt in the Midwest is about to cross the Atlantic

6. Global Grain Harvests

7. Source: USA Dept of Agriculture Of the Top 10 Producers of Wheat, All have a degree of risk.

8. Global Grain Harvests

9. Black Sea exports underpin the worlds base quality usage – The headlines July 25 th 2012 July 30 th 2012 Russian Crop Yield Seen Declining to 1.82 Tons a Hectare July 25 th 2012 Fears grow over Russian grain exports Yuri Sheludyakov, a wheat farmer in Novosibirsk in western Siberia, can easily sympathise with his counterparts in the drought-ravaged US Midwest. After two months of scorching heat and no rain, his wheat crop is in trouble. “We are heading towards a nightmare. We don’t expect anything good,” he says July 31 st 2012 Russia cuts grain harvest forecast as drought and heatwave bite Russia’s agriculture ministry has revised downwards its forecast for the grain crop this year as farms in the Volga River region and Siberia sizzle in a heatwave and drought. Analysts warn that the problems, coinciding with a disastrous harvest in the US Mid-West, will leave Russia with only a small surplus of grain for export just when world markets need supplies most

10. Global Grain Harvests

11. FRANCE In France, the EU's largest wheat producer, the return of rain late last week revived concerns about harvest delays and possible quality damage in northern French grain belts, which could spoil a crop that has so far produced strong yields and satisfactory quality. After last week's dry and hot weather helped harvesting, storms and heavy showers between Friday and Sunday soaked some fields where plants are now ripe for cutting. "Up till now it wasn't too serious as the wheat crops were barely ripe but now there's little room left for manoeuvre," said Michel Portier, head of grains consultancy Agritel FRANCE In France, the EU's largest wheat producer, the return of rain late last week revived concerns about harvest delays and possible quality damage in northern French grain belts, which could spoil a crop that has so far produced strong yields and satisfactory quality. After last week's dry and hot weather helped harvesting, storms and heavy showers between Friday and Sunday soaked some fields where plants are now ripe for cutting. "Up till now it wasn't too serious as the wheat crops were barely ripe but now there's little room left for manoeuvre," said Michel Portier, head of grains consultancy Agritel GERMANY "Some dry weather will push us to a reasonable crop," one analyst said. "There is some concern about quality damage such as lower protein content if rain continues. But this is still only concern at the moment and there is still time for further positive development." GERMANY "Some dry weather will push us to a reasonable crop," one analyst said. "There is some concern about quality damage such as lower protein content if rain continues. But this is still only concern at the moment and there is still time for further positive development." SPAIN Spain's wheat harvest is almost finished and is expected to be down sharply on the year. But with two key regions Castilla y Leon and Navarra still to finished in the next 1-2 weeks, the final harvest picture is still unclear. "We are waiting, perhaps in a week or so's time for those regions to confirm the disaster we've been expecting for the harvest this year," said Gregorio Juarez of the young farmers' association in Madrid. SPAIN Spain's wheat harvest is almost finished and is expected to be down sharply on the year. But with two key regions Castilla y Leon and Navarra still to finished in the next 1-2 weeks, the final harvest picture is still unclear. "We are waiting, perhaps in a week or so's time for those regions to confirm the disaster we've been expecting for the harvest this year," said Gregorio Juarez of the young farmers' association in Madrid.

12. Global Grain Harvests

13. UK weather conditions - Wet High risk of Mycotoxins, plus low hagberg. Early July was as wet as June. Jet stream moving, may help certain counties as it get drier.

14. Sales in the bread division fell 3.6 percent to 348.3 million pounds. Milling sales dropped 8.3 percent, reflecting lower wheat prices, a trend which was reversed owing to the U.S. drought and excessive rainfall in the U.K., Clarke said. “It’s inevitable that this is going to lead to higher wheat commodity prices,” he said. “We will feed those through to pricing.” The Group closely monitors and maintains controls and policies to mitigate wherever possible the effect of such commodity fluctuations. As required, measures to offset the impact of this recent input cost inflation will be taken in the second half of 2012. Premier Foods quarterly trading statement 7 th August 2012 This is an Industry Issue

15. The global grains situation is a concern, a summary July USDA report – very bullish, corn yields reduced to 146 bu/ac Strategie Grains marginally lowered overall EU crop size from 124.2 Mmt to 123.6 Mmt, in its July report Concern for EU wheat due to wet weather Low protein and yield Quality unknown Dry weather in China, Australia, USA Wet UK weather has caused bread quality premium to rise significantly Concern for crops in Russia and the Ukraine Russian crop now likely to be less than 50 Mmt FSU crops getting smaller, reducing exportable surpluses – USDA July report reduced wheat production by 6.2 Mmt to 88.56 Mmt

16. Other Ingredient Costs ?

17. Soya Comments – * 2011/12 remains bullish due to reduced South American supply – 15% down. The worst since 1988. * China’s imports from October to May are currently at 38.357mnt, up 13% omn last * The 2012/13 US crop good to excellent rating has been reduced by 20% over the last 2- 3 weeks and with weather forecasters predicting more hot and dry weather – most believe time has run out for Beans to recover.

18. Rapeseed Oil * Damage from winter frost and diseases likely to decimate the rapeseed crop to only 17.5 million tonnes in 2012, a 5-year low and down 1.5 million tonnes from last year. * Stocks of canola have reduced in Canada because of the record pace of exports and crushing. As of end-March the 2012 stocks were at a 4-year low of about 6.3 million tonnes, compared with the 7.2 million tonnes a year and 7.9 million tonnes two years ago.