1. 2010 World & U.S. Wheat Situation 2010 Hard Red Spring & Durum Quality December 7, 2010 Jim Peterson Marketing Director North Dakota Wheat Commission jpeterso@ndwheat.com www.ndwheat.com

2. World Wheat Situation Production far below early summer projections…but still 3 rd highest on record – Russian drought, reduced Canadian acres, Western Australian drought Usage will reach record high – Exceed production for first time in 3 years – Continued food growth – Increase in feed use…low quality wheat in EU/CAN/AUS Ending stocks expected to decline..but still historically large Supply situation different than in 2007-08 when prices soared to double digits but concerns over 2011 prospects pushing prices U.S. export share up dramatically

3. WORLD WHEAT PRODUCTION AND USE WORLD WHEAT PRODUCTION AND USE Million TonMillion Bushel

4. WORLD WHEAT PRODUCTION – MAP (Million Bushels) USDA October 2010 xldata./world/all/prod & use

5. WORLD WHEAT STOCKS Million Bushels Source: USDA

6. WORLD WHEAT EXPORTS Million Bushels Source: USDA

7. U.S. WHEAT PLANTINGS & PRODUCTION Acres/Bushels Source: USDA Small Grains Summary Million AcresMillion Bushels Historically low winter wheat acres but offset by record national yield

8. Historical U.S. Wheat Yields Bushels Per Acre

9. U.S. WHEAT SUPPLY & DEMAND Million Bushels 05-0606-0707-0808-0909-10Proj 10-11 Change Beg Stocks 54057145630665797649% Production 2,1051,8082,0512,4992,2182,2080% Imports 82122113127119110-8% Tot Supply 2,7272,5012,6202,9322,9933,29410% Dom Use 1,1461,1371,0501,2601,1371,1965% Exports 1,0099081,2631,0158811,25042% Tot Use 2,1552,0452,3142,2752,0182,44621% End Stocks 571456306657976848-13% S/U Ratio 26%22%13%29%48%35% Source: USDA

10. EXPORT PACE FOR U.S. WHEAT (Shipments and Sales as of November 25, 2010) Million BushelsMillion Tons

11. U. S. FUTURES TRENDS Minneapolis – Hard Red Spring Kansas City – Hard Red Winter Chicago – Soft Red Winter – World prices $ per Ton$ per Bushel Shortage of quality wheat in world market and strong U.S. exports have pushed MPLS and KC prices higher.

12. U.S. Hard Red Spring Wheat Share of production by state 18% 49%15% 10%

13. U.S. HARD RED SPRIJNG 2010 Overview  A second year of very strong yields with little to no disease pressures but a more challenging harvest in western areas compared to 2009  Planting / Emergence  Timely in the central and east but some delays in western areas  Growing Season  Excellent subsoil moisture and timely rains  Minimal disease pressures  No excessive heat  Record yields for the region  Harvest  Timely, rapid harvest in eastern half of the region  Later than normal in western areas with parts of Montana and northwest North Dakota hit by long delay in September

14. U.S. SPRING WHEAT PLANTINGS & PRODUCTION Source: USDA Small Grains Summary Xldata/HRS/Acres * Typically includes 30-60 million bushels of white spring wheat. Million AcresMillion Bushels

15. U.S. SPRING WHEAT PRODUCTION BY STATE Million Bushels Source: USDA Small Grains Summary Montana had largest production gains in 2010

16. U.S. Hard Red Spring Wheat 2010 Harvest Progress As of August 29 31% 74%97% 95% Nationally – 69% versus 75% normal MN and SD completed ND near normal, MT well behind

17. U.S. Hard Red Spring Wheat 2010 Harvest Progress As of September 12 56% 85%100%

18. U.S. HARD RED SPRING DEMAND Million Bushels Source: USDA

19. COMPARATIVE U.S. WHEAT PROTEIN LEVELS 12% Moisture Basis Protein Content 10/26/10

20. COMPARATIVE U.S. HRS & CWRS PROTEIN LEVELS 12% Moisture Basis Protein Content 10/26/10 Grade shortfalls and low protein dual challenge with Canadian crop in 2010

21. EXPORT PACE – U.S. HRS WHEAT 2010-11 as of November 25, 2010 Million TonsMillion Bushels

22. U.S. HARD RED SPRING SUPPLY & DEMAND Million Bushels 05/0606/0707/0808-0909-10Proj 10-11 Change Beg Stocks 1591321176814223465% Production 4674324505125485704% Imports 125048454135-15% Tot Supply 63861461562573183915% Dom Use 225247242273282268-5% Exports 28225030521021436070% Tot Use 50649754748349662825% End Stocks 13211768142234211-10 S/U Ratio 26%24%12%29%47%34% Source: USDA

23. U.S. HARD RED SPRING 2010 Quality Summary:  Average grade - #1 Northern Spring with above average test weights  Improved protein levels over record low 2009 crop, but still below traditional level  Little to no damaged kernels, but lower vitreousness (color) and some pockets of lower falling numbers  Performance – Increased flour yields, lower absorption, some improvement in dough strength and similar loaf volumes (both still below traditional levels) Data is based on collection of 713 producer samples -- represents entire harvest with the exception of parts of Montana. Analysis by North Dakota State University, Plant Sciences Department, Hard Red Spring Wheat Quality Lab

24. HRS: Grade Distribution Percent

25. HRS: Test Weight Pounds/bushel

26. HRS: Total Defects Percent

27. HRS: Protein Content (12% Moisture Basis) Percent

28. HRS: Protein Content Distribution

29. HRS: Protein by Area (12% moisture basis – percent) A 12.8 E 13.6 C 13.5 B 13.4 D 13.5 A 14.1 B 13.6 A 13.1 C 13.3 A 13.5 B 14.2 C 14.7 E 14.4 D 14.5 B 13.8 F 13.8

30. HRS: Falling Number Seconds

31. HRS: Vitreous Kernel Count Seconds

32. HRS: 2010 Vitreous Kernels by State (percent) 74 77 70 58

33. HRS: Flour Extraction Test milling was conducted on a Buhler laboratory mill. Results are suitable for comparison between crop years, however yields are lower than those obtained in commercial mills. Percent

34. HRS: Flour Protein (14% moisture) Percent

35. HRS: Farinogram Absorption Percent

36. U.S. Hard Red Spring: Dough Mixing Strength Mixogram Score Scale 1- 8 Reference Farinograms

37. U.S. Hard Red Spring Wheat Dough Quality : Farinograph Times Minutes Classification 050607080910 Peak5.710.89.67.16.36.2 Mix Tolerance 9.922.422.111.09.910.2 Class5.17.56.95.04.8

38. HRS: Stability by Area (minutes) A 9.0 B 6.5 C 7.5 A 10.5 B 10.0 D 11.5 C 11.0 E 8.5 A 11.5 D 11.0 E 14.0 B 9.5 A 9.0 B 9.5 C 12.0 F 10.0

39. HRS: Loaf Volume Cubic Centimeters

40. HRS: 2010 Loaf Volume by State (cubic cm) 894923943 917

41. WORLD DURUM PRODUCTION Million Bushels Source: Stats Canada and Int’l Grains Council

42. WORLD DURUM PRODUCTION – MAP (Million Bushels) Source: Stats Canada and Int’l Grains Council

43. Durum Stocks in Major Exporters U.S., Canada, European Union (As of June 1) Source: Stats Canada and Int’l Grains Council Million TonsMillion Bushels

44. WORLD DURUM EXPORTS Million Tons Others includes Turkey, Syria, Mexico and Australia Source: Int’l Grains Council

45. U.S. DURUM 2010 Overview  Record yields and production in MT. Smaller Desert Durum Crop in AZ and CA (reduced acres). Larger durum crop in ND (higher acres). Quality of Northern crop compromised by September rains/frost.  Overall production  Similar to 2009  Demand  Still seeing strong domestic use  Export sales started strong but have since fallen behind last year due to political issues in Algeria, weaker Euro and compromised quality  Prices  Wide quality price spreads in the market ($3.50 to $7.25)  Top-end durum is nearly a $1 below 14% protein HRS

46. U.S. DURUM WHEAT PLANTINGS & PRODUCTION Source: USDA Small Grains Summary Xldata/durum/acres Million BushelsMillion Acres

47. U.S. DURUM WHEAT PRODUCTION BY STATE Million Bushels Source: USDA Small Grains Summary Desert Durum accounted for smaller share of 2010 crop

48. DURUM SUPPLIES IN THE U.S. Source: USDA Million Bushels Million Tons

49. U.S. DURUM DEMAND Million Bushels Source: USDA

50. EXPORT PACE – U.S. DURUM WHEAT 2010-11 as of November 25, 2010 Million TonsMillion Bushels

51. U.S. DURUM SUPPLY & DEMAND Million Bushels 05/0606/0707/0808-0909-10Proj 10-11 Change Beg Stocks 3840228253540% Production 101537284109107-1% Imports 32424038354015% Tot Supply 1711351341301691827% Dom Use 847984819089-1% Exports 47354224445014% Tot Use 1311141261051341392% End Stocks 4021825354323% S/U Ratio 31%18%6%24%26%31% Source: USDA

52. U.S. NORTHERN DURUM 2010 Quality Source: North Dakota State University Durum Wheat Quality Lab Plant Sciences Department Summary:  Crop averages a #1 HAD but first 60% of the crop is of much higher quality than last portion  Near average test weights but below average protein, vitreous kernels and falling numbers  Milling extractions higher than 09 and 5- yr average  Semolina mixing strength near average  Pasta color scores and cooked firmness below average due to September rains 2009 Carryover stocks remain high and the crop was of excellent quality…will help mitigate some quality issues in 2010 Data based on 204 producer samples collected during harvest. Last 20% of MT crop not sampled due to late harvest Last 20% of MT crop not analyzed

53. N.D. Durum Harvest Progress

54. U.S. Northern Durum Grade Distribution Percent

55. DURUM: Test Weight Pounds/bushel

56. DURUM: Falling Number Seconds

57. DURM: Falling Numbers by Crop Area A 432 B 414 A 264 B 323 C 372 D 443

58. U.S. Northern Durum: Vitreous Kernel Content

59. DURUM: Vitreous Kernel Content Distribution

60. DURUM: 2010 Vitreous Kernels by Crop Area (percent) A 87 B 86 A 79 B 82 C 88 D 84

61. DURUM: Total Defects Percent

62. DURUM: 2010 Total Defects by Crop Area (percent) A 0.8 B 1.0 A 3.2 B 1.3 C 1.2 D 0.9

63. DURUM: Protein Content (12% moisture basis) Percent

64. DURUM: 2010 Protein Content by Crop Area (12% moisture DURUM: 2010 Protein Content by Crop Area (12% moisture) A 13.1 B 13.1 A 13.5 B 13.4 C 13.9 D 13.6

65. DURUM: Semolina Extraction Percent

66. DURUM: Semolina Mixing Strength Mixogram Score Scale 1- 8 Reference Mixograms

67. DURUM: 2010 Semolina Mixing Strength (mixogram score by crop area) A 7.0 B 5.0 A 5.0 B 6.0 C 6.0 D 6.0

68. DURUM: Pasta Color Score Scale of 1-12 A pasta sample with a score of 8.0 or higher is considered to have good quality.

69. DURUM: 2010 Pasta Color Score scale of 1 -12 A 8.5 B 9.0 A 8.0 B 8.0 C 8.5 D 8.5

70. DURUM: Pasta Cooked Firmness Grams cm

71. DURUM: 2010 Pasta Cooked Firmness grams cm A 4.2 B 4.8 A 4.4 B 4.2 C 4.4 D 4.8

72. Average N.D. Hard Red Spring & Durum Wheat Producer Bids Per Ton Per Bushel Source: Basket of average 9 ND elevator bids posted in AgWeek What does recent price gains in HRS mean for 2011 acres in U.S?

73. THANK YOU! QUESTIONS?

74. U.S. SPRING WHEAT PLANTINGS BY STATE Million Acres Source: USDA Small Grains Summary 9/30/10