1. World Sugar Market Outlook Stefan Uhlenbrock F.O. Licht Commodity Analysts Ratzeburg, Germany 2009 Int. Sweetener Colloquium 8-11 February 2009 Orlando

2. International Sweetener Colloquium, 8-11 February 2009, Orlando 2 World Raw Sugar Prices: NY #11 Cents/lb 15.07 9.52

3. International Sweetener Colloquium, 8-11 February 2009, Orlando 3 Key factors of price formation  Speculative activity  Crude oil and commodity prices in general  Energy policy  Sugar policy  Freight rates  Exchange rates  Interest rates  International Trade Policy and Agreements  Inflation  Political reform

4. International Sweetener Colloquium, 8-11 February 2009, Orlando 4 long short Open interest long/short ICE Non-Commercial Futures Position and Total Open Interest (1,000 contracts)

5. International Sweetener Colloquium, 8-11 February 2009, Orlando 5 2007/08 Another year of surplus What about 2008/09?

6. International Sweetener Colloquium, 8-11 February 2009, Orlando 6 World Raw Sugar Prices: NY #11 Cents/lb 11.75 10.82 11.81

7. International Sweetener Colloquium, 8-11 February 2009, Orlando 7 Crop years2008/092007/082006/072005/06 Europe23.826.427.230.6 Africa10.610.210.110.3 North & Central America 19.7 19.818.3 South America41.740.240.435.5 Asia56.367.564.047.1 Oceania4.85.25.65.8 World156.9169.2167.0147.7 Change %-7.31.413.14.3 World Sugar Production mln tonnes, raw value Feb 2, 2009

8. International Sweetener Colloquium, 8-11 February 2009, Orlando 8 October/September2008/092007/082006/072005/06 Beginning stocks76.774.364.361.3 Production160.5168.1167.4151.4 Imports53.350.151.754.1 Consumption161.0158.7152.6146.1 Exports55.857.056.556.3 Ending Stocks74.176.774.364.3 Stocks in % of consumption 46.048.348.744.0 World Sugar Balance mln tonnes, raw value Feb 2, 2009

9. International Sweetener Colloquium, 8-11 February 2009, Orlando 9 Key market drivers

10. International Sweetener Colloquium, 8-11 February 2009, Orlando 10 Ethanol: The wild card in the game

11. International Sweetener Colloquium, 8-11 February 2009, Orlando 11 Crude vs. Corn vs. Sugar indexes ICE Raw sugar +217% +14% +201% Brent Oil CBOT corn As at early June 2008

12. International Sweetener Colloquium, 8-11 February 2009, Orlando 12 Why has corn moved up (and down) in line with crude oil but sugar not?

13. International Sweetener Colloquium, 8-11 February 2009, Orlando 13  Tight global grain markets due to several years of poor crops Stocks-to-use ratios:Corn15.7% 2008/09Wheat22.7% Sugar46.0%  Corn use for ethanol rises faster than cane use for ethanol % of crop used for fuel ethanol05/0606/0707/0808/09 US corn14.420.123.226.2 Brazilian sugar cane50 5558

14. International Sweetener Colloquium, 8-11 February 2009, Orlando 14  US cropland is scarce Corn area increased by 20% in 2007, but total plantings by just 1.3%  Brazilian (non-Amazon) cropland is not scarce  Brazil‘s gasoline prices are government- controlled and do not fluctuate in line with global oil prices

15. International Sweetener Colloquium, 8-11 February 2009, Orlando 15 Ethanol feedstockCane/beetMolassesGrainsOthers USAX BrazilX European Union(X) X ChinaXX CanadaX IndiaX ThailandX(X) PakistanX Philippines(X) Can ethanol eat away the sugar glut?

16. International Sweetener Colloquium, 8-11 February 2009, Orlando 16  Except for Brazil, ethanol production directly from cane juice is not (yet) a reality on a large scale  Ethanol is often produced from the the sugar by-product molasses (no rival use of cane)  Surplus cane sugar will continue to pressure sugar prices

17. International Sweetener Colloquium, 8-11 February 2009, Orlando 17 Crude vs. Corn vs. Sugar indexes Raw sugar +7% +41% +77% Brent Oil CBOT corn As at February 3, 2009

18. International Sweetener Colloquium, 8-11 February 2009, Orlando 18 Years% Change 1950s1.74 1960s1.97 1970s1.83 1990s1.71 2000‘s1.41 2010‘s1.16 2020‘s1.03 2030‘s0.82 2040‘s0.52 World population increase

19. International Sweetener Colloquium, 8-11 February 2009, Orlando 19 +27 World Sugar Consumption (mln tonnes, raw value)

20. International Sweetener Colloquium, 8-11 February 2009, Orlando 20 The world needs more sugar (at least in the long term)

21. International Sweetener Colloquium, 8-11 February 2009, Orlando 21 Who can fill the gap?

22. International Sweetener Colloquium, 8-11 February 2009, Orlando 22 +123% India: Sugar production (mln tonnes, raw value)

23. International Sweetener Colloquium, 8-11 February 2009, Orlando 23  Inconsistent government policy on cane and sugar prices leads to sharp cyclical swings  Huge cane arrears lead to sharp downturn in sugar production in 2008/09  India is not a reliable = consistent sugar exporter but a swing producer who changes back and forth in its net trade position

24. International Sweetener Colloquium, 8-11 February 2009, Orlando 24 Brazil: Sugarcane production (mln tonnes) +120%

25. International Sweetener Colloquium, 8-11 February 2009, Orlando 25 Brazil: Sugar vs. Ethanol (in % of the cane crop)

26. International Sweetener Colloquium, 8-11 February 2009, Orlando 26 Brazil: Car Sales By Engine (units per month)

27. International Sweetener Colloquium, 8-11 February 2009, Orlando 27 Brazil: Sugar production and exports (mln tonnes, raw value)

28. International Sweetener Colloquium, 8-11 February 2009, Orlando 28  Brazil‘s sugar output more than doubled since 2000/01 despite its ethanol boom  2008/09 cane crop growth:15%  2009/10 projection:6 %  Sugar output to rise much stronger in 09/10:  ethanol export prospects fade (1% change in sugar/ethanol mix means 750,000 t sugar)  less global competiton (India!)  Depreciation of Real increases returns in local currency

29. International Sweetener Colloquium, 8-11 February 2009, Orlando 29 Conclusions  2007/08 saw another global surplus with an addition to stocks of about 14 mln t over a period of just two years, elevating the stocks- to-use ratio to 49.1% (179 days of consumption).  Current predictions for 2008/09 are for a significant deficit, but surplus stocks will have to be worked off before a return to a healthier fundamental picture.  A price boom as in the 1970s and the beginning of the 1980s is unlikely, given the vast amounts of cane available in Brazil.

30. International Sweetener Colloquium, 8-11 February 2009, Orlando 30  The key question in the years to come will be how much Brazilian cane will be diverted into producing fuel ethanol and sugar (A 1% change in the sugar/ethanol mix means 750,000 tonnes of sugar).  Outside influences have become almost as important as the sugar market‘s own fundamentals and will continue to do so in the future.

31. The End