1. International Sugar Organization 4 August 2014 2014 ASA Symposium, USA Global Sugar and Ethanol Outlook Jose Orive Executive Director International Sugar Organization 1

2. 2 International Sugar Organization Structure of Presentation The World Sugar Market The Sugar Market in 2013/14 and 2014/15 Key producers and consumers Long-Term Outlook by Region to 2020 The World Ethanol Market The main markets: USA, Brazil, EU World Outlook to 2020 Conclusions 2

3. International Sugar Organization 4- Year World Surplus Weighing on Sugar Prices The accumulated world sugar surplus over 4 seasons means the global stocks to consumption ratio will remain above 40% for at least another year. 3

4. 4 International Sugar Organization + 2% Consumption to continue to rise by around 2% a year

5. 55 Brazil: Sugar and Ethanol to 2015/16 ( Sugar in mln tonnes, raw value; ethanol in bln litres) April/ March International Sugar Organization 5 YearSugar Production Sugar Exports Ethanol Production 2010/2011 38.027.5 2011/2012 35.924.922.6 2012/2013 38.226.823.6 2013/2014 37.526.627.6 2014/2015 (f) 37.025.527.5 2015/2016 (f) 38.026.529.8

6. 6 International Sugar Organization What to Expect from India in 2013/14? Lower sugar prices in India leading to a small fall in production in 2013/14 Sugar Production in India, mln tonnes, raw value

7. 7 International Sugar Organization How about Thailand in 2014/15? The world’s second largest sugar exporter has been on an aggressive expansion path. Could output break the 12 mln tonne mark in 2014/15 Sugar Production in Thailand, mln tonnes, raw value ?

8. Higher Prices in Importers like EU, China and Russia preventing large drops in domestic output International Sugar Organization 8

9. US/Mexico Sugar Markets International Sugar Organization 9

10. Asia Will Remain the Engine of Sugar Consumption Growth Indian Subcontinent and Far East’s share in global consumption: 1984: 25% and in 2012/13: 41% (this will rise to 47% in 2020) 10

11. 11 International Sugar Organization China’s Future Revival as an Importer: More room for sugar refining?

12. International Sugar Organization 12 Climate Change and Sugar Crops (MECAS(13)07)

13. International Sugar Organization 13 Tackling Climate Change Impact  El Niño/La Niña increase yield variability by 20%  Improved crop efficiency needed through adaptation and mitigation for cane producers. Southern Africa may be negatively affected by droughts: early warning is crucial

14. 14 International Sugar Organization The Ethanol Market in 2014 and Beyond

15. Global Fuel Ethanol Production in 2014 International Sugar Organization World Output forecast to rise to match previous record 2014 output World: 90.6 bln litres US: 51.8 bln litres Brazil: 25.5 bln litres Others: 13.3 bln litres 1616

16. 16 Fuel Ethanol Production, outside USA and Brazil International Sugar Organization Among other producers, EU already had record output in 2013; strong growth for Thailand and Argentina in both 2013 and 2014.

17. 17 In other countries: FDI and blend mandates should encourage ethanol output growth CountryBlend %Time Peru, UruguayE82011 BoliviaE102010 CanadaE-52008 ChinaE-52008 ColombiaE-102008 Dominican Rep.E-7.5authorised EthiopiaE-52009 IndiaE-5In 17 of 25 states IndonesiaE-102009 JamaicaE-102009 MalaysiaE-52010 MexicoE-52012 ParaguayE-252010 PhilippinesE-52009 South AfricaE-2 to E-102012 Vietnam E-52009 International Sugar Organization

18. 18 International Sugar Organization Global Fuel Ethanol Demand to 2020 Top consumers of Fuel Ethanol United States – 88 bln litres (RFS2) Brazil 35 bln litres EU (28) 11 bln litres China - 8 bln litres Others 25 bln litres World Total – 167 bln litres – Up 90% from today’s level, in part counting on success of second generation ethanol demand in the US. 18

19. 19 International Sugar Organization Conclusions – World Sugar World Sugar Market at a turning point in 2014 Surplus phase likely to end in 2014/15; 1)Brazil sluggish production growth underpinning market sentiment; 2)Rapid consumption growth in Asia provides additional bullish outlook 3)But production in large consumers likely to stay high due to government support; Longer-term, the world needs more sugar – an additional 20 mln tonnes to 2020. 60% of world consumption growth to take place in Asia. China to become the second largest consumer and largest importer. !

20. 20 Conclusions – Ethanol World record output for fuel ethanol in 2014. Significantly Higher Ethanol Blend rates in Africa and Asia The equivalent of 6 mln tonnes of sugar to be diverted to bioplastics production from ethanol in Brazil alone by 2020. Bullish for the Longer Term World fuel ethanol demand/supply to grow by 90% to 167 bln litres by 2020. International Sugar Organization 20

21. International Sugar Organization Thank you 23rd ISO Seminar– London “Sugar and Ethanol: Fresh Options“ 25-26 November 2014 www.isosugar.org 21