2. Agenda Current Weather Impacts US Supply and Demand Trends Canadian Supply and Demand Trends Big”4” Supply and Demand Trends Current and Historical Prices Forward Trends in Oat Milling

3. Developing drought in US and Canada could impact production

5. US oat production declined, feed use fell, and acreage shifted North to Canada Govt. programs favors beans & corn Research developed earlier varieties Stable production since 1999 Last 5 yr avg. = 1765 mmt (122 million bushes)

6. U.S. Imports rose as production declined 75% of Imports come from Canada 25% from the Scandinavian Countries Declining imports are due to US feed use down 26% (777mmt’s) since 2000

7. Current New Crop Forecast potential if dryness continues

8. Approx. 75 % of Canadian exports go to the US Low production years

9. What drives feed use ? Quality of oats Price of oats compared to other feed grains -- barley, wheat, and corn

10. Total demand for Oats in the Big “4” has declined 27% since 1990 rising food, seed, and export demand has not off-set declining feed use Feed : down 4790 MMt’s or 45% Food and seed: up 355 MMT’s or 20% Trade : up 400 MMT’s or 28%

11. Since 1990 production is down 38% or 4123 MMT’s ( 290 mill bushels)

13. Long-Term oat prices in cents/bushel World wide crop problems in most grains Poor growing conditions and low production Speculative fund interest and developing dry conditions. Fundamental Trading range for 06/07 1.60 2.15

14. 1980 Drought 1988 Drought 1995 Global Commodity Inflation Current forward market for 2006 Avg. price since 1980 = 1.58/ bushel 2001 production down 20%

15. Oat Market Trends Total supplies have trended lower since 1990 but have stabilized in past 5 years Feed demand continues to decline and has been trending lower the past 5 years Milling Capacity has increased by an estimated 7 mill bushels from 2000 - 2005 and is estimated to increase by another 10 mill bushels by 2007. -- majority of the growth is by industrial millers -- total N.AM milling capacity will be an estimated 125 million bushels by 2007 Limited availability of “peak capacities” have left some consumer demand unfilled --new capacities will allow product companies to increase offerings. Over the past five years growth in conventional oats for food has been 2-4% and organic oats about 15-20% /yea -- combined growth has been approx. 4% -6% / yr -- organic will continue to grow faster than conventional Supply Trends Demand Trends Milling and Food Trends

16. Over the next five years combined organic and conventional growth is expected to be 5%/yr ( +/- 2%) Key market segments for growth are convenient, portable consumer products driven by increased demand for healthy food products -- bars, snacks, healthy whole grain and multi-grain blends Back to back years of poor oat quality and poor growing conditions Acreage expansion and decline will be determined by oat prices. These prices will be strongly influenced by bio- diesel and ethanol as corn and beans compete for these acres Milling market growth 5% /year will be a key driver of oat prices. This food demand is basically [price] inelastic as opposed to [price]elastic feed demand Oat Market Trends Milling and Food Trends cont… Considerations going forward