AAAC Outlook: Coarse Grains & Oilseeds26th November 2010

Brad Glass

• Glencore overview

• Review of global coarse grains and oilseed S&D

• Review of Australian market influences

• Key drivers moving forward for global and domestic markets

Presentation Overview

markets

Disclaimer: this presentation is an overview only – please validate your own information to be tailored to your own situations.

• Major international participant in resources, energy and agricultural products markets

• Provide value-added services such as logistics, marketing, purchasing and financing to long-standing producers and consumers

• Industrial asset portfolio (in mining, smelting, refining

Glencore International AG Overview

• Industrial asset portfolio (in mining, smelting, refining and processing) which complements sourcing and marketing operations

• Consistently profitable (35 years) with a strong and liquid balance sheet

• Experienced management team with 100% employee ownership

Marketing Operations Industrial Operations

– Over 3,000 employees

– Some 50 main offices

– Over 40 countries

– Main offices:

• Baar, Switzerland (Headquarters)

– Over 60,000 employees

– 22 plants

– Grain ports, storage, bio-diesel etc

– 14 countries

– Stakes in publicly listed

Glencore International AG Overview

• Baar, Switzerland (Headquarters)

• London, UK

• Rotterdam, Netherlands

• Stamford, USA

• Singapore

• Beijing, China

– Stakes in publicly listed

companies:

• Xstrata Plc, 35.2%

• Century Aluminum, 47.0%

• Minara Resources, 70.6%

Unique Global Infrastructure

Portovesme

Eurallumina

Columbia Falls

Century

Kazzinc

Kubal

Century

Various Russneft Companies

Tennessee Zinc

Xstrata

Xstrata Xstrata

Xstrata

Xstrata

Xstrata

AughinishXstrata

Netherlands (Biodiesel)

Hungary

Prodeco / La Jagua

Los Quenuales / Perubar

Mopani

Aguilar/AR Zinc

Graspan

Zinc/Copper

Alumina/Aluminium

Coal Nickel Grain

Xstrata Zinc/Copper

Xstrata Coal

Xstrata Alloys

CenturyOil

Xstrata Nickel

Xstrata Aluminium

Xstrata

Cobar

Xstrata

XstrataXstrataMoreno (Crush)

Sinchi Wayra

Murrin Murrin Group

Windalco / Alpart

Xstrata

Pasar

Rostov on Don (Port)

Hungary (Ethanol)

Glencore Agricultural Products Group

• Origination / Marketing

– 30million mt of grain, 5million mt of edible oil/ oilseeds, 0.7 million mt of sugar

• Grain storage and port facilities

– Argentina, Australia, UK, Poland, Hungary, Romania, Russia, the Ukraine, Kazakhstan

• Oilseed crushing

– Argentina, the Ukraine

• BioFuel

– Netherlands, Argentina, Brazil, Hungary & UK– Netherlands, Argentina, Brazil, Hungary & UK

• Rice milling

– Argentina, Uruguay

• Flour milling

– Brazil, Russia

• Farming

– Australia, Paraguay, Russia, Kazakhstan the Ukraine

BARLEY: Key Drivers • World Balance Sheet Tight • Crops smaller in Europe/Ukraine/Canada• Russian Crops devastated by drought.• Russian ban on exports, Ukraine inhibiting

exports.• Production down 24.9 mmt yoy• Production down 24.9 mmt yoy• Australia losing production in WA• Australia gaining production East Coast• Malt S&D snug but Chinese will use

germinating feed – off grade

Feed Barley Price Fremantle Jan – Nov 2010

Barley - China

• China Beer Production is 41,359,000 KL

• Forecast Growth is 3.1% increase

• Per capita beer consumption 30.2 L (inc 1.2L yoy)

• 0.2 – 0.5 mmt of wheat used for Malting

• Australia export 1.25 mmt feed/malt in 09/10• Australia export 1.25 mmt feed/malt in 09/10

• 1.25 mmt of Australian lower grade malt and feed barley entered Chinese market in past 12 months

• In 2010 the quantity of the total barley import may exceed 2.5 mmt (including germinating feed for malt).

Corn: Market Drivers

Change in world corn demand

CBOT Corn 1974 – 2010

CBOT Corn Jan-Nov 2010

US Corn for Ethanol Production

China - Market Influence

• Chinese Corn Crop – Estimates range from 155 – 168 mmt.

• Chinese Demand for Food, Seed and Industrial Demand may exceed 167 mmt in 2010/11. (USDA Nov 162 mmt)(USDA Nov 162 mmt)

• China & India holding a larger share of world grain stocks – supplies not available to the market

Corn: Flags Production & Consumption

• Speculation of deal between China & Argentina for 6-8 mmt.

• Strategic deal reduces exposure to tight US Balance sheet

• USDA expecting record Corn crop in • USDA expecting record Corn crop in Argentina at 25 mmt up 11% yoy

• La Nina concerns in Argentina, with the trend towards drought conditions later in the season.

Argentina Soil Moisture at 10th November

World Canola Production: Major Markets

2008/09 2009/10 2010/11 YOY Change %

EU-27 19.08 21.45 20.0 -7%

F.S.U 4.24 3.22 2.3 -29%

Australia 1.84 1.91 2.25 +13%Australia 1.84 1.91 2.25 +13%

Canada 12.64 12.42 11.0 -11%

China 12.1 13.7 12.8 -7%

Pakistan 0.23 0.23 0.23 0%

Australian Canola Export by Origin

Season 2009/10

• Western Australia 920,310 mt• Western Australia 920,310 mt

• South Australia 232,893 mt

• Victoria 45,500 mt

Canola Price Fremantle Jan – Nov 2010

Australian Canola Exports: Destinations (mt)

Season 2009/10

•Bangladesh 50,876

•Pakistan 504,632

•UAE 124,571

•India 5,500

•Japan 169,447

•Europe 343,677

Soybeans – Impact on Oilseed Complex

CBOT Soybeans 1970 – 2010

CBOT Soybeans Jan-Nov 2010

Change in world Soybean demand

Chinese Imports of US Soybeans (mmt)

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Chinas Soybean Imports: Percentage of World Total

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La Nina: Reports strongest in 50 years ?

Trend in Chinese Agriculture Consumption past 20 years.

1989/90 2009/10 % Change

Population 1.2 billion 1.3 billion 2%

Wheat 102.6 105.0 2%

Corn 74.2 156.0 110%

Rice 120.8 134.5 11%

Rapemeal 2.5 9.8 292%

Soy Meal 1.4 37.5 2579%

Cotton 20.3 47.0 132%Cotton 20.3 47.0 132%

Soy Oil 1.1 10.4 845%

Palm Oil 1.0 6.3 630%

Poultry 2.1 12.2 481%

Pork 21.3 48.8 129%

Dairy 4.3 29.6 588%

Source: AgResource Company 2010

04:04 24Nov10 RTRS-China sees big corn shortage, urges more bank aid

BEIJING, Nov 24 (Reuters) - China's Banking Regulatory Commission (CBRC) has called on

banks to urgently offer special support to the agriculture sector in the face of severe shortages of

corn, cotton and sugar, among other crops. Local media reported that the notice,

issued on Monday, marked the first official admission that the country faces

corn shortages, following repeated assurances from the government grain authority that the country has ample reserves. Special financial support should be offered to those involved in

production, processing and circulation of some farm products to counteract looming shortages for

short-grain rice, corn, vegetables, cotton, sugar and other crops, the commission said on its web

site (www.cbrc.gov.cn). CBRC is among several Chinese authorities that have published detailed

Annual inflation rose to a 25-measures as part of efforts to combat rising prices. Annual inflation rose to a 25-

month high in October, largely driven by food price rises. The State

Administration of Grain last week said it would boost state sales of vegetable oils and soy on top

of weekly sales of corn, rice and wheat, but many buyers of corn have been restricted from weekly

bidding. The regulator urged banks to boost lending to agriculture-related industries as the top

priority to help stabilize farm prices. Domestic futures prices of cotton, sugar and corn frequently

hit record high levels this month before the central bank moved to tighten credit inflows to the

commodity markets by raising banks' reserve ratio twice this month, in part to reduce speculative

capital.

Summary• World Grain Demand

• Production trendlines increases a necessity – growth in production

• US trying to reinvigorate their economy, recent purchase of US$600 economy, recent purchase of US$600 bln of US Treasurys – weaker US$

• World economic growth returning but focus is in SE Asia & Latin America for Agricultural demand.

Summary (cont)• China to try to limit inflation and slow

their segments of their economy –food inflation

• Food vs Fuel debate to return ?

• Return of the term AGFLATION • Return of the term AGFLATION

• Market issues are more structural not as speculative as seen in 2007/08

• Watch for major producer concerns issues arising…

Thanks for your time today,

Questions ?Glencore Grain WA Office:

Rob Haddrill & Shaun Cleary