sinolatincapital.com

May, 2010

Soybeans

Supplemental Materials

2Strictly Confidential

World Soybean Market

● World production of soybeans is dominated by the United States, Brazil, Argentina, and China, which together produce around 80% of all soybeans in the world

● World soybean production in market year 2008/09 was 211.8 million metric tons

Largest Soybean Producers 2008/09(thousands of metric tons)

Source: Foreign Agricultural Service/USDA

Largest Soybean Importers 2008/09(thousands of metric tons)

Source: Foreign Agricultural Service/USDA

80,749

57,800

32,000

15,5409,100

3,900 3,3369,348

41,098

13,213

3,396 3,327 2,216 1,510 1,393 1,575 1,007 1,167

7,298

3Strictly Confidential

Soybean Global Market Structure & Trends

● Trade changes in 2008/09 cycle Brazil soybean exports boosted 4.6 million tons to a record 30 million from the previous

year, based on stronger exports primarily to China and the EU U.S. soybean exports were up 3.4 million tons to 34.9 million from the previous year,

supported by stronger shipments to China China’s soybean imports were 41.1 million

● Trade changes in 2009/10 cycle Recent estimates place U.S. soybean exports for the 09/10 cycle at 39.3 million tons, 4.4

million more with respect to the previous year, supported by strong early export commitments, over 85% of which are booked by China

Most recent estimates predict Chinese soybean imports to be 41.1 million tons for the 09/10 cycle, 2.4 million tons more than the 08/09 cycle

In April 2010, the USDA increased the 2009/10 cycle estimates for soybean production from Brazil and Argentina by 0.5 million and 1 million respectively, due to favorable late-season weather which improves yield

Source: USDA October 2009 Report

4Strictly Confidential

Chinese Soybean Market

0

10

20

30

40

50

60

Production Consumption

● China’s production of soybeans is concentrated in the North East and Central East regions of the country

● Domestic production in 2008/09 was 16 million metric tons (2009/10 estimate is 14.5 million)● Imports have increased exponentially since China became a net importer in 1996● Despite efforts by the Chinese government to boost domestic production, planting intentions for

soybean is expected to slightly decrease from 9.5 Mha in 2008/09 to 9.1 Mha in 2009/10, in response to farmers’ poor returns in 2008/09

China Soybean Producing Regions

Source: Economic Research Service

IMPORTS

Chinese Soybean Industry(millions of metric tons)

Source: USDA

5Strictly Confidential

Chinese Soybean Market

1045

115

22 30 38

2006 2007 2008

Dalian Commodity Exchange CME Group*

● The Chinese government has a stockpile of soybean reserves controlled by the China Grain Reserves Corporation (Sinograin). By July 2009, China’s stocks amounted to 7.26 million metric tons; 2009/10 stock estimates are 10.27 million metric tons

● Since 2003, the China’s State Food Administration has allowed the auctioning of state-reserved soybeans to adjust the market demand Auctioned soybeans are not allowed to be sold on the futures market

● Soybean price setting mechanisms are still not sophisticated Most Chinese companies buying soybean will settle for the price that the big international trading

companies (ADM, Bunge, Cargill, Dreyfus) offer them The Dalian Commodity Exchange has been gaining in importance in the past years, and it is followed as

closely as the Chicago exchange CBOT/CME

* includes Chicago Board of Trade or CBOT; and New York Mercantile Exchange or NymexSource: Futures Industry Association, Wall Street Journal

Dalian and CME Soybean Futures(millions of contracts)

6Strictly Confidential

Chinese Soybean Industry

● Chinese consumption of soybean has increased at 9% compounded annual growth rate over the last decade, whereas domestic production has stagnated

● ADM, Bunge, Cargill, and Louis Dreyfus (ABCD) plus other foreign companies control 64 out of 97 crushing companies in China.

● These foreign invested businesses control 80% of China’s soybean crushing capacity

ADM Wilma

r Kuok28%

COFCO

12%Cargill12%

Bunge7%

Drey-fus5%

Other36%

China’s Soybean Crush Market

China’s Soybean Crush Market is highly dominated by the ABCD’s

7Strictly Confidential

Recent Chinese Soybean Import Dynamics

● Argentina’s market share of Chinese soybean imports fell from 33% in 2007/08 to 15% in 2008/09, due to a severe drought and conflicts between farmers and the government

● Up to December 2009, Argentina’s share of China’s Soybean imports fell to 3%

● The United States stepped in since 2008/09 increasing its supply of soybeans to China

Source: USDA Gain Report 2010

China's Soybean Imports by Country of Origin (in MMT) from MY06/07 to MY09/10

* Note: Data for MY09/10 is up to December 2009

MY06/07 MY07/08 MY08/09 MY09/10*

Country MMT Share MMT Share MMT Share MMT Share

United States 11.5 40% 13.7 36% 18.6 45% 8.2 80%

Brazil 10.7 37% 12.5 29% 15.8 38% 1.4 14%

Argentina 6.2 21% 10.9 33% 5.8 14% 0.3 3%

Others 0.3 1% 0.7 2% 0.8 2% 0.2 2%

Total 28.7 100% 37.8 100% 41.1 100% 10.2 100%

8Strictly Confidential

Chinese Soybean 2010/11 Cycle Estimates

● Production Soybean production for MY10/11 is forecast to increase to 15.2 MMT from the previous year’s

estimated 14.5 MMT Total soybean planted area in MY10/11 is forecast at 9.0 MHa, up from the estimated 8.8 MHa in

MY09/10 Small production in MY09/10 was mainly because of the planted area reduction in major producing

regions, including Heilongjiang and Inner Mongolia provinces, as farmers reacted to low prices and returns from soybeans in MY08/09

Soybean yield in MY010/11 is likely to return to an average level. The below average yield in MY09/10 was mainly a result of abnormal weather in Northeast China

● Trade Soybean imports for MY10/11 are forecast at 42.5 MMT, up six percent from the estimated 41 MMT

in MY09/10 The forecast greater imports in MY10/11 reflect continued growth of China’s demand for oilseed

products in concert with strong anticipated economic growth Many industry sources expect that soybean demand will remain strong in the foreseeable future

because of the strong and growing demand for protein meal by the rapidly developing animal husbandry industry (including aquaculture)

9Strictly Confidential

Chinese Government Policies and Regulations

● The Chinese government faces the challenge of meeting domestic soybean demand, protecting planted area, and supporting farm income

● The Chinese government encourages domestic production of soybeans● China’s total comprehensive agricultural subsidies reached US$18 billion in 2009, out of

which US$2.2 billion were paid to farmers as direct grain subsidies● Subsidies are expected to increase in the future

● China holds a “biotech-free” soybean production policy● Policy exists because domestic soybeans are increasingly consumed directly as food,

such as tofu, and the government still regards genetically modified food as a sensitive issue

● Since 2004, regulations have allowed the import of approved biotech soybeans

● Soybean imports subject to a new Automatic Registration Form (ARF) management, effective on January 1, 2010, which requires importers to submit import application in advance. Application is automatically approved within ten working days (maximum)

● Chinese government is encouraging diversification of soybean import sources● In an official document published in November of 2008, the government encourages

Chinese companies to look for alternative sources of soybean imports

10Strictly Confidential

China – Latin American Soybean Production and Consumption

China Soybean Imports(thousands of tons)

Source: United Nations Comdata / SLC Analysis

● Latin America is the only region with the ability to supply large volumes of soybean to China – around 60% of Chinese soybean imports come from Latin America

● China imported 21.6 million tons of soybeans from Brazil and Argentina in 2008/09 cycle

Source: USDA, BMI

China Production and Consumption Forecast(thousands of tons)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1992 1994 1996 1998 2000 2002 2004 2006 2008

Imports from World

Imports from Latin America

15,567 16,069 16,180 16,640

53,44657,187

61,45365,806

2010 2011 2012 2013

Production Consumption

11Strictly Confidential

Brazil Soybean Industry

● Brazil has 482,789,000 hectares of unused arable land – 20% of the world’s total

● Brazil is the biggest country in the world that can still increase its number of soybean plantations. Other soybean producing countries are reaching their limit of unused arable land

● The United States has only 7% of the world’s unused arable land, while Argentina only has 3%

● Brazil’s soybean processing capacity increased 44% between 2001 and 2008

2001 2002 2003 2004 2005 2006 2007 20080

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60

70

Brazil Soybean Production and Exports

ProductionExports

Mill

ion

Tons

2001 2002 2003 2004 2005 2006 2007 20080

20,00040,00060,00080,000

100,000120,000140,000160,000180,000

Brazil Soybean Processing Capacity

Tons

/ d

ay

12Strictly Confidential

Brazil Soybean Industry

● Due to the global economic crisis, net exports of Brazilian soybean meal declined 42% from June 2008 to March 2009. Net exports of Brazilian soybean oil also went down 55%

● Soybean oil accounts for approximately 55-65% of all vegetable oils and animal fats

● Meal represents 50-75% of the value of the total crushed components

● Intense competition for soybean supply and crushing capacity

● Brazil consumes two-thirds of its soybean production, 39% of meal production, and 40% of soybean oil production

● Major firms have crushing capacity, access to food stuffs, and pricing power

● 55 companies own crushing facilities in Brazil

● Four of the largest five producers are multinational traders: (ADM, Bunge, Cargill, Dreyfus) and the other is the largest integrated poultry producer (Sadia/Perdigao)

Independents’ share of the market has been shrinking in the past year due to financial issues