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AAAC (WA) Outlook Day 27th November 2015

Presented by Stephen Moyle – InVivo Trading Asia

November 2015

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4 fields of expertise

A French union of Agricultural Co-operatives

8,000 employees, 60% outside of France

€5.7 billion in revenue in 2013-14

Sites in 28 countries

Agriculture Animal Nutrition and

Health

General Public Distribution

Wine

November 2015

Union InVivo

November 2015

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August 2015

Agriculture Co-operatives in France

2,800 Coopératives, unions and SICACoopératives, unions and SICA

11,500 CUMA (combines used in common)CUMA (combines used in common)

160,000 EmployeesEmployees

€84.3 billions Consolidated revenuesConsolidated revenues

75% of farmers are members of a Coopérativeare members of a Coopérative

Source: Coop de France

November 2015

November 2015

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€5.5bnSeedsand Agricultural Supplies€1.6bn

GENERAL PUBLIC€530m

ANIMAL NUTRITION AND HEALTH

€1.4bn

53%47%Grains€2bn

Group revenue at 30 June 2015

Estimated

International€2.6bn

France€2.9bn

AGRICULTURE

November 2015

• €5.5bn is approx AUD8.02bn• Australian co-op in 2014 was AUD4.4bn

November 2015

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Managed capacities

Silos with InVivo share

Storage and Logistics

BayonneBayonne

BordeauxBordeaux

BlayeBlaye

La PalliceLa Pallice

Dunkerque Dunkerque SantesSantes

RouenRouenChalonsen ChampagneChalonsen Champagne IllangeIllange

MetzMetz

FrouardFrouardNeuf-BrisachNeuf-BrisachOttmarsheimOttmarsheimHuningueHuningue

La GrandeParoisseLa GrandeParoisse

Saint-UsageSaint-Usage

Les TellinesLes Tellines

Port-La-NouvellePort-La-Nouvelle

NantesNantes

• 1.5 MMT of certified capacity ISO 9001 and Food Quality Charter

• ISO 9001 and Food Quality Charter

• 5.75MMT loaded / 650,000mt dried

• No. 1 grain Storage company in France

• 475 wagons

•Magestiv: rail transport freight-forwardingsubsidiary

•Rouen and Dunkerque: are the deliverable silos for the Matif contract

Mass CéréalesMorocco

BajaHungaryBajaHungary

November 2015

November 2015

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August 2015

Topics Covered

• French + Global Wheat Balance Sheets• Change in physical Trade Flows• Low Segment Flour Market in Indonesia• Black Sea Production continues to Grow• Population Growth and • Aussie Quality Profile Vs Black Sea• Depreciating Currencies in SEA• Aussie wheat at a cross roads

November 2015

November 2015

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August 2015

Balance Sheets 2011 2012 2013 2014 2015Beginning Stocks 68,863 62,825 48,452 50,214 58,290Planted Area 100,869 98,687 99,241 100,839 103,929Harvested Area 100,218 94,138 97,595 99,194 99,503Yield 3.25 3.09 3.39 3.47 3.46Production 325,754 291,198 330,948 344,273 343,997Imports (Total) 31,724 28,284 28,907 32,905 32,935Supply Total 426,101 382,567 408,364 427,442 435,282Domestic Total 218,043 208,945 206,448 211,347 214,971Exports (Total) 141,403 122,030 147,884 153,094 151,010Flour Exports (Total) 4,284 4,399 4,303 4,710 4,158Total Use 363,730 335,374 358,635 369,151 370,139Ending Stock 62,372 47,193 49,729 58,290 65,143Stock to Use 17.1% 14.1% 13.9% 15.8% 17.6%

Balance Sheets for AUS/ARG/Can/USA/EU/RUS/UKR (000's)

Global Wheat Balance Sheets

November 2015

• Consumption is Increasing but not in line with Production• Yields are steadily improving with more scope to increase

• Especially from Black Sea/EU regions• In 1965 Russia was harvesting from 65mln Ha last year

was only 39mln Ha

November 2015

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August 2015

French Wheat Balance SheetBalance Sheets 2010 2011 2012 2013 2014 2015Beginning Stocks 3,576          2,933          2,280          2,901          2,349          2,519         Planted Area 4,898          4,990          4,865          4,983          5,007          5,162         Yield 7.25        6.81        7.30        7.40        7.48        7.68       Production 35,487        33,970        35,529        36,867        37,452        39,644       Imports from EU 1,061          324             386             394             839             456            Supply Total 40,184        37,287        38,455        40,220        40,690        42,679       Domestic Consumptions 9,823          9,747          9,556          9,245          9,299          9,325         Feed Use 6,699          7,939          7,690          8,434          8,595          9,100         Exports (Total) 19,540        16,040        17,080        19,024        19,243        17,354       Flour Exports (Total) 761             849             786             713             574             590            Total Use 37,251        35,007        35,554        37,871        38,171        36,834       Ending Stock 2,933          2,280          2,901          2,349          2,519          5,845         Stock to Use 7.9% 6.5% 8.2% 6.2% 6.6% 15.9%

• French exports makes up 6% of global wheat exports• Record crop last year of nearly 40MMT• 5 year yield avg of 7.32mt/Ha

November 2015

November 2015

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August 2015

French Wheat export to 3rd Origin countries

2015/16 record crop Better quality YonY Basis 10.8M°T export = 5M°t

ending stock French has to become more

competitive

2014/15: Poor Quality crop Feed wheat export to Asia Bigger volume to Egypt Lower export to Algeria

November 2015

November 2015

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August 2015

Global Trade Flows

November 2015

Region 1 – North, South & Central America + Caribbean Region 2 – Europe, Black Sea, Middle East and Africa Region 3 – Oceania and Asia

November 2015

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From2011/12 Region 1 Region 2 Region 3

ToRegion 1 20.3 1.1Region 2 18.3 45.3 5.4Region 3 15.4 1.6 18.7

From2012/13 Region 1 Region 2 Region 3

ToRegion 1 21.0 0.8Region 2 12.7 40.2 10.6Region 3 16.2 0.3 18.5

From2013/14 Region 1 Region 2 Region 3

ToRegion 1 21.9 1.6Region 2 8.9 55.5 8.1Region 3 18.9 4.9 14.7

Wheat Trade by Region

2014/15 Region 1 Region 2 Region 3

Region 1 19.7 1.5 0.0

Region 2 8.4 60.1 4.0

Region 3 18.5 6.9 13.4

From

To

November 2015

• Negative trend from Region 3 to Region 2• Negative trend from Region 3 to Region 3• Positive trend from Region 2 to Region 3

November 2015

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August 2015

Indonesian Flour Market

• Indonesia’s most competitive flour market is also one of the fastest growing – Low Segment Flour

• “mill the cheapest wheat available”

November 2015

Season (jul/Jun) USA AUS CAN BS/EU Other Total2014 562           4,373        1,815        497                 12               7,259           2013 1,164        3,720        1,111        654                 446             7,095           2012 546           4,423        1,176        35                   479             6,659           2011 737           4,044        753           28                   20               5,582           2010 763           3,855        887           ‐                  38               5,543           2009 539           2,776        619           397                 ‐              4,331           2008 739           2,638        979           335                 26               4,717           2007 983           1,422        1,436        ‐                  628             4,469           

Season (jul/Jun) USA AUS CAN BS/EU Other2014 8% 60% 25% 7% 0%2013 16% 52% 16% 9% 6%2012 8% 66% 18% 1% 7%2011 13% 72% 13% 1% 0%2010 14% 70% 16% 0% 1%2009 12% 64% 14% 9% 0%2008 16% 56% 21% 7% 1%2007 22% 32% 32% 0% 14%

% of Total Imports

Total Imports (000's MT)

Source: Aptindo

November 2015

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August 2015

EU Production Continues to Improve

Record production @ 149M°T

Record crop in France and Baltic countries

+2,2M°T

-1,4M°T

-0,7M°T

+1,8M°T

-0,3M°T-0,5M°T

-0,4M°T

• Decreases YonY -2.8UK, Germany, Poland, Romania

• Increase YonY +4.5France, Baltics, Bulgaria

November 2015

November 2015

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August 2015

Black Sea Growing

November 2015

• Significant Increase in forecasted production Based off increase acreage and improving technologies

• Stocks to use ratio declining overall which means its being used

2015/2016 Romania Bulgaria Serbia Ukraine Russia TotalCarry In 705 475 334 3035 8400 12949Production 7100 4547 2499 25500 60000 99646Imports 100 10 0 0 350 460Total Supply 7905 5032 2833 28535 68750 113055Domestic Cons 3385 1940 1525 10900 36000 53750Exports 3650 2550 900 14000 24000 45100total Demand 7035 4490 2425 24900 60000 98850Carry over 870 542 408 3635 8750 14205Stocks to Use 11.01% 10.77% 14.40% 12.74% 12.73% 12.56%

2025/2026 Romania Bulgaria Serbia Ukraine Russia TotalCarry In 500 500 600 4500 10000 16100Production 13000 5700 2900 30000 80000 131600Imports 200 0 0 0 500 700Total Supply 13700 6200 3500 34500 90500 148400Domestic Cons 4000 2200 1750 11000 38000 56950Exports 9000 3500 1100 19000 42000 74600total Demand 13000 5700 2850 30000 80000 131550Carry over 700 500 650 4500 10500 16850Stocks to Use 5.11% 8.06% 18.57% 13.04% 11.60% 11.35%% Change In production 83.10% 25.36% 16.05% 17.65% 33.33% 32.07%Change in Stocks to Use ‐5.90% ‐2.71% 4.17% 0.30% ‐1.13% ‐1.21%

November 2015

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August 2015

Region/Country 1975 1985 1995 2005 2015 2025 2035 2044Africa 29% 32% 31% 28% 29% 27% 24% 19%

Nigeria 27% 32% 29% 29% 31% 28% 26% 21%Asia 27% 22% 20% 14% 11% 9% 6% 3%

China 28% 16% 17% 6% 5% 3% 0% ‐2%South East Asia 30% 26% 21% 16% 12% 10% 7% 4%

Indonesia 30% 26% 19% 15% 14% 10% 7% 4%Europe 7% 5% 3% 0% 1% 0% ‐1% ‐2%The Americas 23% 21% 18% 15% 12% 9% 7% 4%Oceania 23% 16% 17% 15% 18% 14% 11% 8%The World 22% 19% 18% 14% 13% 11% 9% 6%Total Population 3,322,495.00          4,061,399.00          4,852,541.00          5,735,123.00          6,519,636.00          7,349,472.00  8,141,661.00  9,396,486.00 

Population Growth

New Demand frontier - Africa

Source: United Nations

• Population boom has happened in SEA• Africa still has substantial growth prospects

from 2015 onwards• Is Australian wheat positioned to feed African

population growth? • USD2 freight advantage over Black Sea to Nigeria

November 2015

November 2015

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August 2015

Australian Wheat Quality

Consistency “Black Sea is getting better, Australia is going the other way” Is Aussie mkt blending away premium? “we can see the ASW,

the AGP and the AUH” Blending in a perfect world vs the reality of physical execution

Moisture Russia is now offering 12% max moisture vs Aussie @ 11.5%

max Other parts of EU/Black Sea are still 13.5%+ on moisture

Protein 12.5% is the base grade MW of BS/EU which is 11.1% Aussie

equivalent 11.5% is the APW2 equivalent (base grade) of BS/EU which is

10.2% Aussie equivalent

GlutenNovember 2015

November 2015

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Specifications and Prices

• Black Sea/EU specs are converging closer to Aussie Milling Wheat

• Black Sea guarantee Wet Gluten Spec’s as its tested up country

• Magic number to displace Aussie wheat seems to be around USD10-15 pmt

November 2015

Specification Australian Russian French Baltic German Specification Australian Russian Baltic GermanProtein (on DMB)         

Min 10.2% = 11.5%

min 11.5% min 11% min 11.5% min 11.5%Protein (on DMB)         

min 11.1% = 12.5%

Min 12.5% Min 12.5% Min 12.5%

Test Weight                       

min 76kg/hl min 77kg/hl min 77kg/hl min 77kg/hl min 77kg/hlTest Weight                       

min 78kg/hl min 78kg/hl min 78kg/hl min 78kg/hl

Moisture                           

max 11.5% max 12.0% max 13.5% max 13.5% max 14.0%Moisture                           

max 11.5% max 12.0% max 13.5% max 14.0%

Falling Number                  

min 300 secs

min 250 secs

min 250 secs

min 250 secs

min 250 secsFalling Number                  

min 300 secs min 280 secs min 280 secs min 280 secs

Foreign Material                 

 max 2%   max 2%   max 2%   max 2%   max 2% Foreign Material                 

max 2% max 2% max 2% max 2%

 USD FOB Jan   $     225.00   $     196.50   $     186.00   $     188.00   $             186.00   USD FOB Jan   $               231.00   $      200.50   $      191.50   $      193.00 

 Freight   $          7.50   $       18.40   $       20.60   $       20.50   $               20.00   Freight   $                    7.50   $        18.40   $        20.50   $        20.00 

USD CFR Indonesia  $     232.50   $     214.90   $     206.60   $     208.50   $             206.00 USD CFR Indonesia

 $               238.50   $      218.90   $      212.00   $      213.00 

Moisture Allowance

 $     232.50   $     215.97   $     210.73   $     212.67   $             211.21 Moisture Allowance

 $               238.50   $      219.99   $      216.24   $      218.33 

APW2 FIS AUD285 APW1 FIS AUD293

Mid‐Protein MW ComparisonLow‐Protein MW Comparison

November 2015

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August 2015

Currencies in Emerging Markets

Indonesian Rupiah as at 24/11

November 2015

Open High  low  last % change at high % change at low % change at lastIDR 12432 14828 12432 13772 19.27% 0.00% 10.78%VND 21388 22547 21256 22495 5.42% -0.62% 5.18%MYR 3.4965 4.4812 3.4965 4.2405 28.16% 0.00% 21.28%THB 32.93 36.67 32.39 35.79 11.36% -1.64% 8.69%

November 2015

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August 2015

Australian Wheat at a cross roads

• “Mace was a great improvement”• “We use to avoid WA until Mace took off”• “we can see the ASW, the AGP and the AUH” • “We invest USD300-400mln in wheat each year so

of course we test it, we own 9 laboratories” • “we test every 50 tonne or if we see a problem

every 20 tonne” • General theme from consumers in terms of

extraction EA>SA>WA• Premium flour markets in Indonesia are made

from Canadian MW not Aussie

November 2015

November 2015

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August 2015

Thank you for your attention

Any Questions?

November 2015