Market Report INTERNATIONAL GRAINS COUNCIL. HIGHLIGHTS WORLD ESTIMATES

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1 Grain GMR July 2016 INTERNATIONAL GRAINS COUNCIL Market Report HIGHLIGHTS The forecast for total grains (wheat and coarse grains) production in 2016/17 is up by 10m t m/m (month-on-month), to 2,026m, the second largest ever. Ample rains in recent months have improved wheat and barley prospects in a number of regions, particularly in Europe, the CIS and North America, although concerns have arisen about below average quality. Despite the m/m upgrades, world wheat and barley harvests are still expected to be smaller y/y (year-onyear), but this is outweighed by an anticipated recovery in the maize (corn) crop. The projection for global consumption in 2016/17 is only fractionally bigger m/m, at a new record of 2,010m t. Heavy supplies and attractive prices raise the forecasts for wheat and barley feeding, but the figure for maize demand in the livestock sector is cut by a broadly equivalent amount. With little change in projected demand from last time, but an increase in supply, the forecast for carryover stocks is boosted by 9m t, to 482m, an expansion of 15m y/y. The trade projection is 1m t higher than before, at 319m, with an increase for wheat, but a cut for maize. Reflecting a further downward adjustment for South America, world soyabean output in 2015/16 is reduced by 2m t, to 312m, a drop of 3% y/y, but still markedly above average. Projected near-unchanged from before, 2016/17 global output could recover to 320m t, on area gains in major producers. However, with consumption anticipated to expand, aggregate inventories are seen falling by 15%, to 28m t; the total is lowered by around 1m to reflect a smaller projection for the US. The forecast for trade is unchanged from May, at a record of 133m t, with the annual increase of 3m tied to China s growing needs. The Council s estimate for rice output in 2015/16 is broadly unchanged from last month s report, the y/y decline of 7m t due to disappointing crop outcomes in Asia. Predictions for 2016/17 are especially tentative but, assuming improved outturns in that region, notably in India, output could rise by 3%, to a new peak of 486m t. However, with total use likely to climb further, stocks could again tighten. The outlook for trade in calendar 2017 is maintained at about 42m t. With gains for all the components other than wheat, the IGC Grains and Oilseeds Index (GOI) rose by 5% m/m. 13/14 14/15 15/16 16/17 est. f'cast proj. million tons TOTAL GRAINS a) Production Trade Consumption Carryover stocks year/year change Major exporters b) WHEAT Production Trade Consumption Carryover stocks year/year change Major exporters b) MAIZE (CORN) Production Trade Consumption Carryover stocks year/year change Major exporters c) SOYABEANS Production Trade Consumption Carryover stocks year/year change Major exporters d) million tons (milled basis) RICE WORLD ESTIMATES Production Trade Consumption Carryover stocks year/year change Major exporters e) Figures may not add due to rounding a) Wheat and coarse grains b) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US c) Argentina, Brazil, Ukraine, US d) Argentina, Brazil, US e) India, Pakistan, Thailand, US, Vietnam IGC GRAINS & OILSEEDS INDEX (GOI) See:

2 GMR July 2016 IGC OVERVIEW Grains production in 2016/17 is expected to be the second highest ever and, given record opening stocks, total supply will be a new peak. With increases for food, feed and industrial uses, consumption will likely be an all-time high. Led by accumulations in the major exporters and China, grains stocks are expected to expand to their largest ever level. Lower shipments to China contribute to a predicted drop in world trade. Assuming market conditions encourage area gains in major producers, 2016/17 soyabean output could match the record of two years earlier. The 2016/17 global rice outturn is seen at a new peak on improved crops in Asia, notably India. Total grains: Supply and demand summary 13/14 14/15 15/16 16/17 y/y (est.) (f'cast) (proj.) change Opening stocks % Production 2,008 2,046 2,001 2, % Total supply 2,347 2,457 2,451 2, % Total use 1,935 2,008 1,984 2, % of which: Food % Feed % Industrial % Closing stocks % major exporters a) % Trade (Jul/Jun) % a) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US Global total grains (wheat and coarse grains) production in 2016/17 is expected to surpass 2bn t for the fourth consecutive year. While wheat and barley harvests may not match the high levels of the year before, the maize outturn is projected to post a solid recovery from the three-year low in 2015/16. Although still placed lower y/y, prospects for wheat production continue to improve, but the wet finish to the growing season in several countries will likely have a negative impact on average quality. Grains consumption will probably be a new peak, fuelled by gains for food, feed and industrial uses. Amid heavy supplies, attractively-priced wheat is capturing some feed demand from alternatives, including maize, although use of the latter is still seen at its highest ever. Despite record consumption, grains carryover stocks will likely climb again at the end of 2016/17, including accumulations in the major exporters and China. World grains trade in 2016/17 is forecast to fall moderately from the previous season s record. China, in particular, is seen being a smaller buyer, as government measures aimed at encouraging greater use of local maize will likely cut its imports of barley and sorghum. m t The Council s 2015/16 global soyabean crop estimate is downgraded by 2m t, to 312m, to reflect a lower figure for Brazil, linked to smaller than anticipated yields. Prospects for 2016/17 are highly tentative given that fieldwork in South America will not begin until September. But assuming some area expansion in key producers, output could recover and match the 2014/15 peak of 320m t. Underpinned by demand for soyabean products, consumption is seen expanding further, resulting in another season of tightening stocks. At 27.8m t, inventories are projected to contract by 15% y/y, including a sharp decline in the major exporters. Trade is expected to reach a new high in 2016/17 on continued growth in China s protein meal requirements. Rapeseed/canola output in 2016/17 is likely to fall for the third consecutive year and, despite a retreat in total use, carryovers are expected to decrease by around one-quarter y/y. Reflecting a reduced global crop and rising consumption, 2015/16 end-season inventories of rice are set to drop by 9%, to 101m t, mostly explained by a heavy contraction in leading exporters. World production in 2016/17 is predicted to reach a new high, but much will depend on weather conditions in Asia s main producers, especially India, where the ongoing monsoon will be crucial in shaping prospects. However, with uptake seen at a record, stocks could again fall, to 99m t. The outlook for trade will, as in all years, hinge on demand from buyers in sub-saharan Africa and Asia. MARKET SUMMARY Driven almost entirely by a further surge in soyabean export prices, and with rice quotations slightly firmer, the IGC GOI increased by a net 5% since late May. Overall advances were trimmed by seasonal pressure in the northern hemisphere, where harvesting of large winter wheat and barley crops is now underway, as well as a slight m/m weakening in average maize values. Grains and oilseeds quotations generally retreated from earlier highs on improved US Midwest weather forecasts and mostly favourable global production prospects. Turbulence on world financial and currency markets following the UK referendum vote also affected prices, especially wheat, late in the month. IGC Grains & Oilseeds Prices Index (GOI)* GMR 467 Change** y/y change IGC GOI % + 0.7% Wheat sub-index % % Maize sub-index % + 0.2% Barley sub-index % % Rice sub-index % + 5.2% Soyabeans sub-index % % *Jan 0=100, **Change vs. GMR 466 2

3 IGC GMR July Wheat: GOI sub-index The IGC GOI rice sub-index posted a net gain of 2% since the last GMR, with values in South Asia underpinned by recent sales and prospects for fresh demand. In Thailand, the release of state reserves was mildly bearish, while offers in Vietnam were somewhat mixed, with demand from traditional buyers largely muted. 240 Soyabeans: GOI sub-index World wheat export prices were mixed during June. Initial strong gains, linked to worries about quality damage, were subsequently reversed on overall favourable production prospects, with the IGC GOI sub- Index down 2% m/m. Maize: GOI sub-index Global soyabean values advanced sharply, the IGC GOI rising by 13%, as tightening availabilities at South American origins and firmer demand for US old crop supplies underpinned. Although beneficial Midwest weather weighed, sentiment was also buoyed by USDA s smaller than expected official 2016/17 area figure The IGC GOI maize sub-index was fractionally lower compared to late May, as declines in US and South American markets offset strength in Black Sea quotes. Earlier advances were tempered by an improved US weather outlook and stiff competition from low/medium grade wheat. USDA s Acreage report was bearish Rice: GOI sub-index GMR CONTENTS Wheat Durum Maize Barley. Other coarse grains Rice... Oilseeds Ocean Freight Market National Policy & Other Developments... Market Focus / Special Features UK: Grains trade with the EU USDA Acreage report... Rice: Update on monsoon progress in India Soyabeans: Update on Brazil's 2016/17 crop prospects Tables. IGC

4 SUPPLY & DEMAND: TOTAL GRAINS # Million tons Opening Production Imports Total Use Exports Closing stocks supply Food Industrial Feed Total a) stocks TOTAL GRAINS Argentina ** 2014/15 est /16 f'cast /17 proj Australia ** 2014/15 est /16 f'cast /17 proj (5.9) (37.5) (43.5) (8.1) (12.4) (6.7) Canada EU* 2014/15 est /16 f'cast /17 proj (54.7) (64.4) (8.6) 2014/15 est /16 f'cast /17 proj (309.6) (17.8) (362.4) (163.4) (279.4) (47.8) (35.3) Kazakhstan 2014/15 est /16 f'cast /17 proj Russia Ukraine USA 2014/15 est /16 f'cast /17 proj (9.5) (100.5) (110.8) (15.7) (36.2) (68.5) (32.9) (9.5) 2014/15 est /16 f'cast /17 proj (6.6) (56.6) (63.2) (13.3) (25.1) (32.0) (6.1) 2014/15 est /16 f'cast /17 proj (77.8) (425.8) (7.6) (511.2) (148.8) (353.7) (74.9) (82.7) MAJOR EXPORTERS b) 2014/15 est , , /16 f'cast , , /17 proj , , (152.4) (1059.8) (28.0) (1240.2) (132.4) (407.2) (802.6) (280.0) (157.7) China India 2014/15 est /16 f'cast /17 proj (188.2) (354.9) (13.7) (197.2) 2014/15 est /16 f'cast /17 proj WORLD TOTAL c) c) 2014/15 est , , , /16 f'cast , , , /17 proj , , , (467.6) (2015.5) (317.9) (2483.1) (671.0) (334.0) (881.5) (9.4) (317.9) (473.7)

5 SUPPLY & DEMAND: ALL WHEAT # Million tons Opening Production Imports Total Use Exports Closing stocks d) supply Food Industrial Feed Total a) d) stocks WHEAT Argentina (Dec/Nov) 2014/15 est /16 f'cast /17 proj Australia (Oct/Sep) 2014/15 est /16 f'cast /17 proj (25.0) (29.9) (4.8) Canada (Aug/Jul) 2014/15 est /16 f'cast /17 proj EU* (Jul/Jun) 2014/15 est /16 f'cast /17 proj (153.6) (175.8) (52.5) (125.6) (34.4) (15.8) of which common wheat 2014/15 est /16 f'cast /17 proj (144.7) (163.6) (52.5) (117.2) (32.3) (14.2) Kazakhstan (Jul/Jun) 2014/15 est /16 f'cast /17 proj Russia (Jul/Jun) 2014/15 est /16 f'cast /17 proj (7.4) (61.0) (68.9) (13.0) (14.5) (37.0) (24.5) (7.4) Ukraine (Jul/Jun) 2014/15 est /16 f'cast /17 proj (4.7) (21.5) (26.2) (9.6) (4.2) USA (Jun/May) 2014/15 est /16 f'cast /17 proj (54.3) (3.8) (85.4) (5.0) (33.1) (22.5) (29.8) MAJOR EXPORTERS b) 2014/15 est /16 f'cast /17 proj (69.7) (373.0) (9.3) (452.0) (111.3) (86.8) (237.1) (144.6) (70.4) China (Jul/Jun) 2014/15 est /16 f'cast /17 proj (127.4) (2.0) (206.1) (90.0) India (Apr/Mar) 2014/15 est /16 f'cast /17 proj WORLD TOTAL e) e) 2014/15 est /16 f'cast /17 proj (216.8) (722.3) (153.7) (939.1) (488.5) (137.9) (716.5) (153.7) (222.6)

6 SUPPLY & DEMAND: MAIZE # Million tons Opening Production Imports Total Use Exports Closing stocks supply Food Industrial Feed Total a) stocks MAIZE Argentina (Mar/Feb) 2014/15 est /16 f'cast /17 proj /18 proj Brazil (Mar/Feb) 2014/15 est /16 f'cast /17 proj /18 proj (3.9) (46.6) (58.1) (25.0) (6.2) EU* (Oct/Sep) 2014/15 est /16 f'cast /17 proj (63.7) (12.4) (83.4) (53.9) (74.9) (6.5) South Africa (May/Apr) 2014/15 est /16 f'cast /17 proj /18 proj Ukraine (Oct/Sep) 2014/15 est /16 f'cast /17 proj USA (Sep/Aug) f) 2014/15 est /16 f'cast /17 proj (45.8) (402.1) (138.0) (307.4) (46.0) (48.6) China (Oct/Sep) 2014/15 est /16 f'cast /17 proj (108.0) (328.5) (103.9) Japan (Oct/Sep) 2014/15 est /16 f'cast /17 proj WORLD TOTAL g) g) 2014/15 est , , /16 f'cast , /17 proj , , , (205.1) (129.0) (1208.2) (272.3) (583.4) (1002.9) (129.0) (205.3) # IGC estimates. May differ from official estimates shown elsewhere in this report. ** Years shown for southern hemisphere countries include following marketing years for maize and sorghum. For example, for Argentina, the "2013/14" year includes the 2013/14 (Dec/Nov) local marketing year for wheat and the 2014/15 (Mar/Feb) marketing year for maize. a) Including seed and waste. f) Includes residual. b) Argentina, Australia, Canada, EU, Kazakhstan, g) IGC July/June trade Russia, Ukraine, United States h) Excludes trade in malt c) Includes trade in malt. Totals may not sum due to rounding. d) Including estimated trade in secondary products Figures in brackets represent the previous estimate. e) IGC July/June trade: excluding trade in secondary products

7 SUPPLY & DEMAND: ALL RICE # Million tons (milled basis) Opening Production Imports Total Total Exports Closing stocks supply use a) stocks India (Oct/Sep) 2014/15 est /16 f'cast /17 proj Pakistan (Nov/Oct) 2014/15 est /16 f'cast /17 proj Thailand (Jan/Dec) 2014/15 est /16 f'cast /17 proj USA (Aug/Jul) 2014/15 est /16 f'cast /17 proj Vietnam (Jan/Dec) 2014/15 est /16 f'cast /17 proj Total 5 leading exporters b) 2014/15 est /16 f'cast /17 proj Bangladesh (Jul/Jun) 2014/15 est /16 f'cast /17 proj China (Jan/Dec) 2014/15 est /16 f'cast /17 proj Indonesia (Jan/Dec) 2014/15 est /16 f'cast /17 proj Philippines (Jul/Jun) 2014/15 est /16 f'cast /17 proj WORLD TOTAL 2014/15 est /16 f'cast /17 proj # IGC estimates. May differ from official estimates shown elsewhere in the report. a) Including seed and waste. b) India, Pakistan, Thailand, United States, Vietnam. Totals may not sum due to rounding. Figures in brackets represent the previous estimate.

8 SUPPLY & DEMAND: SOYABEANS # Million tons Opening Production Imports Total Use Exports Closing stocks supply Food Feed Crush Total a) stocks SOYABEANS Argentina (Apr/Mar) 2015/16 est /17 f'cast /18 proj Brazil (Feb/Jan) 2015/16 est /17 f'cast /18 proj (102.0) (102.7) (3.3) (41.5) (57.0) USA (Sep/Aug) 2014/15 est /16 f'cast /17 proj (10.9) (115.2) (51.3) (8.3) Total 3 major exporters b) 2014/15 est /16 f'cast /17 proj (17.1) (261.5) (279.5) (9.0) (138.6) (148.6) (117.0) (13.9) Canada (Sep/Aug) 2014/15 est /16 f'cast /17 proj (6.0) (0.3) Ukraine (Sep/Aug) 2014/15 est /16 f'cast /17 proj (4.5) (4.6) (0.2) Paraguay (Mar/Feb) 2015/16 est /17 f'cast /18 proj China (Oct/Sep) 2014/15 est /16 f'cast /17 proj (12.0) (111.9) (11.5) (102.2) (9.5) EU* (Oct/Sep) 2014/15 est /16 f'cast /17 proj India (Oct/Sep) 2014/15 est /16 f'cast /17 proj Japan (Oct/Sep) 2014/15 est /16 f'cast /17 proj WORLD TOTAL c) c) 2014/15 est /16 f'cast /17 proj (33.5) (320.0) (353.5) (17.8) (17.2) (288.2) (324.9) (28.6) # IGC estimates. May differ from official estimates shown elsewhere in the report. a) Including seed and waste. b) Argentina, Brazil, USA c) IGC October/September trade Totals may not sum due to rounding Figures in brackets represent the previous estimate.