1. Decision Support Tool Discussion May 29 th, 2014 USB – QSSB: Communications and Partnership Workshop

2. Objectives Decision Support Tool (DST) ◊ Conceptual Overview of the DST Market Data ◊ Content ◊ Market Overview QSSB Participation ◊ Value of QSSB Participation ◊ How to Increase QSSB Participation? 2

3. Decision Support Tool 3

4. What is the DST? The Decision Support Tool (DST) is designed to provide the USB Farmer Directors and stakeholders (QSSBs!) with information and to guide them through a logical thought process to help make better in-season and annual budgeting decisions, where annual budgeting and planning processes are aligned with the organization’s long range strategic objectives. It is not meant as a substitute for the unique insights that every farmer director will bring to the process. It is not something that is going to make a decision, but it’s something that will assist in making good strategic decisions for USB. 4

5. DST Overview 5

6. DST Home Page 6

7. Market Data Home Page 7

8. Market Data 8

9. US Soybean Supply and Demand (Million Bushels) 9

10. Soybeans-General Market Information  US soybean planted area flat in recent years; corn acreage up (ethanol).  Weather-reduced yields and strong exports have made US soybean stocks tight in recent years, and have done so again in 2013/14.  Despite unusually large imports in 2013/14, crush and export forecasts imply a stocks-to-use ratio below the 4.5% that has been seen in 4 of the past 10 years and may represent a realistic minimum.  The 2014/15 balance sheet assumes the 2013/14 situation will be resolved with ending stocks of 150 million bushels (a stocks-to-use ratio of 4.5%) by a combination of larger imports, smaller usage and an upward revision in production.  From 2014/15 forward, a moderation in corn acreage as ethanol production flattens is expected to allow soybeans to attract more acreage, facilitating larger exports and a build in stocks.  Growth in the soybean crush is expected to be slower than growth in exports with increases in soybean meal demand limited by livestock expansion. 10

11. Soybeans-Developments Since December  2013/14 US balance sheet tighter than projected in December as exports have been much larger than expected. o US imports are now forecast at 80 million but larger imports or smaller usage will be necessary to resolve the tightness in supplies. o 2013 production significantly larger than USDA’s estimate?  Due to the tight US fundamentals, soybean futures prices have moved higher.  Price expectations for 2014/15 have been reduced slightly with a lower demand outlook relative to that in December more than offsetting a less robust increase in acreage and production than previously projected.  Price projections for 2015/16 have been lowered due to a smaller export outlook resulting from a larger 2015 South American soybean production forecast. 11

12. Soybeans-Global Issues  China’s soybean import demand for both 2013/14 and 2014/15 has been lowered by 1.0 to 1.5 million tonnes from the December outlook due to negative crush margins in the early months of 2014 and the assumption of a more moderate build in soybean stocks in the year ahead.  Soybean ending stocks in Argentina for both 2013/14 and 2014/15 have been raised as high inflation continues to encourage farmers to hold a larger portion of their crop. This reduced the amount of soybean supplies competing with the US for export business.  Although old-crop soybean futures prices have risen the most since December, the 2015 contracts have increased such that farmers in Brazil and Argentina are not expected to significantly reduce soybean plantings later in 2014. This is a significant change from the December outlook, when South American soybean area was forecast to decline by 7-8%. 12

13. US Soybean Meal Supply and Demand (1,000 Short Tons) 13

14. Soybean Meal-General Market Conditions  Domestic soybean meal usage has declined in recent years due to growth in canola meal supplies and increased feeding of corn byproducts from ethanol production as a protein meal replacement.  Soybean meal usage rebounded in the 2011/12 marketing year with ethanol production leveling off and soybean meal prices low relative to grain prices, but dropped in 2012/13 amid record-high prices.  US soybean meal usage is forecast to increase slightly in 2013/14.  Lower soybean meal prices and an expansion in livestock production are expected to bring solid growth in domestic soybean meal usage in 2014/15; more modest growth is projected for subsequent years. 14

15. Soybean Meal-Developments Since December  Soybean meal production and domestic use forecasts for 2013/14 have been lowered since December with larger-than-expected soybean exports leaving smaller supplies to crush this summer.  Spread of PED virus in hogs is also keeping protein meal demand from meeting expectations.  Meal exports also have been lowered due to the smaller supplies. 15

16. US Soybean Oil Supply and Demand (Million Pounds) 16

17. Soybean Oil-General Market Conditions  US soybean oil stocks have fallen in recent years on increased use in biodiesel.  Non-biodiesel (mainly food) domestic usage has declined since the mid- 2000s with the food industry cutting partially hydrogenated soybean oil use to reduce trans fat.  Soybean oil usage in biodiesel production is not expected to increase much during the next couple of years.  Note that in Balance Table, 15/16, 16/17, and 17/18 numbers are Informa projections. While Informa predicts a drop in soybean oil usage for biodiesel and increasing soybean oil stocks, USDA’s long term baseline shows static biodiesel usage (5 bil. lbs in all three years) and essentially static ending stocks. o The last USDA long term baselines were released in February of 2014. USDA has since revised its near term use projections (13/14 and 14/15) downward. This directional movement is reflected in Informa’s forecast. 17

18. Soybean Oil-Developments Since December  Projected 2013/14 US soybean oil ending stocks have been reduced 380 million pounds from the December outlook with smaller production associated with the smaller soybean crush more than offsetting lower exports.  For 2014/15, soybean oil ending stocks have been lowered about 530 million pounds with sizable reductions in carryin stocks and production more than offsetting a 400-million-pound reduction in projected exports. 18

19. QSSB Participation 19

20. DST Result: Full Board Opinion With Respect to Allocations by Action Team and Target Area 20

21. Why is QSSB Involvement Important? USB Directors specifically asked for it – need your input. QSSBs have unique insights into regional-specific dynamics. The DST/STRATlink is a unique way to capture QSSB opinion and deal with the complexity of information. 21

22. QSSB Input Goes to Action Team Level 22

23. How To Increase QSSB Participation? 23

24. Reasons For Low Participation? Don’t think opinion matters? Don’t know how to use DST? Don’t know what DST is used for? Organizational structure of USB not understood (Action Teams, Target Areas)? Terminology not understood? Time constraints? Other? 24

25. Decision Support Tool Discussion Thanks! May 29 th, 2014 USB – QSSB: Communications and Partnership Workshop