1 FUNDAMENTAL BULLS and BEARS Feed-Millers meeting Dan Cesarea 31 July 2006 in a (relatively) quiet market

2 The Fundamentals Supply (land sowed, yields, weather etc…) Demand (Food, Feed, Energy etc…) Stocks to Usage ratio Price vs Stocks to Use Crush margins

3 It is NOT the news that move the market it is the variation to expectation and the weight of the items

4 Soybean complex and Meal Ample world soybean production High yields expected in US crop (August critical) Increasing US and Argentinean crush barely offsets Brazilian slowdown due to poor crush margins World consumption of soybean meal is lower than expected but up 6.3 MnT from last season The low stock of fish meal and high prices are actually rationing. But watch over-rationing! Look for ample supply of oil-meals due to the big demand for oil Source: Oil World

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21 Export Sales (USDA)

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25 Meal

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29 Source: Oilworld

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33 Biodiesel… Is a renewable fuel for diesel engines derived from natural oils like soybean oil and other vegetable oils and fats. Can be used as a pure fuel (B100) or blended with petroleum in any percentage. B20 is the most popular blend. Is made through a chemical process called transesterification, whereby the glycerin is separated from the fat or vegetable oil. This results in two products, methyl esters (biodiesel) and glycerin (used in soaps and other products). Source: FIMAT

34 Biodiesel Production: Efficient Conversion = Source: National Biodiesel Board/FIMAT

35 Biodiesel Capacity Source: National Biodiesel Board/FIMAT

36 US Soybean Oil in Biodiesel Estimates on the rate of growth in SBO for biodiesel vary widely. Source: FIMAT

37 Biodiesel…supply? The entire US soybean production for biodiesel would total 4.8 billion gallons, or about 7.5% of total diesel consumption only! Biodiesel expansion will require a doubling of EU rapeseed acres and imports or big blending of soybean oil and palm oil.

38 Source: Oil World

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53 THANK YOU!