1. Agricultural Commodity Outlook Gerald A. Bange Chairperson World Agricultural Outlook Board Office of the Chief Economist U.S. Department of Agriculture Presented to TD Newcrest Agriculture Conference – Harvesting Great Ideas Toronto, Canada November 20, 2008

2. Price Volatility Factors Strong Demand Worldwide for Agricultural Commodities Petroleum Prices have Dropped Sharply from Record Highs Increased Production of Renewable Fuels Tight Grain and Soybean Stocks Record World Wheat Production will Exceed Consumption in 2008/09 Restrictions on World Exports of Grains – especially Rice – have been Lifted U.S. Cotton Area and Production Sharply Lower Input Costs have been Declining U.S. Dollar is Strengthening

3. World Wheat Production

4. World Corn Production

5. World Coarse Grain Production

6. World Soybean Production

7. World Oilseed Production

8. Source: USDA-NASS, Crop Production, November 10, 2008. Includes wheat, feed grains, soybeans, upland cotton, and rice. U.S. 8-Principle Crop Planted Area …8-crop area up 5.2 million for 2008

9. U.S. Wheat Supply and Demand

10. U.S. Wheat Planted Area …wheat acres up 2.6 million for 2008 Source: USDA-NASS, Crop Production, November 10, 2008.

11. 2007 Energy Act –Mandates very ambitious renewable fuel standard (RFS), starting at 9.0 billion gals in 2008 and increasing to 36 billion gals by 2022. 1 –Up to 15 billion gallons of the RFS can be met with corn-based ethanol starting in 2015. –By 2016, all of the RFS increase must be met with cellulosic ethanol or other non-corn starch biofuels. 1 The 2005 Energy Act mandated 5.4 billion gals by 2008, rising to 7.5 billion by 2012.

12. Crude Oil Prices Source: DOE-Energy Information Administration, Short-Term Energy Outlook, November 2008. Forecasts

13. U.S. Blended Motor Gasoline Consumption Source: DOE-Energy Information Administration.

14. U.S. Blended Motor Gasoline Consumption Source: DOE-Energy Information Administration.

15. U.S. Blended Motor Gasoline Consumption Source: DOE-Energy Information Administration.

16. U.S. Blended Motor Gasoline Consumption Source: DOE-Energy Information Administration.

17. U.S. Blended Motor Gasoline Consumption Source: DOE-Energy Information Administration. 8-9 bil. gal.

18. U.S. Ethanol Production Capacity Annual Capacity by Month Note: Sep. 2006 through Oct. 2008 from Renewable Fuels Association (RFA). Projections by USDA-WAOB as of November 2008.

19. U.S. Corn Supply and Demand

20. Note: 2008/09 projection from the November 10, 2008, World Agricultural Supply and Demand Estimates. *Projections for 2009/10 and beyond based on maximum RFS level for corn starch based ethanol under the Energy Independence and Security Act of 2007. U.S. Corn Used for Ethanol

21. Note: Central Illinois cash bids. Daily Cash Market Corn Prices 2004/05 through 2008/09 to date

22. U.S. Biodiesel Mandate... (2007 Energy Act) 14%

23. U.S. Soybean Supply and Demand

24. China Soybean Import Dependence Growing Million Tons Percent

25. Soybean Production Trends Million Tons

26. U.S. Soybean Oil Supply and Demand

27. Soybean Oil Futures Prices Note: Chicago Board of Trade daily settlement prices. December 2008 Contract

28. U.S. Domestic Biodiesel Production Margin

29. Biodiesel Production Trends in 2007/08 Soybean oil share 61% for 2007/08 vs 86% for 2006/07 Million lbs.

30. U.S. Corn & Soybean Planted Area …soybean acres up 11.2 million for 2008 Source: USDA-NASS, Crop Production, November 10, 2008.

31. New-crop Soybean/Corn Futures Price Ratios 2007-crop, 2008-crop, & 2009-crop thru Nov. 12, 2008 Note: Chicago Board of Trade daily settlement prices.

32. U.S. Ammonia Prices, weekly Source: Green Markets Fertilizer Market Intelligence Weekly

33. Note: Net returns are above variable costs. 2009-crop outlook reflects current estimated costs and Nov. and Dec. 2009 futures adjusted for current Central IL basis (11/12/08). Net Returns Outlook Corn and Soybeans Spring 2006, 2007 & 2008 vs. Fall 2008 (2009 crop)

34. Devaluation: Effect on Brazilian Soybean Price Planting time last year

35. U.S. Soybean Meal Supply and Demand

36. U.S. Meat Production and Prices

37. U.S. Meat Trade Million Pounds

38. U.S Livestock Trade with Canada 1,000 head Imports Exports * Jan-Sep data

39. U.S. Meat Trade with Canada million lbs. Imports Exports Imports Exports * Jan-Sep data

40. The Canadian Dollar and Oil Source: Reuters/Datastream

41. End