Argentina’s Default and the ‘Lucky’ Soybean Factor

Argentina’s Default and the ‘Lucky’ Soybean Factor

CPA. Daniel A. Miró November 2012

Chart 1

EXPORT PRICES INDEX base year 1993=100

270 250 230

Cereals

Oilseeds

Oils & Fats

Oil Meals

210 190 170 150 130 110 90

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

70

Source: INDEC N贸vitas S.A.

Chart 2

Soybean Complex Share in Argentine Total Exports (in Million US Dollars) 1999 139 2044 1011

SOYBEANS SOY OIL BIODIESEL SOY MEAL TOTAL SOYBEAN COMPLEX 3193 TOTAL EXPORTS % SHARE OF THE SOYBEAN COMPLEX

2000 642 1740 1442

2001 504 1800 1206

2002 773 2170 907

2003 1239 2401 1000

2004 1113 2561 1280

2005 1833 3260 2002

3824

3510

3850

4640

4955

7096

23333 26409 26610 25709 29566 34550 40013

14%

14%

13%

15%

16%

14%

18%

2006 2007 2008 2009 2010 2011 2012* SOYBEANS 1779 3415 4592 1654 4966 5335 3485 SOY OIL 4358 5741 7189 8051 8195 9789 4180 BIODIESEL 2789 4260 4734 3136 3959 4925 2282 SOY MEAL 5 135 845 913 1225 2142 9980 TOTAL SOYBEAN COMPLEX 8931 13551 17360 13754 18345 22191 19926 TOTAL EXPORTS % SHARE OF THE SOYBEAN COMPLEX *Forecast Source: INDEC N贸vitas S.A.

45456 55780 70589 55669 68500 84269 81954

20%

24%

25%

25%

27%

26%

24%

2011/12

2010/11

2009/10

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

1999/00

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

35

1992/93

40

2012/13*

*Forecast

1991/92

1990/91

Billion US Dollars

Chart 3 www.novitas.com.ar

Argentina: Value of Grain Production and Export Taxes

45

Value of Grain Production

Amount of Export Taxes

30

25

20

15

10

5

0

-Can this trend continue?

-Is this just luck?

-Are we facing a new market scenario?

The Grain Market and the Changing “Dynamics� of Demand

Chart 4 EVOLUTION OF WORLD POPULATION AND THE WORLD DEMAND OF MAIN GRAINS AND OILSEEDS Base Index 1976/77 - 1980/81 = 100

360 340

WORLD POPULATION

320

COARSE GRAINS

300

WHEAT

280

CORN OILSEEDS

260

SOYBEAN

240

220 200 180 160 140

120 100 *Forecast

Source: USDA and Oil World N贸vitas S.A.

Chart 5

EVOLUTION OF WORLD POPULATION AND THE WORLD DEMAND OF MAIN GRAINS AND OILSEEDS ANNUAL CUMULATIVE GROWTH RATES

PERIOD WORLD POPULATION WHEAT COARSE GRAINS CORN OILSEEDS SOYBEAN

1975-2012 1,43% 1,80% 1,53% 2,54% 3,44% 4,04%

1995-2012 1,17% 1,26% 1,68% 2,61% 3,16% 4,02%

The Trade/Consumption Relation: A Key Indicator

Chart 6

300

Soybean: World Consumption and Soybean Complex Exports Consumption

In Millon Tons

250

Exports (in grain equivalent)

200 150 100

64% 50

*Forecast

64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*

0

Source: USDA N贸vitas S.A.

Chart 7

USA: Soybean Production and Soybean Complex Exports 100

Production

90

Exports (In grain equivalent)

80

In Million Tons

70 60 50

40 30

54%

20 10

Source: USDA N贸vitas S.A.

10/11

08/09

06/07

04/05

02/03

00/01

98/99

96/97

94/95

92/93

90/91

88/89

86/87

84/85

82/83

80/81

78/79

76/77

74/75

72/73

12/13*

*Forecast

70/71

68/69

66/67

64/65

0

Chart 8

South America: Soybean Production and Soybean Complex Exports 160

Production

140

Exports (in grain equivalent)

In Million Tons

120 100 80 60 40

75%

20

*Forecast

Source: USDA N贸vitas S.A.

12/13*

10/11

08/09

06/07

04/05

02/03

00/01

98/99

96/97

94/95

92/93

90/91

88/89

86/87

84/85

82/83

80/81

0

Chart 9

NET WORLD EXPORTS OF THE SOYBEAN COMPLEX 1976/77-1978/79 USA 71,0% OTHERS 0,5% SOUTH AMERICA 29% ARGENTINA 4,0%

PARAGUAY 0,5%

BRAZIL 24,0% TOTAL: 32,89 MILLION TONS.

NET WORLD EXPORTS OF THE SOYBEAN COMPLEX 2010/11-2012/13 URUGUAY 1% PARAGUAY 4,2% BOLIVIA 1,1%

USA 30,7%

CANADA 1,1%

INDIA 2,3% OTHERS 0,4%

SOUTH AMERICA 65,6% BRAZIL 32,0%

ARGENTINA 27,4%

TOTAL: 154,91 MILLION TONS. N贸vitas S.A.

900

*Forecast

60/61 62/63 64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*

In Millon Tons

Chart 10

CORN: WORLD CONSUMPTION AND EXPORTS

800 Consumption

700 Exports

600

500

400

300

200

100

0

11%

Source: USDA N贸vitas S.A.

60/61 62/63 64/65 66/67 68/69 70/71 72/73 74/75 76/77 78/79 80/81 82/83 84/85 86/87 88/89 90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13*

In Million Tons

Chart 11

USA: Corn Production and Exports

350

Production

0

*Forecast

Source: USDA N贸vitas S.A.

Exports

300

250

200

150

100

50

11%

Soybean Supply: An American Continent Issue

Chart 12

WORLD SOYBEAN PRODUCTION 275 250 OTHER COUNTRIES

225

MERCOSUR + BOLIVIA

200

In Million Tons

USA + CANADA 175 150 125 100 75 50

*Forecast

Source: USDA N贸vitas S.A.

12/13*

10/11

08/09

06/07

04/05

02/03

00/01

98/99

96/97

94/95

92/93

90/91

88/89

86/87

84/85

82/83

80/81

78/79

76/77

74/75

72/73

0

70/71

25

*Forecast

Source: USDA N贸vitas S.A.

12/13*

11/12

10/11

09/10

08/09

07/08

06/07

05/06

04/05

03/04

02/03

01/02

00/01

99/00

98/99

Brazil Paraguay Uruguay

97/98

96/97

95/96

94/95

50

93/94

92/93

91/92

90/91

In Million Hectares

Chart 13

SOYBEAN AREA IN SOUTH AMERICA

60

Argentina Bolivia Others

40

30

20

10

0

Soybean Demand: The Chinese ‘Dilemma’

Chart 14

Source: USDA N贸vitas S.A.

10/11

08/09

06/07

04/05

02/03

00/01

98/99

96/97

94/95

92/93

90/91

88/89

12/13*

*Forecast

86/87

84/85

82/83

5 0 -5 -10 -15 -20 -25 -30 -35 -40 -45 -50 -55 -60 -65

80/81

In Million Tons

CHINA: Net Trade of Soybeans

Chart 15

CHINA: SOYBEAN CRUSHINGS & IMPORTS 70 64

Imports

Crushings

58

In Milllon Tons

52 46 40 34 28 22 16 10 4 *Forecast

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13*

Source: USDA N贸vitas S.A.

Chart 16

CHINA: SOYBEAN IMPORTS BY ORIGIN 60 OTHERS

In Million Tons

50 40

SOUTH AMERICA USA

30 20 10

0

Source: OILWORLD N贸vitas S.A.

80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13

In Million Tons 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12

In Million Tons

Chart 17 70

USE OF PROTEIN MEALS IN CHINA

60

50

40

140

OTHERS FISH MEAL GROUNDNUT MEAL COTTON MEAL RAPE MEAL SOY MEAL

30

20

10

0

180

FEED USE OF GRAINS IN CHINA

160

CORN OTHERS

Source: OIL WORLD - USDA N贸vitas S.A. WHEAT

120

100

80

60

40

20

0

Chart 18 CHINA: SOYBEAN PRODUCTION AND HUMAN CONSUMPTION 20 18

In Million Tons

16 14 12 10 8 6

4 2 0

*Forecast

Source: Oil World N贸vitas S.A.

Production Human Consumption

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Chart 19

7

CHINA: MONTHLY SOYBEAN IMPORTS 2009/10

2010/11

2011/12

2012/13

In Million Tons

6 5 4 3 2 1 OCT NOV DEC JAN

FEB MAR APR MAY JUN

JUL AUG SEP

Soybean Demand and the Biofuels ‘Fever’

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Chart 20

ENERGETICA MUNDIAL AMATRIZ VIEW ABOUT THE FUTURE OF THE WORLD ENERGY EQUATION We are Here

Modern Biomass

Traditional Biomass Mineral Gas

Mineral Oil

Coal Others

Challenge: The Diversification of Energy Sources

Chart 21

BIODIESEL WORLD PRODUCTION In Million Tons COUNTRIES Germany France Italy Other E.U. E.U. (27 countries) BRAZIL ARGENTINA U.S.A. OTHERS WORLD TOTAL Source; Oil World N贸vitas S.A.

2006 2,55 0,74 0,50 0,89 4,88 1,13 0,05 0,06 1,04 7,16

2007 2,93 0,87 0,46 1,53 6,02 1,70 0,18 0,36 1,37 9,63

2008 2,67 1,86 0,62 2,18 7,57 2,69 0,71 1,03 2,10 14,10

2009 2,49 2,00 0,80 2,83 8,87 1,87 1,18 1,42 2,56 15,89

2010 2,55 2,00 0,76 3,47 9,58 1,08 1,82 2,10 3,83 18,40

2011 (2) 2,73 1,78 0,43 3,63 9,13 2,95 2,43 2,35 4,00 20,85

2012 % VAR (1) (1/2) 2,40 -12,1 1,80 1,1 0,48 11,6 3,60 -0,8 9,00 -1,4 3,38 14,6 2,60 7,1 2,20 -6,3 4,00 0,0 21,18 1,6

% 2012 11,3% 8,5% 2,3% 17,0% 42,5% 16,0% 12,3% 10,4% 18,9% 100,0%

Chart 22

Argentina: Biodiesel Production and Capacity

In Millon Tons

4,0 3,5

Capacity

3,0

Production

2,5

2,0 1,5 1,0 0,5 0,0

2005 N贸vitas S.A.

2006

2007

2008

2009

2010

2011 2012* *Forecast

The Role of ‘Structural Exporters’ The Amazing Argentine Case

Chart 23

100% 90%

ARGENTINA: AVERAGE INTERNAL PRODUCTION EXPORTED IN THE LAST 5 YEARS AS DERIVATIVES AS GRAINS/OILSEEDS

90,3%

80% 70%

59,5%

65,5% 58,8%

60% 50% 40% 30% 20% 10% 0% WHEAT Source: Argentine Ag Ministy Nóvitas S.A.

CORN

Cambiar colores – ampliar letras SOYBEAN SUNFLOWER

Chart 24

ARGENTINA: EVOLUTION OF PLANTED AREA WITH CEREALS AND OILSEEDS 35 CEREALS OILSEEDS

30

In Million Hectares

25 20 15 10 5

Source: Buenos Aires Grain Exchange & Argentine Ag Ministry N贸vitas S.A.

10/11

12/13*

*Forecast

08/09

06/07

04/05

02/03

00/01

98/99

96/97

94/95

92/93

90/91

88/89

86/87

84/85

82/83

80/81

0

Chart 25

SOYBEAN OIL DEMAND STRUCTURE: ARGENTINA, BRAZIL AND THE USA IN 2012/13 10

Biodiesel exports Soybean oil exports Biodiesel domestic use Soybean oil domestic use

9 In tMillion Tons

8 7 6 5 4 3 2 1 0

Argentina Source: USDA N贸vitas S.A.

Brazil

USA

Chart 26

EVOLUTION OF PRODUCTION AND OVERHEAD COSTS FOR MAIN CROPS IN ARGENTINA (In US Dollars per Hectare) SOYBEANS (1) CORN (2) WHEAT (3) Production Overhead Production Overhead Production Overhead 05/06 (A) 173 99 267 99 146 76 06/07 182 113 277 113 169 86 07/08 183 121 290 121 190 105 08/09 199 141 309 141 208 112 09/10 211 145 345 145 217 120 10/11 216 153 345 153 237 131 11/12 244 165 395 165 261 134 12/13 (B) 282 185 476 185 366 150 (B/A) 63% 87% 78% 87% 151% 97% (1) GMO, Cero Tillage, Main Soybean Belt (2) Cero Tillage, Main Corn Belt (3) Conventional Tillage, Southeastern Areas

Looking into the Future -Limited Availability in Grain Markets -Is Corn Facing a Similar Imbalance as Soybeans?

-Is there a ‘Quick’ Solution?

Source: USDA N贸vitas S.A. 12/13

11/12

10/11

World

09/10

08/09

07/08

30

06/07

05/06

04/05

03/04

02/03

01/02

00/01

99/00

98/99

97/98

96/97

95/96

94/95

93/94

92/93

91/92

90/91

89/90

%

Chart 27 CORN: WORLD AND U.S. STOCK/USE RATIO

35

U.S.A.

25

20

15

10

5

0

Chart 28

WORLD PRODUCTION OF COARSE GRAINS In Million Tons

05/06

06/07

07/08

08/09

09/10

10/11

11/12

12/13

12/13

VAR %

(1)

(2)

N贸vitas

(2/1)

Corn

699,74 714,05 794,22 799,54 821,20 830,29 877,75 839,0

827,0

-4,4

Barley

136,22 136,97 133,08 155,05 150,76 122,78 134,06 130,7

132,5

-2,5

Sorghum

59,62

57,51

65,98

64,70

54,27

62,47

53,78

59,5

58,8

10,6

Millet

30,63

31,66

32,14

32,76

28,28

34,98

32,94

30,7

30,6

-6,7

Oats

23,93

22,77

25,75

25,80

23,52

19,84

22,99

21,5

22,0

-6,7

Mixed Grain

14,52

12,20

14,39

17,32

17,52

11,44

12,87

13,8

13,3

7,6

Rye

15,71

13,56

15,10

15,98

17,20

15,56

14,44

14,9

15,1

2,9

1099,3

-3,4

TOTAL Source: USDA N贸vitas S.A.

980,36 988,72 1080,67 1111,13 1112,74 1097,35 1148,83 1110,1

Chart 29 COARSE GRAINS: WORLD SUPPLY AND DEMAND Production Season 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

2012/13 2012/13 N贸vitas Source: USDA N贸vitas S.A.

Ending Stock

722,8 794,3 828,8 812,2 868,9 797,6 869,4 800,9 909,1 881,4 891,5 878,1 863,7 896,6 873,6 916,0 1015,6 980,4 988,7 1080,7 1111,1 1112,7 1097,4 1148,8

Use In Million Tons 780,3 814,9 815,2 813,1 841,4 836,2 853,8 835,8 869,5 867,9 869,7 882,6 884,7 909,0 901,2 944,8 978,9 994,0 1013,5 1057,4 1081,0 1111,0 1129,5 1148,6

204,0 183,4 197,1 196,3 221,3 182,7 198,3 163,4 203,0 216,4 238,1 233,1 212,0 199,6 172,1 143,3 180,0 166,3 141,5 164,8 194,9 196,7 164,6 164,8

Stock/Use Ratio (% ) 26,1 22,5 24,2 24,1 26,3 21,8 23,2 19,6 23,3 24,9 27,4 26,4 24,0 22,0 19,1 15,2 18,4 16,7 14,0 15,6 18,0 17,7 14,6 14,3

1110,1 1099,3

1128,6 1124,0

146,3 140,1

13,0 12,5

88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13*

%

Chart 30

EVOLUTION OF THE U.S. STOCKS/USE RELATIONS

30 CORN

* Forecast

Source: USDA N贸vitas S.A. SOYBEANS

25

20

15

10

5

0

The 2012/13 Soybean Campaign in South America A ‘Key’ Crop

Chart 31

USA: SUPPLY & DEMAND OF SOYBEANS USDA 11/12

USDA 12/13

AUG

SEP

OCT

AUG

SEP

OCT

NOVITAS OCT

Planted Area (Million Hectares) Harvested Area (Million Hectares) Yields (Tons/Ha)

30,4 29,8 2,790

30,4 29,8 2,790

30,4 29,9 2,817

30,8 30,2 2,427

30,8 30,2 2,373

31,3 30,4 2,541

31,3 30,3 2,258

Begining Stocks Production Imports Total Supply

5,9 83,2 0,4 89,4

5,9 83,2 0,4 89,4

5,9 84,2 0,4 90,4

3,9 73,3 0,5 77,7

3,5 71,7 0,5 75,8

4,6 77,8 0,5 83,0

4,6 75,1 0,5 80,2

Crushings Other Uses Exports Total Use

46,0 2,7 36,7 85,5

46,4 2,5 37,0 85,9

46,3 2,4 37,0 85,9

41,2 3,2 30,2 74,6

40,8 3,2 28,7 72,7

41,9 3,1 34,4 79,4

41,7 2,8 32,3 76,8

Ending Stocks Stocks/Consumption Rel. (%)

3,9 4,6%

3,5 4,1%

4,6 5,3%

3,1 4,2%

3,1 4,3%

3,5 4,4%

3,4 4,4%

Chart 32

SOYBEAN: SOUTH AMERICAN PRODUCTION In Million Tons 04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

12/13*

BRAZIL

53,00

57,00

59,00

61,00

57,80

69,00

75,50

66,50

81,00

ARGENTINA

39,00

40,50

48,80

46,20

32,00

54,50

49,00

41,00

55,00

PARAGUAY

4,04

3,64

5,58

5,97

3,65

7,38

8,31

4,00

8,10

URUGUAY

0,48

0,63

0,82

0,81

1,17

1,82

1,55

1,60

1,90

BOLIVIA

2,03

2,06

1,65

1,05

1,60

1,67

2,10

2,20

2,30

OTHERS

0,17

0,13

0,15

0,18

0,20

0,21

0,21

0,21

0,21

TOTAL Source: USDA N贸vitas S.A.

98,72 103,96 116,00 115,21

96,42 134,57 136,67 115,51 148,51 *Forecast

Funds Waiting: A 15/20 million tons failure in South American soybean production will give us back record prices

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35

In Millon Tons

30

CBOT Soybeans: Nearby Quotes and Net Fund Positions Speculative Funds Index Funds Nearby Quotes

660 620 580

25

540

20

500

460

15 420

10 5

380 340 300

0 -5

260 220

U$S/Ton

Chart 33