SWEET ALL

1
The Future of the HFCS Market
Influences on Demand
2
(No Transcript)
3
The Future of the HFCS Market

• U.S. HFCS demand flat to slightly declining
• HFCS in Mexico potential growth
• Alternatives for grind less ethanol

4
North American HFCS Demand
Billion Pounds Dry
19.6
70 of U.S. HFCS Used in Beverages
Estimate
Source McKeany-Flavell
5
U.S. HFCS Demand Steady Decline
American Heart Association Even moderate weight
excess increases the risk of death, particularly
in adults 30-64.
From its peak in 2002, total HFCS demand has
fallen 2.27 billion lbs., or 12.4
Billion Pounds (dry basis)
Estimate
6
U.S. Case Sales (Volume) of CSD
2007 2008
Coca-Cola Down 2 Down 8
Pepsi Flat Down 6
Cott Down 4.8 Down 11
As of 2008 Q2 report.
U.S. CSD Consumption
Estimate
7
Consumers Are Hesitant to Spend
Estimate
Source USDA ERS, Congressional Budget Office
8
Consumers Are Concerned
?
9
Consumers Want Natural Foods
Third-most used claim in product launches in 2007
and fourth-most popular for beverages
Estimate Sources Mintel, Beverage World Annual
Report
10
Consumers Explore Other Sweeteners
Nearly two-thirds of Americans are concerned
about the safety of artificial sweeteners
New Products
2003 2007
With Agave 56 176
HFCS-Free 6 146
FDA Oks Rebiana
Sources Datamonitor, Mintel
11
Americans Still Like Sweet
Per Capita Nutritive Sweetener Deliveries
Pounds
Consumers Return to Sugar in Search of
Less-Processed Food
Estimate
12
Who Buys Sweetened Products
The 12-19 age group consumes the most sweeteners
Demographic Profiles Hispanic Young, increasing
affluence, may favor nutritive sweeteners Asian
Increasing affluence, may favor non-nutritive
sweeteners
of Population 1980 2000 2020
Hispanic 6.5 12.6 18.0
Black 11.6 12.3 12.9
Asian/Pacific Islander 1.5 3.9 5.0
White 79.9 70.4 62.5
Minority Purchasing Power May Reach 4.3 Trillion
by 2045
Source U.S. Census Bureau, U.S. Dept of Commerce
13
Sugar-Free Appeals to Aging Population
People 65 made up 12.4 of the population in
2000 and are expected to make up 20 by 2030.
14
Carbonated Soft Drink Industry
Market Share Regular Nutritive CSD vs. Diet
2008 Diet makes up over 30 of total
Source Beverage Marketing Corporation
Estimate
15
Future of HFCS Capacity

• No major capacity changes over the next ten
  years.
• Wild card Tate Lyle Fort Dodge, Iowa facility
  may add HFCS capacity but probably not before
  2011/12.

16
Theoretical HFCS Production Capacity vs. Demand
Cargill re-opens Dayton, Ohio and Decatur, Ala.
Industry expansion for Mexico
Cargill stops HFCS production at Dayton, Ohio,
then shutters Dimmitt, Tex. and Decatur, Ala.
Includes Canada and Mexico. Assumed capacity
expansion 1 annually through 2003 due to
de-bottlenecking.
Estimate
Source McKeany-Flavell
17
MEXICO - Estimated HFCS Imports
Thousand Metric Tons
Price of sugar within Mexico makes it difficult
for U.S. HFCS to compete
Estimate
Source Mexican Trade Sources and McKeany-Flavell
18
Wet Milling Industry Compensates for Slowdown in
HFCS Demand

• Industry Consolidation
• Capacity Reduction
• Grind Diversification
• Ethanol, specialty starches, dextrose feedstock,
  crystalline fructose, bioplastics
• About 2.0 billion lbs. (wet) of HFCS grind
  reallocated to other products since 2002
• Demand down for these products

19
U.S. Corn Wet Milling Usage by Product Line
2008/09 Crop Estimate 12.101 Billion Bushels
Wet Milling Usage by Product Line of Crop
Fuel Ethanol 3.600 Billion
Bushels 29.8 HFCS 588 Million Bushels
4.9 Starch 175 Million Bushels
1.4 Corn Syrup Dextrose 303 Million Bushels
2.5 Cereal and other products 226 Million
Bushels 1.9 Industrial Alcohol 126 Million
Bushels 1.0 Beverage Alcohol 25 Million
Bushels 0.2 Total 5.043 Billion Bushels
41.7 Includes Dry Milling In 1975, corn
refiners used 5 of the corn crop
Numbers may not add due to rounding
Source USDA and CRA
20
Biofuels Mandate by Type
Corn starch-based ethanol
21
Ethanol Supply/Demand/Capacity Utilization
Demand Domestic Supply Utilization
1999 1.5 1.7 88
2000 1.7 1.9 89
2001 1.9 2.2 86
2002 2.1 2.5 84
2003 2.8 2.9 97
2004 3.6 3.7 97
2005 4.0 4.3 93
2006 5.0 5.4 93
2007 6.5 7.5 87
2008 9.0 11.5 78
2009 10.0 12.5 80
2010 12.5 14.0 89
2011 13.5 15.0 90
2012 14.5 15.0 97
(Billion Gallons)
Source McKeany-Flavell estimates
22
Ethanol vs. RBOB Gasoline Pricing
per Gallon
Ethanol trading at premium to RBOB gas reduces
blender incentive to use ethanol
Note as of Dec. 29, 2006, unleaded gas contract
replaced by RBOB contract on NYMEX RBOB
Reformulated blendstock for oxygenate blending
23
Key Factors that Impacted HFCS Negotiations for
2009

• U.S. HFCS demand flat to slightly declining
• HFCS in Mexico potential growth?
• Alternatives for grind fewer options - less
  ethanol demand
• HFCS prices at 20 to 25 discount to sugar