Brief Overview of the Current South Africa Grain Supplies. 19 February 2016

Brief Overview of the Current South Africa Grain Supplies 19 February 2016 1

Background on the Grain Supply Industry RSA growers produce 42% of all maize in SADC SADC is a net importer of RSA maize RSA Summer grain production yield decreases 27%y/y in 2015 (maize -30%y/y). RSA 2016 maize production might decrease further by 25%y/y. 2

Million tons Maize Production : Negatively Affected Across the Region 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 SA ZAM MOZ TAN MAL ZIM KEN 2014 2015 EST 2016 Source: BFAP and Grain SA 3

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 2013/14 2014/15 2015/16* 000 Tons RSA Total Maize Production Lowest since 2006/07 15000.0 12000.0 9000.0 6000.0 3000.0 0.0 Source: Grain SA 4

000 tons White maize Production is at the lowest level since 94 9000.0 8000.0 7000.0 6000.0 5000.0 4000.0 3000.0 2000.0 1000.0.0 Noordwes/North West Gauteng Limpopo Mpumalanga Kwazulu-Natal Oos-Kaap/E. Cape Vrystaat/Free State Noord-Kaap/N. Cape Wes-Kaap/W. Cape Source: Grain SA 5

000 tons Yellow Maize Production Lowest since 06/07 7000.0 6000.0 5000.0 4000.0 3000.0 2000.0 1000.0.0 Noordwes/North West Gauteng Limpopo Mpumalanga Kwazulu-Natal Oos-Kaap/E. Cape Vrystaat/Free State Noord-Kaap/N. Cape Wes-Kaap/W. Cape Source: Grain SA 6

Index 2004/05 = 100 RSA Production: All Summer Crops have been Negatively Affected 600 500 400 300 200 100 0 Source: Grain SA Groundnuts (-48% y/y) Soybean (-27% y/y) Maize (-25% y/y) Sunflowerseed (-6% y/y) 7

Index 2004/05 = 100 Production: All Summer Crops have been Negatively Affected 600 500 400 300 200 100 0 Groundnuts (-48% y/y) Soybean (-27% y/y) Maize (-25% y/y) Sunflowerseed (-6% y/y) Source: Grain SA 8

Index 2004/05 = 100 Production: All Summer Crops have been Negatively Affected 600 500 400 300 200 100 0 Groundnuts (-48% y/y) Soybean (-27% y/y) Maize (-25% y/y) Sunflowerseed (-6% y/y) Source: Grain SA 9

'000 Tons Continuous Growth in Demand of RSA Maize for Feed Consumption 6 000 5 000 4 000 3 000 2 000 1 000 Human Consumption Feed Consumption Source: Grain SA 11

Tons YMAZ: Maize for Animal Feed At Higher Levels 550 000 500 000 450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 0 Jan 2013 June 2013 Nov 2013 Apr 2014 Sep 2014 Feb 2015 July 2015 Dec 2015 -animal -human Source: Grain SA 12

Tons WMZ: Maize for Animal Feed Peaks July Feb 400 000 350 000 300 000 250 000 200 000 150 000 100 000 50 000 0 Jan 2013 June 2013 Nov 2013 Apr 2014 Sep 2014 Feb 2015 July 2015 Dec 2015 -human -animal Source: Grain SA 13

000 Tons 000 Tons Commercial Demand Remains Strong 16 000 14 000 12 000 10 000 4 000 3 500 3 000 2 500 8 000 6 000 4 000 2 000 2 000 1 500 1 000 500 2011/12 2012/13 2013/14 2014/15 2015/16* 2016/17** Source: Grain SA Imports Carry-out stocks Total commercial demand Whole maize exports Production 14

RSA White Maize: Supply and Demand 2014/15 2015/16* 2016/17 (3.16) Opening stocks 274 000 1 283 000 1 017 000 Commercial Deliveries 7 593 000 4 618 000 3 182 000 Mexico Imports 0 70 000 1 100 000 Total supply 7 876 000 5 971 000 5 299 000 RSA consumption 5 952 000 4 404 000 4 304 000 Exports 548 000 470 000 470 000 Total demand 6 593 000 4 954 000 4 854 000 Carry-out (30 Apr) 1 283 000 1 017 000 445 000 Surplus/deficit above pipeline Area planted (x1 000 ha) 1 448 1033 Yield (ton/ha) 3.25 3.16 & Zam 554 000 479 000-80 000 15

RSA Yellow Maize: Supply and Demand Area planted (x1 000 ha) 1205 963 Yield (ton/ha) 4.35 4.33 2014/15 2015/16* 2016/17 (4.33) Opening stocks 315 000 791 000 349 000 Commercial Deliveries 6 235 000 4 802 000 3 734 000 Imports 65 000 900 000 2 700 000 Total supply 6 632 000 6 493 000 6 783 000 RSA consumption 4 326 000 5 884 000 6 092 000 Exports 1 410 000 160 000 160 000 Total demand 5 841 000 6 144 000 6 352 000 Carry-out (30 Apr) 791 000 349 000 431 000 17 Surplus above pipeline 285 000-354 000-297 000 Arg.

RSA Total Maize : Supply and Demand Area planted (x1 000 ha) 2 653 1 995 Yield (ton/ha) 3.75 4.53 2014/15 2015/16* 2016/17 (4.53) Opening stocks 589 000 2 074 000 1 366 000 Commercial Deliveries 13 828 000 9 420 000 6 916 000 Imports 65 000 970 000 3 800 000 Total supply 14 508 000 12 464 000 12 082 000 RSA consumption 10 278 000 10 288 000 10 396 000 Exports 1 957 000 630 000 630 000 Total demand 12 434 000 11 098 000 11 206 000 Carry-out (30 Apr) 2 074 000 1 366 000 876 000 Surplus above pipeline 839 000 126 000-378 000 19

Tons RSA Traditionally a net exporter. 4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 - Source: Grain SA Imports Exports 21

Tons % RSA exports to SADC RSA Exports to SADC Likely To Continue. 4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000-120% 100% 80% 60% 40% 20% 0% Source: Grain SA Imports Exports % RSA exports to SADC 22

% imports of annual maize consumption SADC: Expected % Imports of Annual Domestic Consumption 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: USDA, ITC and Grain SA 23

Million tons Global Maize Supply Remains at High Levels 1 000 900 800 700 600 500 400 300 200 100 2012/13 2013/14 2014/15 2015/16 Production Consumption Ending Stocks Source: IGC and Grain SA 24

KEY COMMODITY PRICE MOVEMENTS 25

ZAR/T US$/T Maize and Rice Prices have Peaked 7000 6000 5000 4000 3000 2000 350 300 250 200 150 100 1000 0 Rice (Thailand) Yellow Maize White Maize US Maize 50 0 Source: JSE, IGC and Grain SA 26

01-Jan-15 22-Jan-15 12-Feb-15 05-Mar-15 26-Mar-15 16-Apr-15 07-May-15 28-May-15 18-Jun-15 09-Jul-15 30-Jul-15 20-Aug-15 10-Sep-15 01-Oct-15 22-Oct-15 12-Nov-15 03-Dec-15 24-Dec-15 14-Jan-16 04-Feb-16 25-Feb-16 ZAR/USD Continuous Depreciation of the ZAR Adds Inflationary Pressure 18.00 17.00 16.00 15.00 14.00 13.00 12.00 11.00 10.00 Source: Bloomberg and Grain SA 27

15-Feb-13 15-Apr-13 15-Jun-13 15-Aug-13 15-Oct-13 15-Dec-13 15-Feb-14 15-Apr-14 15-Jun-14 15-Aug-14 15-Oct-14 15-Dec-14 15-Feb-15 15-Apr-15 15-Jun-15 15-Aug-15 15-Oct-15 15-Dec-15 15-Feb-16 R/ton White Maize Price is well Above the Import Parity Price 5 300 4 900 4 500 4 100 3 700 3 300 2 900 2 500 2 100 1 700 1 300 USA Import Parity Safex WM USA Export Parity Source: IGC and Grain SA 28

1-Oct-12 1-Dec-12 1-Feb-13 1-Apr-13 1-Jun-13 1-Aug-13 1-Oct-13 1-Dec-13 1-Feb-14 1-Apr-14 1-Jun-14 1-Aug-14 1-Oct-14 1-Dec-14 1-Feb-15 1-Apr-15 1-Jun-15 1-Aug-15 1-Oct-15 1-Dec-15 1-Feb-16 R/ton Yellow Maize Price is at Import Parity Price Level 4 100 3 700 3 300 2 900 2 500 2 100 1 700 1 300 USA Import parity Safex YM ARG Import Parity USA Export Parity Source: IGC and Grain SA 29

SOUTH AFRICAN WHEAT PRODUCTION 30

000 ton RSA Wheat Production is under Pressure. 3500 3000 2500 2000 1500 1000 1990/91 1993/94 1996/97 1999/00 2002/03 2005/06 2008/09 2011/12 2014/15 Source: Grain SA NOK produksie skatting/cec crop estimate ('000ton) Totaal RSA verbruik / Total RSA consumption Linear (NOK produksie skatting/cec crop estimate ('000ton)) Linear ( Totaal RSA verbruik / Total RSA consumption) 31

000 ton % RSA is Increasingly Importing more Wheat. 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 1990/91 1994/95 1998/99 2002/03 2006/07 2010/11 2014/15 Invoere / Imports % invoere t.o.v RSA verbruik/ % imported of RSA consumption 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Source: Grain SA 32

RSA Wheat: Domestic Demand and Supply 2013/14 2014/15* 2015/16** Opening stocks 489 000 489 000 594 00 Commercial Deliveries 1 817 000 1 701 000 1 470 000 Imports 1 668 000 1 832 000 1 950 000 Total supply 3 975 000 4 037 000 4 014 000 RSA consumption 3 218 000 3 151 000 3 140 000 Exports 255 000 275 000 265 000 Total demand 3 486 000 3 443 000 3 427 000 Carry-out 33 (30 Sep) 489 000 594 000 587 000

Million tons Global Wheat Supply Remains at High Levels 750 650 550 450 350 250 150 2012/13 2013/14 2014/15 2015/16 Production Consumption Ending Stocks Source: IGC and Grain SA 35

01-Jan-15 22-Jan-15 12-Feb-15 05-Mar-15 26-Mar-15 16-Apr-15 07-May-15 28-May-15 18-Jun-15 09-Jul-15 30-Jul-15 20-Aug-15 10-Sep-15 01-Oct-15 22-Oct-15 12-Nov-15 03-Dec-15 24-Dec-15 14-Jan-16 04-Feb-16 25-Feb-16 ZAR/USD Continuous Depreciation of the ZAR Adds Inflationary Pressure 18.00 17.00 16.00 15.00 14.00 13.00 12.00 11.00 10.00 Source: Bloomberg and Grain SA 36

1-Oct-12 1-Dec-12 1-Feb-13 1-Apr-13 1-Jun-13 1-Aug-13 1-Oct-13 1-Dec-13 1-Feb-14 1-Apr-14 1-Jun-14 1-Aug-14 1-Oct-14 1-Dec-14 1-Feb-15 1-Apr-15 1-Jun-15 1-Aug-15 1-Oct-15 1-Dec-15 1-Feb-16 R/ton Wheat Prices Trade Along Import Parity Prices 5 600 5 200 4 800 4 400 4 000 3 600 3 200 2 800 2 400 2 000 USA Export Parity Safex USA Import Parity Source: IGC and Grain SA 37

04-Oct-13 08-Nov-13 13-Dec-13 17 Jan 2014 21-Feb-14 28-Mar-14 02-May-14 06-Jun-14 11 Jul 2014 15-Aug-14 19-Sep-14 24 Oct14 28-Nov-14 02-Jan-15 06 Feb 15 13-Mar-15 17-Apr-15 22-May-15 26-Jun-15 31-Jul-15 04-Sep-15 09 Oct 15 13-Nov-15 18-Dec-15 22-Jan-16 27-Jan-16 01-Feb-16 Weekly Wheat Imports (tons) and Tariff triggers 200 000 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 20 000 0 Tariff R461/t Tariff R800/t Tariff R510/t Tariff R911/t Source: SAGIS and Grain SA 38

Wheat Farmers only Receive R2.38 in a Loaf of Bread Source: Grain SA 39

TOTAL GRAIN IMPORTS FOR 2016 TO APRIL 2017 40

RSA Total Grain and Oilseed Import Estimates for 2016 April 2017 is 7.24 million tons Barley, 0.06 Sorghum, 0.06 Soybean, 0.30 Peanuts, 0.02 Sunflowerseed, 0.10 Rice, 0.90 Maize, 3.80 Wheat, 2.00 Units: million tons Source: Grain SA 41

RSA Possible Total Grain Imports for the year. Maize = 3.8 million tons Wheat = 2 million tons Rice = 900 000 tons Sorghum = 60 000 tons Barley = 60 000 tons Soybean = 300 000 tons Sunflowerseed = 100 000 tons Peanuts = 20 000 tons TOTAL GRAIN & OILSEED IMPORT ESTIMATE FOR 2016-APRIL 2017 = 7.24 million tons 42

01-Jan-15 22-Jan-15 12-Feb-15 05-Mar-15 26-Mar-15 16-Apr-15 07-May-15 28-May-15 18-Jun-15 09-Jul-15 30-Jul-15 20-Aug-15 10-Sep-15 01-Oct-15 22-Oct-15 12-Nov-15 03-Dec-15 24-Dec-15 14-Jan-16 04-Feb-16 25-Feb-16 ZAR/USD Continuous Depreciation of the ZAR Adds Inflationary Pressure 18.00 17.00 16.00 15.00 14.00 13.00 12.00 11.00 10.00 Source: Bloomberg and Grain SA 45

2016 will see the toughest consumer environment WMAZ Spot price have increased by +80% y-o-y YMAZ Spot price have increased by +45% y-o-y CPI bread & cereal increased by 8.4% y-o-y (Jan 16) PPI cereals & crops increased by 53.7% y-o-y (Dec 15) Maize meal prices increased by 22% y-o-y (Jan 16) Rice prices increased by 5% y-o-y (Jan 16) Beef prices increased by 5% y-o-y (Jan 16) Milk prices increased by 3% y-oy (Jan 16) Egg prices increased by 10% y-o-y (Jan 16) Sunflower oil prices increased by 30% y-o-y (Jan 16) 46

THERE ARE CONCERNS ABOUT LOGISTICS 47

The usual grain port usage is roughly 4.8 million tons a year DBN (130 000 TONS/Month) CPT (140 000 TONS/Month) PE (70 000 TONS/Month) EL (66 000 TONS/Month) Port Authorities indicated that they can be in a position to accommodate roughly 7 million tons a year. 48

Thank You! Wandile Sihlobo Email: wandile.sihlobo@grainsa.co.za Tel: 012 816 8045 www.grainsa.co.za Disclaimer: Everything has been done to ensure the accuracy of this information, however Grain SA takes no responsibility for any losses or damage incurred due to the usage of this information. 49