CHINA COUNTRY MARKET ORIENTATION

P A U L B U R K E | N O R T H A S I A R E G I O N A L D I R E C T O R

U.S. SOY FOR A GROWING WORLD

Soy Market Overview

Soybeans 78.18, 62%

Rapeseed 18.25, 15%

Peanut16.9, 14%

Cottonseed 11.75, 9%

ChinaMajor OilseedsConsumption

in 2013/14

Soy Market Overview

Soy Meal 51,

73%

Rape Meal10.4, 15%

Cotton Meal 4.1, 6%

Peanut Meal 2.8, 4%

Other Meals 1.1, 2%

ChinaProtein Meal

For Feed in 2013/14

Soy Market Overview

Soy Oil12.0, 41%

Rapeseed Oil 5.8, 20%

Cotton-seed Oil1.4, 5%

Peanut Oil2.6, 9%

Palm Oil5.0, 17%

Other Oils2.2, 8%

ChinaEdible Oil

Consumption in 2013/14

U.S. SOY FOR A GROWING WORLD

1978 1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 2014 600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

0%

10%

20%

30%

40%

50%

60%

963 987 1,059 1,143 1,211 1,267 1,308 1,341 1,347 1,354 1,361 1,368

17.9%19.4%23.7%

26.4%29.0%

36.2%

43.0%

50.0%51.3%52.6%53.7%54.8%Population Urbanization

Million

Urbanization in China

Source: China Statistical Year Book

U.S. SOY FOR A GROWING WORLD

GDP Growth & Per Capita Income

1978 1980 1985 1990 1995 2000 2005 2010 2011 2012 2013 2014 -

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

11.7%

7.8%

13.5%

3.8%

10.9%

8.4%

10.4%10.3%9.2%

7.8% 7.7% 7.4%

Urban Income Rural Income GDP Growth

US

$

Source: China Statistical Year Book

U.S. SOY FOR A GROWING WORLD

Per Capita Food Consumption2

00

0

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

-

10

20

30

40

50

60

70

Urban Population

Fish Egg Poultry Pork Veg Oil

kg

Source: China Statistical Year Book

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

-

10

20

30

40

50

60

70

Rural Population

Fish Egg Poultry Pork Veg Oil

kg

U.S. SOY FOR A GROWING WORLD

China Feed Production

0

50

100

150

200

250

300

350

193.7191.0

326.8 315.6 CFIAJCI

MMT

U.S. SOY FOR A GROWING WORLD

Feed Production by Animal Species

20

02

20

08

20

12

20

13

0

10

20

30

40

50

60

70

80

90

31.0

45.8

77.0 80.0

18.1 26.7

32.2 30.5 22.1

42.1

55.1 50.5

7.2 13.4

18.8 19.0

2.7 5.7 7.8 7.8

Swine Layer Broiler Aqua Ruminant OthersMMT

Source: China Statistical Year Book

U.S. SOY FOR A GROWING WORLD

China: Soy Consumption Growth

9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1

13

14

100

300

500

700

900

1,100

1,300

1,500

1,700 1,606

1,260 Soy MealSoy Oil

Index 92/93=100

Source: China Statistical Year Book

U.S. SOY FOR A GROWING WORLD

Animal Utilization Production & Consumption Trends

China - 12th Five Year Plan (2010 – 2015)Items 2015 2010 Change 2013

Output (million metric ton)

Meat 83.0 78.7 +5.5% 83.7

Eggs 29.0 27.7 +4.7% 28.8

Milk 50.0 35.7 +40.0% 35.3

Manufactured Feed 200.0 162.0 +23.5% 191.0

Scaled Farm Operations (%)

Swine 80 56 +24 point

Poultry 90 77 (layer) +13 point

Dairy 50 28 +22 point

Avg. Yield/Dairy Cattle 5,500 kg 3,800 kg +96.4%

Hog Slaughter Rate 140% N/A N/A

Standardized Scaled Farm (%) 50 N/A N/A

U.S. SOY FOR A GROWING WORLD

Animal Utilization Production & Consumption Trends

Definition of Scaled Farm Operation

Items 2015 2010 Change

SwineAnnual Slaughtered Fattened

Hogs>=500 heads

80% 56%+24

point

LayerAnnual Inventory >

=20,000 birds90% 77%

+13 point

BroilerAnnual Slaughtered Broiler

>=50,00090% N/A N/A

DairyAnnual Dairy Cattle Inventory

>=100 heads50% 28%

+22 point

BeefAnnual Slaughtered Beef Cattle

>=200 headsN/A N/A N/A

U.S. SOY FOR A GROWING WORLD

Animal Utilization Production & Consumption Trends

Standardized Scaled Farm Operation Definition

1 Selected Superior Breeding

2 Production in Specialized Facilities

3 Uniform Procedure in Animal Production

4 Quarantine Measures on Regular Basis

5 Environment-friendly Waste Treatment

6 Production Monitor and Supervision on Regular Basis

U.S. SOY FOR A GROWING WORLD

Human Utilization Consumption Trends

China - Soy Food Consumption

National Dietary Recommendation 2010 2015

Per Capita Consumption 11- 18 kg 7 kg 10 kg

Total Consumption 14.9 – 24.4 mmt 9.4 mmt 13.6 mmt

Soy Food includes: • Traditional food products such as tofu, soymilk, etc.• Novel food products such as soy bar, soy yogurt, etc.• Food ingredients such as whole bean products, soy proteins, etc.

Source: Bean Product Committee, China National Food Industry Association

U.S. SOY FOR A GROWING WORLD

China: Soy Production & Consumption

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

13

14

-

10

20

30

40

50

60

70

80

90

10.3 15.3 16.0 13.5

13.2 14.7 15.2 14.3 15.4 15.4 16.5

15.4 17.4 16.5 15.1

12.7 15.5 15.0 15.1 14.5 13.1 12.0 11.8

13.58 23.17

41.17

59.18

83.80

Crush

Export

Feed

Food

ProductionMMT

Source: National Grain & Oil Information Center

U.S. SOY FOR A GROWING WORLD

China: Soybean Import95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12/1

3

13

14

0

10

20

30

40

50

60

70

80

0.8 2.3 2.9 3.9 10.1

13.2 10.4

21.4 16.9

25.8 28.3 28.7

37.8 41.1

50.3 52.6

59.2 59.8

70.4 73.0

MMT

Source: U.S. Department of Agriculture / National Grain & Oil Information Center

U.S. SOY FOR A GROWING WORLD

China: Soybean Import

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

10/1

1

11/1

2

12

13

0

10

20

30

40

50

60

70

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

68%

78%

31%

52%49%47%

43%36%

49%46%

34%40%

36%

45%45%47%

39%37%39%

From Others From US US Share

MMT

Source: U.S. Department of Agriculture / National Grain & Oil Information Center

U.S. SOY FOR A GROWING WORLD

U.S. Soybean Export Sales to China

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

13

/14

13

/14

14

/15

0

5

10

15

20

25

30

35U. S. Soybean Export Sales to China (as of Feb.

19, 2015)On Order

Shipped

Final Export

MMT

Source: U.S. Department of Agriculture

U.S. SOY FOR A GROWING WORLD

China: Seasonality of Soybean Import

2000/01-2011/12

Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug0%

20%

40%

60%

80%

100%

7%18%

55%

81%86% 91% 91%

69%

40%

10% 8% 6%

Others U.S.

Source: National Grain & Oil Information Center

U.S. SOY FOR A GROWING WORLD

China: Monthly Soybean Imports

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

1,0002,0003,0004,0005,0006,0007,0008,0009,000

2014

U.S. SOY FOR A GROWING WORLD

China: Soybean Processing Capacity

NE. China Region

20%

Bohai Rim Region

30%

E. Coast Region16%

S. China Region23%

China

Total Capacity135 MMT

Daily Capacity0.4 MMT

Capacity Utilization

55%

Inland Region

11%

U.S. SOY FOR A GROWING WORLD

China: Gross Crush Margin

Domestic Soybean Imported SoybeanRMB Yuan/MT

U.S. SOY FOR A GROWING WORLD

China: Pork/Corn Price Ratio

RatioBreakeven

Changes in Pork/Corn Price Ratio (Feb. 2009 – Jan. 2015)

U.S. SOY FOR A GROWING WORLD

China: Top 15 Producers of Pork, Poultry Meat and Eggs (2012)

1

29

7

4

15

14

5

3 8

6

13 11 10

12

# ProvinceProd. (ml. MT)

1 Shandong 10.5

2 Henan 9.6

3 Sichuan 7.4

4 Hebei 6.9

5 Liaoning 6.4

6 Hunan 5.8

7 Jiangsu 5.7

8 Hubei 5.2

9 Anhui 4.9

10 Guangdong 4.6

11 Guangxi 4.1

12 Jiangxi 3.4

13 Yunnan 3.2

14 Jilin 3.0

15 Heilongjiang 2.7

National 100.3

% of National

83.3

Source: China Statistic Yearbook

U.S. SOY FOR A GROWING WORLD

China: Top 15 Aquaculture Producers (2012)

Source: China Statistic Yearbook

214

11 4

10

13

6

12 5

8

7 1

93

15

# ProvinceProd. (ml. MT)

1 Guangdong 6.20

2 Shandong 5.78

3 Fujian 4.06

4 Jiangsu 4.02

5 Hubei 3.68

6 Liaoning 3.48

7 Guangxi 2.24

8 Hunan 2.11

9 Jiangxi 2.11

10

Zhejiang 1.85

11

Anhui 1.75

12

Sichuan 1.13

13

Hebei 0.81

14

Henan 0.68

15

Hainan 0.60

National 42.88

% of National

94.4

U.S. SOY FOR A GROWING WORLD

USSEC Programs to Build Customer Demand & Preference

for U.S. Soy

Market and Trade Services

U.S. SOY FOR A GROWING WORLD

USSEC Programs to Build Customer Demand & Preference

for U.S. Soy• Technical

Services– Joint Technical

Seminars– Technical

Assistance to Feed Millers and Animal Producers

U.S. SOY FOR A GROWING WORLD

USSEC Programs to Build Customer Demand & Preference

for U.S. Soy• Technical

Services– Joint Technical

Seminars– Technical

Assistance to Feed Millers and Animal Producers

U.S. SOY FOR A GROWING WORLD

USSEC Programs to Build Customer Demand & Preference

for U.S. Soy

Differentiation of U.S. Soy

U. S. Soybean Crushers

&Importers

Soymeal Dealers

Integrators

Feed Dealers

Animal Produc

ersFeed

Millers

U.S.

SOY

Timely Market Updates and Efficient Logistics

Effective Price Risk Management via CME/CBOT

Sustainable Soy Export Certification

Advantages in Digestible Amino AcidsBetter Animal Performance & Profitability Consistency in Product Quality &

Services

U.S.

SOY

U.S. SOY FOR A GROWING WORLD

China Market Summary

• China Is Still a Growing Market but Slower Growth Rate Is Expected

• China Is a Price Sensitive Market although Some Large Scale Integrators Are Becoming Concerned about Quality

• Chinese Crushing Industry Has Been Running Far Below Its Capacity– Hedging on Both CBOT and DCE to Secure Crush Margin

– Financing Soybean Imports

• Issues Impacting Soybean Trade– More Resistance to GMO Foods

– Biotech Approval Delays

– Zero Tolerance on LLP, Potential Threat to Trade

– State Owned Companies More Powerful in Market Place

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