PNWA International Trends For Northwest Grain Markets

PNWAPNWAInternational Trends International Trends For Northwest Grain For Northwest Grain

MarketsMarkets

By Amer Y. BadawiVice President

Columbia Grain International, Inc.

Global Seaborne Dry Bulk Trade

Grain Market Review

Transportation

Trends & Challenges

TopicsTopics

GLOBAL SEABORNE GLOBAL SEABORNE DRY BULK TRADEDRY BULK TRADE

Dry Bulk Seaborne TradeDry Bulk Seaborne Trade Iron oreIron ore Coal, CokeCoal, Coke Grains, AgribulksGrains, Agribulks Bauxite, Alumina, Phosphate Bauxite, Alumina, Phosphate

RockRock SugarSugar FertilizerFertilizer Scrap, Steel Products, Pig IronScrap, Steel Products, Pig Iron CementCement Forest ProductsForest Products

Seaborne Bulk ProfileSeaborne Bulk ProfileClarkson Research & otherClarkson Research & other

0MMT

200MMT

400MMT

600MMT

800MMT

1,000MMT

1,200MMT

2000 449MMT 520MMT 264MMT 84MMT 793MMT

2001 451MMT 552MMT 260MMT 83MMT 811MMT

2002 481MMT 577MMT 271MMT 85MMT 818MMT

2003 516MMT 626MMT 264MMT 89MMT 864MMT

2004 588MMT 662MMT 275MMT 99MMT 928MMT

2005 661MMT 692MMT 272MMT 109MMT 945MMT

2006 721MMT 734MMT 292MMT 109MMT 990MMT

2007 781MMT 787MMT 301MMT 116MMT 1,030MMT

2008 866MMT 817MMT 316MMT 119MMT 1,068MMT

2009 910MMT 850MMT 307MMT 119MMT 1,090MMT

Iron Ore CoalWheat, Coarse Grain &

SoybeanBauxite, Alumina & Phos-

Rock

Sugar, Agribulk, Cement, Steel, Fertilizer, Coke,

others

0MMT

500MMT

1,000MMT

1,500MMT

2,000MMT

2,500MMT

3,000MMT

3,500MMT

4,000MMT

Bulk Trade Estimated

Seaborne Dry Bulk TradeSeaborne Dry Bulk TradeF

orecast

Fo

recast

Clarkson Research & otherClarkson Research & other

HistoricalHistorical

Forecast adjustment from 6% to 3% growth.

IRON OREIRON ORE

Iron Ore Trade volumeIron Ore Trade volume

COALCOAL

Thermal Coal Trade volumeThermal Coal Trade volume

Coking Coal Trade volumeCoking Coal Trade volume

GRAIN GRAIN MARKET MARKET

OVERVIEWOVERVIEW

General Outlook for GrainGeneral Outlook for Grain 08/09 World

Consumption up by 30MT (1.8%) to 1,714 MT.

Almost entirely due to rise in Ethanol use; set to reach 124 MT.

Slight increase in direct food consumption 0.6%.

Trade Forecast up 4.1%

Grain Imports by Grain Imports by RegionRegion

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

98/99 15.3MMT 68.3MMT 43.0MMT 61.5MMT 4.9MMT

99/00 24.2MMT 69.2MMT 45.0MMT 69.5MMT 4.1MMT

00/01 19.1MMT 67.8MMT 48.6MMT 72.4MMT 1.1MMT

01/02 24.5MMT 65.7MMT 47.4MMT 74.0MMT 0.4MMT

02/03 25.6MMT 66.8MMT 44.5MMT 70.7MMT 3.4MMT

03/04 28.6MMT 70.6MMT 42.5MMT 63.5MMT 2.8MMT

04/05 19.0MMT 73.1MMT 44.6MMT 73.6MMT 0.7MMT

05/06 18.6MMT 70.8MMT 46.7MMT 78.1MMT 0.8MMT

06/07 20.9MMT 72.7MMT 54.2MMT 72.3MMT 0.9MMT

07/08 27.8MMT 66.8MMT 56.3MMT 76.1MMT 11.0MMT

East & West Europe

AsiaCentral & South

AmericaMiddle East &

AfricaOther

PNW’s Geographical Advantage

World Grain ExportsWorld Grain Exports

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

100.0MMT

120.0MMT

140.0MMT

Wheat 99.1MMT 99.7MMT 109.9MMT 101.5MMT 106.7MMT 105.3MMT 101.7MMT 110.0MMT 109.9MMT 110.0MMT 109.5MMT 114.7MMT

Coarse Grain 92.5MMT 85.4MMT 93.7MMT 101.9MMT 107.7MMT 105.6MMT 105.1MMT 101.7MMT 105.3MMT 110.4MMT 128.5MMT 114.9MMT

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

100.0MMT

120.0MMT

Argentina Australia Canada EU USA00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09

Grain Exports from The “big 5”

WHEATWHEAT

Wheat OutlookWheat Outlook 08/09 World Production: 679 MT

68 MT or 11% above last year’s. 28 MT in EU.

08/09 World consumption: 631 MT.

World Stocks: to go up by 19 MT, to 131 MT.

US stocks to double, to 16 MT.

Shipments by 5 Major Exporters are forecast to increase by 1.8 MT, to 78.4 MT.

Shipments by US to fall by 10.1 MT to 24.5 MT due to greater export availabilities in other countries.

WORLD WHEAT PRODUCTION - MMT

COUNTRY CY 2004 CY 2005 CY 2006 CY 2007 CY 2008

USA 58.70 57.30 49.30 56.20 68.00

CANADA 24.70 25.70 25.20 20.00 27.30

AUSTRALIA 21.90 25.10 10.80 13.00 22.50

ARGENTINA 16.00 14.50 15.20 16.00 12.00

FS-12 85.50 90.90 84.90 92.70 110.50

INDIA 72.10 68.60 69.30 75.80 78.40

PAKISTAN 19.50 21.60 21.20 23.30 21.50

EGYPT 7.20 8.20 8.30 8.20 8.30

IRAN 14.60 14.30 14.50 15.00 10.00

AFHGANISTAN 2.30 4.20 3.20 3.80 1.50

SYRIA 4.50 4.70 4.20 4.00 2.00

IRAQ 1.90 2.30 2.50 2.30 1.30

CHINA 91.50 97.40 108.40 109.80 114.00

WORLD 625.70 620.80 596.30 611.00 678.70

IGC World Wheat ExportIGC World Wheat Export

Price Trend?Price Trend?

Chicago Wheat Futures

CORNCORN

US Corn Used For Ethanol

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

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

Mil

lio

n B

ush

els

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Grind for Ethanol

Pct of Production

Total US Corn Exports vs Corn Used for Ethanol

0

1,000

2,000

3,000

4,000

5,000

6,000

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

Crop Year

Mil

lio

n B

us

he

ls

Ethanol Exports

TRANSPORTATIONTRANSPORTATION

HandymaxHandymax

Fleet SizeFleet Size

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2001 2,832 1,063 1,010 575

2002 2,743 1,173 1,061 591

2003 2,683 1,231 1,123 620

2004 2,724 1,306 1,205 611

2005 2,755 1,410 1,299 658

2006 2,764 1,500 1,399 713

2007 2,827 1,582 1,472 760

2008 2,900 1,668 1,530 805

Handysize Handymax Panamax Capesize

Bulk Carrier Bulk Carrier UnitUnit Profile ProfileTotal Total 6,90

6,9033

Bulk Carrier Bulk Carrier DWTDWT Profile Profile2.5Billion 2.5Billion Metric Metric tons/Year

tons/Year

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

100.0MMT

120.0MMT

140.0MMT

160.0MMT

2001 75.2MMT 49.1MMT 71.3MMT 90.5MMT

2002 72.9MMT 54.2MMT 74.7MMT 93.5MMT

2003 71.2MMT 57.2MMT 80.1MMT 98.5MMT

2004 72.6MMT 61.2MMT 86.4MMT 102.4MMT

2005 73.6MMT 66.5MMT 93.7MMT 111.1MMT

2006 73.9MMT 71.0MMT 100.8MMT 121.1MMT

2007 75.5MMT 76.0MMT 107.7MMT 129.9MMT

2008 77.2MMT 79.5MMT 111.2MMT 135.9MMT

Handysize Handymax Panamax Capesize

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

100.0MMT

120.0MMT

140.0MMT

160.0MMT

2001 2002 2003 2004 2005 2006 2007 2008

Handysize Handymax Panamax Capesize

Vessel Size Vessel Size DWTDWT Profile Profile

Vessel Size

Vessel Size TrendTrend

200.0MMT

300.0MMT

400.0MMT

500.0MMT

2001 2002 2003 2004 2005 2006 2007 2008

Freight Deadweight GrowthFreight Deadweight Growth

Fleet up 45%, in 7 years!

Fleet up 45%, in 7 years!

34

HandymaxHandymax

Fleet AgeFleet Age

0%

10%

20%

30%

40%

50%

60%

70%

Handysize 61% 4% 12% 10% 12%

Handymax 25% 7% 21% 21% 27%

Panamax 24% 7% 20% 22% 27%

Cape 19% 13% 21% 16% 30%

Over 20 yrs 15-19 10-14 5-9 Under 4 yrs

Bulk Carrier Size/Age ProfileBulk Carrier Size/Age Profile

Percent

Percent

36

HandymaxHandymax

Historical Historical EarningsEarnings

Historical high earnings have been behind the Huge ship-building boom

Historical Earnings $/dayHistorical Earnings $/day

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Capesize

Panamax

Handymax

Global markets turmoil.effect on global

economies, banks, ship mortgage, and …

Psychology.

Baltic Panamax Index 2002 to date

Baltic Panamax Index 2002 to date

Order book represents 70% of current fleet dwt capacity!

Rail ServiceRail Service

Major Rail Serving the USMajor Rail Serving the US

Burlington Northern Santa Fe (BNSF) Union Pacific (UP) CSX Corporation (CSX) Norfolk Southern (NS)

Plus Two Canadian RailroadsCanadian Pacific (CP)Canadian National (CN)

BNSFUPNS

CSXCPCN

North American Rail System

Grain OriginationGrain Origination

Source: Association of American Railroads

Rail Shuttle Rail Shuttle Service…Service…

What it means to What it means to Grain Exporters?Grain Exporters?

Columbia Grain’s Newest Shuttle Facility

Kasa Point, Montana

21,773 metric tons of storage

Load shuttle in 10 hours

Need for facility Need for facility upgrade, i.e. upgrade, i.e.

spend more $$spend more $$

Sits on 54.6 Hectares

Loop is 1.5 miles

Kasa Point

More cargo in one train?!More cargo in one train?!

Weather & Predictability Weather & Predictability issuesissues

Barge Service Barge Service SnapshotSnapshot

Barge StatisticsBarge Statistics

725 MMT transported each year by barge in the U.S.

65 MMT Grains, 9% of total movement.

Over 28,000 barges in the system.

Over 60% of America's grain EXPORTS move by barge along the nation's inland waterways.

Source: Army Corp of Engineers and the American waterways Association

Outlook & Trends for Outlook & Trends for Pacific Northwest?Pacific Northwest?

Delivered Cost Counts!Delivered Cost Counts!

USA & PNWUSA & PNW

Major U.S. Grain Load Ports 07/08

TOTAL U.S. EXPORTS: 6 year average volume 100 MMT

Columbia River 24.5 MMT

Duluth4.1 MMT

Houston11.8 MMT

New Orleans 67.2 MMT

PNW

Gulf of Mexico

Great Lakes

Major U.S. Wheat Load Ports 07/08

TOTAL U.S. EXPORTS: 6 year average volume 25 MMT

Columbia River 11.5 MMT

Duluth1.8 MMT

Houston7.2 MMT

New Orleans

5.5 MMT

PNW

Gulf of Mexico

Great Lakes

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

CLD CGII KEC UHL

in M

T

Wheat Barley Corn Soybeans Sorghum

Columbia River Grain Columbia River Grain OutputOutput

05

1015202530354045505560

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

Percent of Total Move

Rail Barge Truck

U.S. Grain Movement by ModeU.S. Grain Movement by Mode

Columbia River Grain Movement by Columbia River Grain Movement by ModeMode

0

10

20

30

40

50

60

70

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

Crop Year

Pe

rce

nt

rail barge truck

ChallengesChallenges

Geography Geography RulesRules

6 Weeks Ago6 Weeks AgoEGYPTEGYPT

The world’s largest Wheat ImporterThe world’s largest Wheat Importer

PNW: Wheat $350 + Freight $88 = $439

USG: Wheat $290 + Freight $90 = $380

Black Sea: Wheat $280 + Freight $45 = $325

S. France: Wheat $280 + Freight $30 = $310

Australia: Wheat $242 + Freight $65 = $307

$ per ton

This WeekThis WeekEGYPTEGYPT

The world’s largest Wheat ImporterThe world’s largest Wheat Importer

PNW: Wheat $200 + Freight $45 = $245 $194

USG: Wheat $195 + Freight $25 = $220 $160

Black Sea: Wheat $200 + Freight $20 = $220 $105

S. France: Wheat $220 + Freight $20 = $240 $70

Australia: Wheat $190 + Freight $40 = $230 $77

$ per ton

Is the Columbia River deep enough?Is the Columbia River deep enough?

How big & deep is a How big & deep is a Panamax?Panamax?

60,000 Tons 40’60,000 Tons 40’65,000 Tons 43’65,000 Tons 43’72,000 Tons 47’72,000 Tons 47’78,000 Tons 50’78,000 Tons 50’

43” on the Columbia River expected in 2009.43” on the Columbia River expected in 2009.Already about Already about 13,000MT short13,000MT short of full Panamax of full Panamax

load… load… today.today.

$45

$35 $ per ton

What will full load mean in $$?What will full load mean in $$?

Freight Columbia River to EGYPTFreight Columbia River to EGYPT

Most Notable Trends

0.0MMT

20.0MMT

40.0MMT

60.0MMT

80.0MMT

100.0MMT

120.0MMT

140.0MMT

160.0MMT

2001 2002 2003 2004 2005 2006 2007 2008

Handysize Handymax Panamax Capesize

Ship Size

200.0MMT

300.0MMT

400.0MMT

500.0MMT

2001 2002 2003 2004 2005 2006 2007 2008

Fleet Size

Freight Value Commodity Value

Thank you!Thank you!