Australian sugar outlook

Damian Ziebarth – QSL GM Operations

September 2015

Disclaimer

“The information provided in these slides is of a general/summary nature and is designed to give you a high-level update on QSL’s current marketing and pricing activity. It does not constitute financial product or investment advice and should not be construed as such. Information about past performance should not be relied upon and is not an indication of future performance. While care has been taken in the preparation of these slides, the accuracy or completeness of the information is not guaranteed.”

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Outline

1. Australian sugar snapshot

2. 2015 Season overview

3. Key industry issues

4. Looking forward

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Australian sugar industry snapshot

• 4000 farms

• Average farm size = 100 hectares

• 24 sugar mills

• 6 bulk storage ports

• 30-35 Mt of cane per annum

• 4-4.5 Mt of raw sugar per annum

• 80% of production exported

• Approx A$2b in sales annually

* Data courtesy of CANEGROWERS 4

Our geographic spread

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Australian production 2010-2015 Seasons

6*indicative only

2015 Season Overview

• Rain interrupted start to crush in north of the state

• Most areas up on last year’s production, except Central region (very dry growing conditions)

• Over 60% of crop now cut

• Expect similar cane production as 2014 – around 33 Mt

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*Data courtesy of ASMC

Key industry issues

• Rising farm input costs– Farm electricity prices up

approximately 95% in 7 years

– Mill electricity prices up approximately 114% in 7 years

• Yellow Canopy Syndrome– Lowers yields

– Reported as far south as Sarina

– Subject of ongoing SRA research project

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Key industry issues

• Queensland Government biofuel mandate– Legislation proposes targets for bio-based petrol, such as E10 ethanol-

blended petrol and bio-based diesel, to make up at least 20% of regular petrol sales across the state.

– Planned introduction on 1 July 2016

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• Sugar marketing impasse– Continuing industry debate

regarding Grower Choice in marketing

– QSL’s prefer solution is an enduring, industry-led commercial resolution acceptable to all parties

Looking forward

• Growing Asian market on our doorstep

10* Data courtesy of Czarnikow

Looking forward

• Looking for improved market access arrangements through trade agreements, such as current TPP negotiations

• Our key advantages remain:– Consistently high-quality product

– Storage capabilities

– Reliable logistics (100% DIFOT in 14/15)

– Proximity to market

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Questions?

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