Fertiliser Market Update

WMG Crop Update

7th March 2013

• In the event that this presentation contains forecasts or estimates in relation to fertiliser and grain prices (or any other matter) then these forecasts are expressions of CSBP’s opinion only, and are based on assumptions that are subject to significant uncertainties and contingencies. Some (if not all) of these contingencies are outside of CSBP’s control and actual future events may vary significantly from the forecasts or estimates. To the extent that the presentation contains information from third party sources, that information has not been independently audited or verified by CSBP.

• CSBP makes no express or implied representation or warranty that any estimate or forecast will be achieved or that any statement as to future matters will prove correct.

Disclaimer

Fertiliser market forces are global and Australia is a small part

3

Africa 3.0%

East Asia 40.2%

Eastern Europe and

Central Asia 3.9%

Latin America and the

Caribbean 6.1%

North America 12.7%

Oceania 1.2%

South Asia 19.8%

West Asia 3.1%

Western and Central

Europe 10.0%

Africa 8.8%

East Asia 12.2%

Eastern Europe and Central Asia

26.5%

Latin America and

the Caribbean

4.6%

North America 11.7%

Oceania 0.5%

South Asia 0.4%

West Asia 17.4%

Western and Central Europe 17.9%

Africa 5.8%

East Asia 16.0%

Eastern Europe and Central Asia

2.5%

Latin America and the

Caribbean 15.4%

North America 12.2%

Oceania 2.4%

South Asia 17.2%

West Asia 5.4%

Western and Central Europe

23.1%

Africa 3.8%

East Asia 39.3%

Eastern Europe and Central Asia

10.4%

Latin America and

the Caribbean

2.8%

North America 12.5%

Oceania 0.5%

South Asia 14.6%

West Asia 6.7%

Western and Central Europe 9.2%

Global consumption Global exports

Global imports Production

Australia is a net importer and the relatively small market position makes domestic participants price takers in a global market.

POTASH

MAP, AGNP, DAP, DAPNP, SMAP

ROCK

UREA POTASH, TSP

UAN

UREA

DAP, MAP

UREA, ROCK, SSP, MAP TSP

POTASH

SOA

Fertiliser Supply Sources to Australia

Fertiliser lead times

Usage

Pricing

Sourcing

0 30 60 90 120 150 180 210 240

DAP

UREA

MOP

UAN

SUPER Rock

DAYS

Notice to supplier Notice to Ship Owner Arrival Window at Loadport Ship Inspection and Loading

Sailing Time Bad Weather, Delays, etc Manufacture / Curing Inventory Cover

March Jan

July Feb

March Jan

Oct

July April Feb

May Feb Dec

June

June

Usage

Pricing

Sourcing

Some Perspectives

6

Global Grain stocks are currently high enough to prevent a repeat of 2008’s food riots. (World Bank. Food Price Watch Aug 12)

India’s fertiliser usage for 2012/13 could possibly be down by 9 million tonnes compared to 2011/12. IFFCO reports a 50% decrease in potash sales and a 30% decrease in phosphate sales. (Reuters 03 September). {Poor Rabi monsoon, a change in domestic fertiliser subsidies and a depreciated Rupee}.

Current Indian DAP manufacture cost is USD 620 per mt CFR compared to their DAP import contract price of USD 580 per mt CFR.

Corn Stocks in USA will be low but area to be planted to corn in 2013 is likely to be same as in 2012. They can’t grow any more !

Possible impact of residual phosphate and potash levels from USA corn crop.

DAP supply/demand is currently in balance, a surplus of Urea supply seems to be building with Potash being managed.

What happens on the world stage, impacts Australia.

Fertiliser price trends

0

100

200

300

400

500

600

700

Jan2010

Mar2010

May2010

Jul2010

Sep2010

Nov2010

Jan2011

Mar2011

May2011

Jul2011

Sep2011

Nov2011

Jan2012

Mar2012

May2012

Jul2012

Sep2012

Nov2012

Jan2013

US$/tonne Fertiliser price trends

Urea DAP Potash Sulphur

Commodity Trend Summary

Price

1

mth % change

12

mth

%

change

Wheat price (A$/tonne) 331 $/t ▼ (2.0%) ▲ 41.7%

Barley price (A$/tonne) 295 $/t ▼ (4.2%) ▲ 27.2%

Canola price (A$/tonne) 578 $/t ▼ (0.2%) ▲ 10.3%

Feed Barley price (A$/Tonne) 276 $/t ▼ (2.8%) ▲ 21.8%

Beef price (c/kg) 159 c/kg ▼ (7.3%) ▼ (17.4%)

Lamb price (c/kg) 303 c/kg ▲ 12.0% ▼ (43.7%)

Wool (c/kg clean) 1131 c/kg ▲ 2.9% ▼ (5.8%)

Fertiliser prices relative to Agriculture commodities

Increasing global nitrogen (N) production and consumption

10

Nitrogen demand and supply balance

Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. Yara Fertiliser Industry Handbook February 2012

Moderate growth in nitrogen volumes

• The International Fertilizer Association (IFA) forecasts nitrogen fertiliser demand growth at 1.5% p.a to 2016.

• Higher growth rate for urea expected. Urea is the most widely used and traded nitrogen fertiliser due to its ease of transport.

Regional supply/demand imbalance

• Main urea exporters are gas rich countries/regions with small domestic markets.

• The main exception is China which produces for supply to its domestic market.

• Ammonium nitrate still widely used in Europe.

Potential surplus emerging by 2015.

• Large ammonia capacity increases expected in China, Africa and West Asia

• New urea capacity being developed in large consuming countries (China and India) however new India capacity is uncertain.

• Shale gas developments in the US may lead to significant new sources of low cost ammonia production.

0

20

40

60

80

100

120

140

160

180

Million tonnes product

2016 2015 2014 2013 2012

2010: Global urea imports 2010: Global urea exports

United States 18%

India 16%

Brazil 7%

Mexico 5%

Bangladesh

4%

Rest of the world

50%

West Asia 34%

China 20%

Russia 13%

Egypt 9%

Ukraine 8%

Rest of the world

16%

Improving nitrogen demand is expected to absorb short-term incremental supply potentially followed by oversupply.

Fertiliser Demand Other Demand Supply

Increasing global phosphate (P) consumption and production

11

Phosphoric Acid demand and supply balance

Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. , Deutsche Bank, “US Fertilizers: Eating Through the Cycle”, 5 March 2010

Moderate growth in phosphate volumes

• IFA forecasts phosphoric acid demand growth at 2.3% p.a. to 2016.

• DAP share of phosphate fertiliser consumption expected to increase.

MAP and DAP are actively traded.

• The US and China are the largest exporters of MAP and DAP.

• India and to a lesser extent Brazil dominate the import market.

Potential surplus emerging

• Increase in DAP supply expected to grow at a higher rate (4.3% p.a.) than demand (2.9% p.a.).

• Growing phosphoric acid capacity in China, Morocco and Brazil.

• Low cost sources typically involve relatively high sovereign risk.

0

5

10

15

20

25

30

35

40

45

50

Million tonnes product

2014 2013 2016 2015 2011 2012

2010: Global MAP/DAP imports 2010: Global MAP/DAP exports

India 38%

Brazil 11% Argentina

4%

Pakistan 3%

Australia 3%

Rest of the world

41%

United States 29%

China 24%

Africa 19%

Russia 17%

Europe, Other

Asia, and Oceania

6%

Rest of the world

5%

Firm demand leading to balanced market conditions with a moderate surplus emerging.

Demand Supply

Global potash (K) dynamics

12

Potassium demand and supply balance

Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. , Deutsche Bank, “US Fertilizers: Eating Through the Cycle”, 5 March 2010, Potash Corp 2011 Online Overview

Strong growth in potash volumes

• IFA forecasts potassium fertiliser demand growth at 3.7% p.a. to 2016, expected to outpace nitrogen and phosphate demand.

• This is largely attributed to the under application of potash to soil and higher crop yields increasing potassium nutrient removal.

Highly concentrated global reserves

• Potash reserves are highly concentrated globally, with a small number of large mines providing supply.

• More than 60% of global supply from Canada and the Former Soviet Union; Dead Sea-based producers represent a further 11%).

• Potash earnings tend to attract a higher multiple than those from phosphate or nitrogen due to this nutrient’s highly consolidated industry structure

Short-medium term surplus emerging

• Attributed to significant capacity additions expected from brownfield development projects, despite expected delays in this capacity coming online.

• Concentration of reserves results in greater price discipline than other nutrients.

0

10

20

30

40

50

60

m/t product

2016 2015 2014 2013 2012

2010: Global potash imports 2010: Global potash exports

United States 19%

Brazil 15%

India 14% China PR

12%

Indonesia 5%

Rest of the world

35%

Canada 36%

Russia 19%

Belarus 15%

Germany 9%

Israel 9%

Rest of the world

12%

Potassium surplus forecast over the next five years despite strong volume growth.

Other Demand Supply Fertiliser Demand

2012 Trial Results

Residual Nitrogen and Phosphorus - Badgingarra

• Canola in 2011 and Wheat in 2012

• In 2011 we looked at how much of a response curve we could get to

phosphorus and nitrogen rates

• In 2012 we wanted to look at how much residual we could get from

those rates applied in 2011

• Site

o 2008 – 2010 Sub-Clover (150kg SuperPotash 3:1)

o Red sandy loam

Soil Tests

Description pH EC OC N(Nit) N(Amm) P PBI K S

0-10 Br orange sandy loam 4.8 0.10 1.1 40 4 14 31 128 5 10-20 4.5 0.05 0.4 15 2 8 17 41 3 40-50 4.2 0.02 0.2 2 1 2 42 46 6

90-100cm 5.1 0.02 0.1 1 1 1 51 59 12

Ex Ca Ex Mg Ex K Ex Na Ex Al ECEC Ex Al% Cu Zn Al

0-10 2.9 0.31 0.33 0.08 0.07 3.7 2 0.9 1.1 1.1 10-20 1.3 0.13 0.11 0.05 0.18 1.7 11 1.2 0.1 2.9 40-50 0.5 0.07 0.12 0.02 0.25 0.9 28 0.3 6.1

90-100cm 0.6 0.09 0.14 0.02 0.05 0.9 6 0.2 0.5

2011

2011

24P 16P

8P

2011

24P 0N 0P 40N

2012

2012 Wheat 2011 Canola 2 Year

Trt Yield Returns Cost Profit Trt Yield Returns Cost Profit Profit

N P (t/ha) ($/ha) ($/ha) ($/ha) N P (t/ha) ($/ha) ($/ha) ($/ha) ($/ha)

0 0 3.41 - - - 0 0 2.10 - - - -

0 24 3.83 116 92 23 0 24 2.63 265 91 174 197

0 24 4.02 168 92 75 40 24 2.39 146 155 -9 66

0 24 4.00 162 92 70 60 24 2.64 270 189 81 151

80 24 4.48 294 226 68 80 24 2.64 271 219 52 120

80 0 3.76 96 134 -38 80 0 2.25 73 128 -54 -92

80 0 3.83 116 134 -19 80 8 2.30 99 158 -59 -78

80 0 3.83 116 134 -19 80 16 2.31 106 189 -83 -101

80 16 4.01 165 195 -30 40 16 2.30 99 125 -25 -55

80 24 4.41 275 226 49 80 24 2.77 336 219 117 165

Prob <0.001 Prob 0.007

Lsd 0.33 Lsd 0.319

Questions?