CONFIDENCIALMarch, 2017

ISMA Annual Sugar Conference

5th October 2021

From a Disaster Crop in CS Brazil to Muted Crop Recoveries Elsewhere – Sugar prices to stay well bid

CONFIDENCIAL

The 2021 Price Action - Commodities was one of the Best Performing Asset Classes

2

Commodities in general and sugar in particular have benefitted from the global economic recovery post-Covid, elevated weather-risk premium and

constructive fundamental story. In the current inflationary environment, general interest in commodities is set to remain strong in 2021-22.

80

90

100

110

120

130

140

Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21

Sugar Outperformed the BCOM Ags in 2021(Index 4th Jan 2021 = 100)

BCOM-Ags NY No11

80

90

100

110

120

130

140

Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21

BCOM Outperformed US Equities in 2021(Index 4th Jan 2021 = 100)

SPX Index BCOM Index

CONFIDENCIAL

Spec Positioning in Sugar – “Sticky” core net long position to be Maintained

3

The strong sugar fundamental story translated into a core net spec long position of approximately +150K which is comfortably in the money. It would

require a very large price correction to shake-up this “sticky length”.

9

10

11

12

13

14

15

16

17

18

19

20

21

(100)

(50)

-

50

100

150

200

250

300

NY

No

11

Net Fund Position versus NY No11 Prices

Net Fund Position NY No11

CTA

Length

CoreLength

New

Length

CONFIDENCIAL

Distortions in the White Sugar Market

4

The combination of high freight rates and the usual time-lag for domestic prices in some key destinations to react to a rapid structural change in

international prices has resulted in a short-lived and unsual weak white premium. This have now converged to the long-term average.

80

5,080

10,080

15,080

20,080

25,080

30,080

35,080

40,080

45,080

Freight Rates Skyrocketing

Panamax Supramax

20

40

60

80

100

120

140

160

180

Jan

Jan

Jan

Feb

Feb

Mar

Mar

Mar

Ap

r

Ap

r

Ap

r

May

May Jun

Jun

Jun

Jul

Jul

Jul

Au

g

Au

g

Sep

Sep

Sep

Oct

Oct

Oct

No

v

No

v

De

c

De

c

De

c

US$

/MT

Evolution of the Spot White

2021 2020 20Y Average

CONFIDENCIAL

High Global Energy Prices

5

Structural changes seen on the supply side of the energy market trumpet Covid-related demand concerns. High energy prices may have implications for

planting decision in 2022, especially in Europe.

0

20

40

60

80

100

120

140

Brent Crude and European Gas Prices

EU Nat Gas (EUR/MWh) Brent Crude (USD/barrel)

CONFIDENCIAL

Global Weather - Weather Risks Abound as La Niña Looms

6

Since June 2021, the chances of La Niña forming during Nov/Dec/Jan increased from around 50% to almost 80%, according to the latest data from the

US’Climate Prediction Center. The Australian Bureau of Meteorology activated its “La Niña Watch”.

✓ Greater chances of continued below normal rainfall in CS Brazil = > risk of further crop losses in 2022-23

✓ Greater chances of above normal rainfall in Asia = > delayed start of the India harvest campaign, harvest disruptions and

sucrose dilution

4953

50

43

78 79

72

60

OND NDJ DJF JFM

Evolution of Probabilistic La Niña Forecasts by CPC/NOAA (%)

Jun-21 Jul-21 Aug-21 Sep-21

CONFIDENCIAL

EU28 and FSU – Tight SnD Situation to Keep a Lid on Exports Once Again in 2021-22

7

The multi-year low EU28 carry-in will likely keep a lid on exports at sub 1M MT. In the FSU area, suboptimum weather conditions in Russia reduced its

crop potential.

✓ In the medium-term, elevated natgas prices materially increases the EU28 cost of production and will likely keep beet

acreage on a downward trend

-3

-2

-1

0

1

2

3

12

13

14

15

16

17

18

19

20

21

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Surp

lus/

Def

icit

(M

MT)

Pro

du

ctio

n/C

on

sum

pti

on

(M

MT)

EU28 Tight SnD Situation to Once Again Limit Exports

S&D Surplus/Deficits Production Consumption

6.35.7

0

1

2

3

4

5

6

7

8

9

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22Potential

2021-22Likely

Suga

r P

rod

uct

ion

(M

MT)

Russia - Suboptimum Weather Reduced Crop Potential

CONFIDENCIAL

Thailand 2021/22 – Crop Recovery Ahead, but it is Likely to dissapoint the most optimistic

8

We are more likely see new crop production closer to 9.5M MT than at the 10.5M MT mark, as the market consensus suggests. Despite the improved

weather conditions so far in 2021, acreage expansion during the first round of plantings in late 2020 was compromised by last year’s drought.

10.5

9.5

0

2

4

6

8

10

12

14

16

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22Consensus

2021-22Likely

Suga

r P

rod

uct

ion

(M

MT)

Thailand - Sugar Production to Dissapoint the Most Optimistic

CONFIDENCIAL

India 2021/22 – No Longer the Threat to World Market Sugar Prices it used to be, On the Contrary

9

The strong subsidized domestic sugar export program in recent years was key to rationalize the India sugar stocks. The record domestic export program

of 2020-21 at over 7M MT is a testimony of the strong global sugar import demand in 2021.

✓ Looking ahead, the sugar production gains are being mostly absorbed by the domestic ethanol program. We currently assume

that the sugar to ethanol diversion in 2021-22 will be 3.2M MT, up from close to 2M MT in 2020-21

✓ In 2022-23, the sugar diversion to ethanol could break the 4M MT mark

7

5

14.6

8

0

2

4

6

8

10

12

14

16

0

1

2

3

4

5

6

7

8

2018-19 2019-20 2020-21 2021-22

Car

ry-I

n (

M M

T)

Do

mes

tic

Exp

ort

s (M

MT)

India - Reduced Role of Exports in Rationalising Sugar Stocks in 2021-22

Exports Carry-in

31.2 31.1

0

5

10

15

20

25

30

35

40

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Suga

r P

rod

uct

ion

(M

MT)

India - Acreage Gains are Mostly Directed to Ethanol

Sugar to Ethanol Net Sugar Production

CONFIDENCIAL

India Sugar Policies – World Market Prices Set to Stay Elevated to Connect India Exports

10

The weaker India fiscal position post-Covid makes export subsidies a more challenging proposition. Also, in an environment of tight global sugar

supplies, reflected in the high international sugar prices, why should the India taxpayer bear the cost of an export subsidy?

✓ Note that NY No11 prices have been trading well above the India 2020-21 breakeven export parity, as the market needed

India to maximize domestic exports

✓ We expect such a pattern to repeat itself once again in 2021-22

29,000

31,000

33,000

35,000

37,000

39,000

Oct

-19

No

v-1

9

De

c-1

9

Jan

-20

Feb

-20

Mar

-20

Ap

r-2

0

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Sep

-20

Oct

-20

No

v-2

0

De

c-2

0

Jan

-21

Feb

-21

Mar

-21

Ap

r-2

1

May

-21

Jun

-21

Jul-

21

Au

g-2

1

Sep

-21

INR

/ P

MT

India Domestic Sugar Prices

UP M30 Prices Maharashtra S-30

Current MSP

15.8 15.4

22.020.7

0

5

10

15

20

25

Uttar Pradesh Maharashtra

Ce

nts

/LB

India - Breakeven Sugar Export Parity

2020-21 2021-22

CONFIDENCIAL

Lasting Impact of the 2021-22 CS Brazil Crop Woes

11

The decline of -85M MT in sugarcane crushing in 2021-22, to approximately 520M MT, will not be so easily recovered in 2022-23. With fairly limited

upside potential to total crushing next year, pulling more sugar supplies from CS Brazil will once again need to be done via the sugar mix.

605

520530

545

38

32 3233

0

5

10

15

20

25

30

35

40

45

460

480

500

520

540

560

580

600

620

2016-17 2017-18 2018-19 2019-20 2020-21 2021-22e 2022-23eConservative

2022-23eConsensus

Suga

r P

rod

uct

ion

(M

MT)

Can

e C

rush

ing

(M M

T)

CS Brazil Crush and Sugar Production Outlook

CONFIDENCIAL

Weak Demand, What Weak Demand?

12

The world sugar market is yet to feel the impact of the CS Brazil crop loss of 2021-22. Total CS Brazil exports during Jan-Sep 2021 were a mere 300K

MT less than in the same period of 2020.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan Feb Mar Apr May Jun Jul Aug Sep

M M

T

CS Brazil Monthly Sugar Exports Jan-Sep

2021 2020

20.220.5

0

5

10

15

20

25

Jan Feb Mar Apr May Jun Jul Aug Sep

M M

T

CS Brazil Cumulative Sugar Exports Jan-Sep

2021 2020

CONFIDENCIAL13

Conclusions - Structural Deficit Situation to Persist For Longer, Keeping Sugar Prices Well Bid

✓ The disaster CS Brazil sugarcane crop of 2021-22 will have long

lasting impact on Brazil sucrose availability in the medium to

longer term

✓ Weather risk premium is set to stay high, as there is little signs of

sustained normalization of weather pattern globally (80%

chances of La Niña)

✓ As global stocks continue to deplete, domestic sugar prices in

key markets have moved higher, improving import economics

and providing support to the white premium

✓ Sustained Fund Interest in Commodities/Sugar - efficient hedge

against inflation

✓ We expect NY No11 prices to trade at a premium to the India

breakeven export parity (like in 20-21), if India sugar exports are

to be maximized

In the very-short term, the sugar market is missing a spark and is likely to remain in a range-bound regime. However, during 2021 we saw NY No11

sugar prices range move from US$ 15-17c/lb all the way into the current US$ 19-21 c/lb range under the pressure of weather events and macro

repricing. We might see the same process continuing into the 2022 calendar year.

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-4

-2

0

2

4

6

8

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12

2017-18 2018-19 2019-20 2020-21 2021-22

Mill

ion

MT

RV

Source: Alvean

Global Sugar Production & Consumption Balance(Oct-Sep Basis, RV)

CONFIDENCIALMarch, 2017

SUGAR MARKETDRIVERS CS BRAZIL WEATHER

Crop Recovery in 22-23?

INDIA SUGAR POLICIESPace of Exports

PRICING INBALANCEExporters are well hedged but importers…

ENERGYStructurally

bullish?

Conclusions - Structural Deficit Situation to Persist For Longer, Keeping Sugar Prices Well BidIn the very-short term, the sugar market is missing a spark and is likely to remain in a range-bound regime. However, during 2021 we saw NY No11

sugar prices range move from US$ 15-17c/lb all the way into the current US$ 19-21 c/lb range under the pressure of weather events and macro

repricing. We might see the same process continuing into the 2022 calendar year.