1

The Future of The Future of the HFCS the HFCS MarketMarket

Influences on Influences on DemandDemand

2

3

The Future of the HFCS The Future of the HFCS MarketMarket

• U.S. HFCS demand: flat to slightly U.S. HFCS demand: flat to slightly decliningdeclining

• HFCS in Mexico: potential growthHFCS in Mexico: potential growth

• Alternatives for grind: less ethanolAlternatives for grind: less ethanol

4

0

5

10

15

20

25

U.S. CANADA MEXICO

19.019.9

20.2

19.019.4

20.6 20.3 20.1 20.0

Source: McKeany-Flavell

Billion Pounds Dry

North American HFCS North American HFCS DemandDemand

19.6

* Estimate

70% of U.S. HFCS

Used in Beverages

DIETING 101Stay away from empty-calorie foods

such as regular carbonated soft

drinks.

5

U.S. HFCS Demand: Steady U.S. HFCS Demand: Steady DeclineDecline

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

Billion

Pou

nd

s (

dry

basis

)

* Estimate

From its peak in 2002, total HFCS demand has fallen 2.27 billion lbs., or 12.4%

American Heart Association: Even

moderate weight excess increases the

risk of death, particularly in adults

30-64.

6

U.S. Case Sales (Volume) U.S. Case Sales (Volume) of CSDof CSD

2007 2008

Coca-Cola Down 2% Down 8%

Pepsi Flat Down 6%

Cott Down 4.8% Down 11%*

*As of 2008 Q2 report.

Foreign Sales Offset Coke’s Weak

U.S. Cola Sales

Non-Cola Bev Sales on the Rise at Home

U.S. CSD Consumption

* Estimate

7

Consumers Are Hesitant to Consumers Are Hesitant to SpendSpend

Source: USDA ERS, Congressional Budget Office

3.26

2.54

-0.20

0.66

1.57

2.69

2.121.94

1.12

-2.00

2.97

0.40

$32,000

$34,000

$36,000

$38,000

$40,000

$42,000

$44,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009*

Baseline 2005 $

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

Percentage

Per Capita GDP Annual Growth Rate * Estimate

8

Is Fructose

Making You Fat?

Most Consumers Don’t Know How

Much HFCS They Eat

American M

edical Association

Says HFCS the Sam

e as Sucrose

Consumers Are Consumers Are ConcernedConcerned

?

9

Third-most used claim in product launches in 2007 and fourth-most popular for beverages

Consumers Want Natural FoodsConsumers Want Natural Foods

Bottled Water Consumption in U.S.

* EstimateSources: Mintel, Beverage World Annual Report

Al l Natu

ral

Al l Natu

ral

10

Nearly two-thirds of Americans are concerned about the safety of artificial sweeteners

Consumers Explore Other Consumers Explore Other SweetenersSweeteners

2003 2007

With Agave

56 176

HFCS-Free 6 146

New Products

Sources: Datamonitor, Mintel

FDA Decides HFCS Is

Natural Sweetener

HFCS Does Not Occur in

Nature, Says Center for

Science in the Public Interest

FDA Oks

Reb

iana

11

302

266.6

279.3

290.3

40

60

80

100

120

140

160

Refined Sugar HFCS Total Nutritive Sweeteners

U.S. Population (in millions)

Per Capita Nutritive Sweetener Deliveries

Pou

nd

s

Consumers Return to Sugar in

Search of Less-Processed Food

Americans Still Like SweetAmericans Still Like Sweet

* Estimate

12 Source: U.S. Census Bureau, U.S. Dept of Commerce

Demographic Profiles

Hispanic – Young, increasing affluence, may favor nutritive sweeteners

Asian – Increasing affluence, may favor non-nutritive sweeteners

Who Buys Sweetened Who Buys Sweetened ProductsProducts

% of Population 1980 2000 2020

Hispanic 6.5% 12.6% 18.0%

Black 11.6% 12.3% 12.9%

Asian/Pacific Islander

1.5% 3.9% 5.0%

White 79.9% 70.4% 62.5%

The 12-19 age group consumes the most sweeteners

Minority Purchasing Power May

Reach $4.3 Trillion by 2045

13

% of people who regularly buy sugar-free products ...

24% 26%

34% 38%37%

48%

18-24 25-34 35-44 45-54 55-64 65+

Sugar-Free Appeals to Aging Sugar-Free Appeals to Aging PopulationPopulation

People 65+ made up 12.4% of the population in 2000 and are expected to make up 20% by 2030.

14Source: Beverage Marketing Corporation

Carbonated Soft Drink Carbonated Soft Drink IndustryIndustry

Market Share: Regular Nutritive CSD vs. Diet

* Estimate

2008: Diet makes up over 30% of total

15

Future of HFCS CapacityFuture of HFCS Capacity

• No major capacity changes over No major capacity changes over the next ten years.the next ten years.

• Wild card: Tate & Lyle Fort Dodge, Wild card: Tate & Lyle Fort Dodge, Iowa facility may add HFCS Iowa facility may add HFCS capacity – but probably not before capacity – but probably not before 2011/12.2011/12.

16

Total HFCS

0

5

10

15

20

25

Billion

Pou

nds

(Dry

).

Total Capacity

Total Demand

Source: McKeany-Flavell

Includes Canada and Mexico. Assumed capacity expansion: 1% annually through 2003 due to de-bottlenecking. * Estimate

Theoretical HFCS Production Theoretical HFCS Production Capacity vs. DemandCapacity vs. Demand

Capacity Utilization

0%

20%

40%

60%

80%

100%

Capacity Utilization (%)

Industry expansion for Mexico

Cargill stops HFCS production at Dayton,

Ohio, then shutters Dimmitt, Tex. and Decatur, Ala.

Cargill re-opens Dayton, Ohio

and Decatur, Ala.

17

MEXICO - Estimated HFCS ImportsMEXICO - Estimated HFCS Imports

Source: Mexican Trade Sources and McKeany-Flavell

Thousand Metric Tons

*Estimate

Price of sugar within Mexico makes it difficult for U.S. HFCS to compete

18

Wet Milling Industry Wet Milling Industry Compensates for Slowdown Compensates for Slowdown

in HFCS Demandin HFCS Demand• Industry ConsolidationIndustry Consolidation

• Capacity ReductionCapacity Reduction

• Grind DiversificationGrind Diversification– Ethanol, specialty starches, dextrose Ethanol, specialty starches, dextrose

feedstock, crystalline fructose, bioplasticsfeedstock, crystalline fructose, bioplastics

– About 2.0 billion lbs. (wet) of HFCS grind About 2.0 billion lbs. (wet) of HFCS grind reallocated to other products since 2002reallocated to other products since 2002

– Demand down for these productsDemand down for these products

19

2008/09 Crop Estimate = 12.101 Billion BushelsWet Milling Usage by Product Line % of Crop

Fuel Ethanol = 3.600 Billion Bushels* 29.8%

HFCS = 588 Million Bushels 4.9%

Starch = 175 Million Bushels 1.4%

Corn Syrup & Dextrose = 303 Million Bushels 2.5%

Cereal and other products = 226 Million Bushels 1.9%

Industrial Alcohol = 126 Million Bushels 1.0%

Beverage Alcohol = 25 Million Bushels 0.2%

Total = 5.043 Billion Bushels 41.7%*Includes Dry Milling

In 1975, corn refiners used 5% of the corn crop

Source: USDA and CRA

U.S. Corn Wet Milling Usage by U.S. Corn Wet Milling Usage by Product LineProduct Line

Numbers may not add due to rounding

20

*Corn starch-based ethanol

Biofuels Mandate by Biofuels Mandate by TypeType

21

Ethanol Supply/Demand/Capacity Ethanol Supply/Demand/Capacity UtilizationUtilization

Demand Domestic Supply Utilization

1999 1.5 1.7 88%

2000 1.7 1.9 89%

2001 1.9 2.2 86%

2002 2.1 2.5 84%

2003 2.8 2.9 97%

2004 3.6 3.7 97%

2005 4.0 4.3 93%

2006 5.0 5.4 93%

2007 6.5 7.5 87%

2008 9.0 11.5 78%

2009 10.0 12.5 80%

2010 12.5 14.0 89%

2011 13.5 15.0 90%

2012 14.5 15.0 97%

(Billion Gallons)

Source: McKeany-Flavell estimates

22

$0.50$1.00$1.50$2.00$2.50$3.00$3.50$4.00

Ethanol (CBOT) Unleaded/RBOB (NYMEX)

Ethanol vs. RBOB Gasoline Ethanol vs. RBOB Gasoline PricingPricing

$ p

er

Gallon

Note: as of Dec. 29, 2006, unleaded gas contract replaced by RBOB contract on NYMEX

RBOB = Reformulated blendstock for oxygenate blending

Ethanol trading at premium to RBOB gas reduces blender incentive to use ethanol

23

Key Factors that Impacted Key Factors that Impacted HFCS Negotiations for 2009HFCS Negotiations for 2009

• U.S. HFCS demand: flat to slightly U.S. HFCS demand: flat to slightly decliningdeclining

• HFCS in Mexico: potential growth?HFCS in Mexico: potential growth?

• Alternatives for grind: fewer options Alternatives for grind: fewer options - less ethanol demand- less ethanol demand

• HFCS prices at 20% to 25% discount HFCS prices at 20% to 25% discount to sugarto sugar