Presentation to analysts

by

John Barneby, Chairman, Czarnikow Sugar

www.czarnikow.com

C.Czarnikow Sugar Limited, 24 Chiswell Street, London. EC1Y 4SG. United Kingdom. Tel + 44 20 7972 6600.Director of Research: Toby Cohen

About Czarnikow

Czarnikow has been in the sugar business since 1861

Czarnikow is the leading professional services company in the sugar market

Czarnikow has a ‘first hand’presence in all major sugar markets of the world and employs over 120 professional staff

…The Premier Provider of Sugar Market Services…

A Global Office Network

New York

Mexico

Rio

São Paulo

Moscow

Dubai

Singapore

Hong KongDelhi

Nairobi

Czarnikow Services

Trade Facilitation

Distribution

Structured Finance

Risk Management

Futures

Corporate Services

Strategic Consultancy

Research

World Market Outlook: Sugar Production in a Dynamic Price Environment

0

10

20

30

40

50

60

52 58 64 70 76 82 88 94 00

c p

er

lb

Cuban Missile Crisis

Oil Price Shock

Oil Price Shock

Post-BoomTrough

SuezCrisis

KoreanWar

The Post War Cycle

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Dec-05 Feb-06 Apr-06 Jun-06 Aug-06

Cents per lb

Sugar prices more than doubled at the start of the year.

Prices rose to the highest point seen in 25 years.

This spike has triggered a reaction

NYBOT No.11; First Futures 2005 - 2006

Trade Flows(Dec 05)

-2000

-1600

-1200

-800

-400

0

400

800

Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07

Whites Raws

Market Response

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

Cents per lb

Trade Flows(Dec 05)

-2000

-1600

-1200

-800

-400

0

400

800

Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07

Whites Raws

Trade Flows(March)

-2000

-1600

-1200

-800

-400

0

400

800

Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07

Whites Raws

Market Response

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

Cents per lb

Trade Flows(March)

-2000

-1600

-1200

-800

-400

0

400

800

Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07

Whites Raws

Trade Flows(June)

-2000

-1600

-1200

-800

-400

0

400

800

Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07

Whites Raws

Market Response

11.00

12.00

13.00

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

Cents per lb

Speculative Activity

-60,000

-30,000

0

30,000

60,000

90,000

120,000

150,000

180,000

210,000

Jan-04 Apr-04 Aug-04 Dec-04 Mar-05 Jul-05 Nov-05 Mar-06 Jun-065

7

9

11

13

15

17

19

21Speculative Open Interest

1st Delivery New York No.11

lots c per lb

1990 1992 1994 1996 1998 2000 2002 2004 2006-6

-4

-2

0

2

4

6

8

10m mtrv

Stock Change

Production / Consumption

2

4

6

8

10

12

14

16

18

20

1990 1992 1994 1996 1998 2000 2002 2004 2006

US c/lb

-6

-4

-2

0

2

4

6

8

10m mtrv

Stock Change No.11 Spot Price

Production growth at above 15c

Production contracts at below 10c

Production / Consumption

Trade estimated: 26m tonnes

0 5m 10m 15m 20m 25m

Brazil

Thailand

EU

Australia

Guatemala

South Africa

Cuba

Others

World Trade 1990

Brazil

Thailand

EU

Australia

Guatemala

South Africa

Cuba

Others

Trade estimated: 40m tonnes

0 5m 10m 15m 20m 25m

World Trade 2005/6

Brazil

Thailand

EU

Australia

Guatemala

South Africa

Cuba

Others

0 5m 10m 15m 20m 25m

World Trade 2006/7

CU

S$/l

b

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00Ja

n-0

3

Mar

-03

May

-03

Jul-

03

Sep

-03

Nov-

03

Jan-0

4

Mar

-04

May

-04

Jul-

04

Sep

-04

Nov-

04

Jan-0

5

Mar

-05

May

-05

Jul-

05

Sep

-05

Nov-

05

Jan-0

6

Mar

-06

May

-06

Jul-

06

NYBOT No.11 Price and Brazil Costs

… however, the relationship between supply and price is being altered by structural change in the EU, Russia & Ethanol markets…

0

1000

2000

3000

4000

5000

6000

7000

66/6

7

68/6

9

70/7

1

72/7

3

74/7

5

76/7

7

78/7

9

80/8

1

82/8

3

84/8

5

86/8

7

88/8

9

90/9

1

92/9

3

94/9

5

96/9

7

98/9

9

00/0

1

02/0

3

04/0

5

Exp

ort

Volu

me

('000s

tonnes

)

c per lb

0

10

20

30

40

50

60

EU net importer EU production expands / becomes net exporter8000

Building the EU Regime

0

1000

2000

3000

4000

5000

6000

7000

66/6

7

68/6

9

70/7

1

72/7

3

74/7

5

76/7

7

78/7

9

80/8

1

82/8

3

84/8

5

86/8

7

88/8

9

90/9

1

92/9

3

94/9

5

96/9

7

98/9

9

00/0

1

02/0

3

04/0

5

Exp

ort

Volu

me

('000s

tonnes

)

c per lb

0

10

20

30

40

50

60

EU production expands / becomes net exporter8000

Building the EU Regime

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,00087/8

8

88/8

9

89/9

0

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

'000 mt

0

50

100

150

200

250

300

350

400

450

US$/tonne

EU exports Avg white sugar prices

7.9m tonnes in final year. 4.8m tonnes shipped to end April

EU Exports: Insensitive to price

20 m Production

2m Preferential

Imports

16m Consumption

6m Exports

=

Excess production exported

The Old EU Sugar Regime

14 m Production

3 m Imports

16m Consumption

= 1m Exports

Excess production retained in Europe

The New EU Sugar Regime

Total 45s Trade: 11m tonnes

Total 45sCirca 70%

Others

Dubai

Brazil

Thailand

Malaysia

South Africa

South Korea

EUPRE REFORM

Total White Trade: 17m tonnes

EU and the White Sugar Market

Total 45sCirca 70%

Others

Dubai

Brazil

Thailand

Malaysia

South Africa

South Korea

EU POST REFORM

Total 45s Trade: 11m tonnesTotal White Trade: 17m tonnes

EU and the White Sugar Market

Constructed approximately 5/10 years ago

Constructed less than 5 years ago

Under construction

New Refinery Raw Sugar Demand

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.089/9

0

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

07/0

8

08/0

9

09/1

0

million tonnes

Imports Production Consumptionforecast

Declining import demand due to resurgence in beet production

Russian TrendsM

illio

n t

on

nes

Can

e

0

50

100

150

200

250

300

350

400

450

75

/7

6

76

/7

7

77

/7

8

78

/7

9

79

/8

0

80

/8

1

81

/8

2

82

/8

3

83

/8

4

84

/8

5

85

/8

6

86

/8

7

87

/8

8

88

/8

9

89

/9

0

90

/9

1

91

/9

2

92

/9

3

00

/0

1

93

/9

4

94

/9

5

95

/9

6

96

/9

7

97

/9

8

98

/9

9

99

/0

0

01

/0

2

02

/0

3

03

/0

4

04

/0

5

05

/0

6

Ethanol (cane production basis)

Sugar (cane production basis)

Brazilian Sugar & Ethanol

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Mar-

03

Jun

-03

Sep

-03

Dec-

03

Mar-

04

Jun

-04

Sep

-04

Dec-

04

Mar-

05

Jun

-05

Sep

-05

Dec-

05

Mar-

06

Jun

-06

mo

nth

ly v

eh

icle

sale

s

The production of cars with flex-fuel engines [able to run on gasoline and ethanol] has revolutionised demand for ethanol powered cars.

Brazilian Flex Fuel Car Sales

Source: Anfavea

10

15

20

25

30

35

40

45

50

Jan

-05

Feb

-05

Mar-

05

Ap

r-0

5

May-0

5

Jul-

05

Au

g-0

5

Sep

-05

Oct

-05

No

v-0

5

Dec-

05

Jan

-06

Mar-

06

Ap

r-0

6

May-0

6

Jun

-06

Jul-

06

Au

g-0

6

No.11 Anhydrous Ethanol Hydrous Ethanol

Brazilian Sugar & Ethanol R$/50kg of Sugar Equivalent

Brazil (cane)

Colombia (cane)

Thailand(cassava)

U.S (corn)

Crude Oil vs. Ethanol

0

10

20

30

40

50

60

70

80

96 97 98 99 00 01 02 03 04 05 06

US/barrel

… these structural changes will continue to have an effect, but the February price spike has provoked a short term reaction …

Thailand Production

90/91 92/93 94/95 96/97 98/99 00/01 02/03 04/05 06/07

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00forecast

Million tonnes

1999 2000 2001 2002 2003 2004 2005 2006 2007

Million tonnes

Sugar Consumption Starch Consumption*

Sugar Production

China: Starch vs. Sugar

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

… and then there is India …

0.00

5.00

10.00

15.00

20.00

25.00 Production Consumption

Mill

ion m

ttq

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

Indian Production Cycle

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

Chan

ge

in P

roduct

ion (

m t

onnes

)

98/9

9

99/0

0

00/0

1

01/0

2

02/0

3

03/0

4

04/0

5

05/0

6

06/0

7

Indian Production Cycle

150

200

250

300

350

400

450

500

Jan-0

2

Jul-

02

Jan-0

3

Jul-

03

Jan-0

4

Jul-

04

Jan-0

5

Jul-

05

Jan-0

6

Jul-

06

USD per tonne

0

50

100

150

200

250

300

350

400metric tonne

Exports - Right Scale Domestic S30 prices

World market whites prices

Indian Export Sensitivity

• Producers and consumers have responded to the February price spike and the market has corrected downwards.

• The effects of structural change are still working through.

• But low stocks, higher global production costs and rising oil prices should support a higher ‘floor value’ for the market.

Conclusion