AFOA 2004

1
AFOA 2004
2
Chicago Tallow 2003 / 2004

• AFOA 2003 -- projected floor 15-18 BFT Chicago
• Actual Low Chicago Avg. 16 ¾ (Feb)
• AFOA 2003 -- projected ceiling 20-23 BFT Chicago
• Actual Top Chicago Avg. 23 ½ (Nov 03)

3
October 2003 / Jan 2004

• Chicago BFT 22 3/4(Oct) to 23 1/4 (Jan)
• Good domestic demand, light cattle, year-end
  inventory build
• Pakistan Subsidy in tight market
• DECEMBER 23, 2003
• Top White West Coast 560.00 bid,
  mid January 2004 380.00
  offered
• Domestic Prices hold in Jan, buyers unsure of
  supply, 23 1/4 Chicago

4
Feb 2004 March 2004

• Short Kills
• Shorter Demand
• No W. Coast Export
• 16 7/8 18 Chicago

5
April 2004 June 2004

• Supply driven market
• Kills 8 - 12 below 5 yr average
• Prices 18 - 21 Chicago

6
Interim Final July

• lt 0.15 Impurities Is it a rule, sellers ask
  can I get a premium?
• Make a derivative, buyers ask can I get a
  discount?
• Got our fill

7
August / September16 7/8 18 1/4

• Bear Side
• Clean tallow needs filled
• Longs in August Nearby Tallow
• Summer Doldrums

• Bull side
• Short Kills Continue
• Late Surge Soy Oil
• Shutdowns winding down

8
Yellow Grease vs. CBOT Corn
9
Chicago CWG / Decatur Corn
10
FOB Iowa CWG / Decatur Corn
11
Feed Ration Support

• 300 Corn
• Cash Corn Fat / lb.
• 1.85 b 9.91 lb.
• 1.90 10.17
• 2.00 10.71
• 2.25 12.05
• 2.50 13.39

• 400 Corn
• Cash Corn Fat / lb.
• 1.85 b 13.21 lb.
• 1.90 13.57
• 2.00 14.29
• 2.25 16.07
• 2.50 17.86

12
Boiler Fuel Support

• Natural Gas Price Burn Fat
• per million BTU per million BTU
• 5.00 9
  cents
• 5.55 10
  cents
• 6.11 11
  cents
• 6.66 12
  cents
• 7.22 13
  cents
• 7.77 14
  cents
• 8.33 15
  cents
• Quick formula Burn fat price / 1.8 natural
  gas per million BTU

13
Soy / Palm Oil Stocks / Use

• SOY -- Oct 2004 USDA 6.0 (03-04)
• 6.5
  (04-05)
• PALM ----- Sept 2004 8.0
• Same as 03/04, 02/03
• Big 4 Oils (Soy, Palm, Rape, Corn)
• Sept 2004 5.68 a 24 year low

14
Tallow / Grease Demand
Factors For 2005

• Palm Oil Stocks / Pricing
• U.S. Economy Expanding?
• Corn / Natural Gas Pricing
• Biodiesel Disappearance
• World Veg Oil Demand
• ½ 2003 China Business (10,000 MT)

15
BFT / Could Have Been Worse
16
Tallow / Grease Supply Factors For 2005

• Canadian Border Opening for live cattle import to
  U.S.?
• Japanese Border Opening for red meat export from
  U.S. ?

17
(No Transcript)
18
(No Transcript)
19
(No Transcript)
20
October WASDE PerspectiveWorld Vegoil Carryout

• Take a Deep Breath
• 04/05 03/04 02/03
  
• 6.36 MMT 6.54 MMT 6.63 MMT

21
BFT Chicago Floor / Ceiling

• Last AFOA Projection (Monthly Average)
• Floor 15 18
• Ceiling 20 - 23
• Since 2003 AFOA 16 3/4 23 1/2
• Next 12 months Floor 13 - 15
• Ceiling 17 - 19