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ANZ RESEARCH

COMMODITY CALL
10 JULY 2013 INSIDE
Summary Macro Backdrop Charts of the Month Commodity Calls Feature Note Trade Ideas Commodity Prices CFTC Table Calendar Heatmap Forward Curves Moving Averages Forecasts Contacts Disclaimer 1 2 3 4 7 9 10 11 12 13 14 15 16 17

SEASONAL DEMAND PASSING June was a volatile month for commodity prices, with significant headwinds from China and the US undermining risk appetite for commodities. Despite these headwinds, our proprietary ANZ-CCI ended the month only mildly lower, with stronger energy, iron ore markets offsetting weaker precious and base metals. Looking forward, we expect commodity markets to experience false starts this month as early signs of a bottom in prices begin to emerge. But any upside will likely be short-lived. Blurring the picture is the passing of a peak in seasonal demand and an unclear position for China’s near-term growth outlook. In addition, the perception and eventual withdrawal of USD liquidity from global financial markets will likely generate some uncertainty for commodity moves. FEATURE ARTICLES This month, we have two feature articles. The first is a review of our commodity price forecasts, where weaker China demand and fragile investor sentiment has prompted downward price revisions. The second note looks at the outlook for Indonesian wheat imports. Indonesia is Australia’s largest buyer of wheat and looks set to overtake Egypt as the world’s largest wheat importer within the next five years. KEY TRADES Long WTI/Brent spread – divergent demand & declining stocks to support WTI Short iron ore – weaker capesize rates & seasonal slowdown in China

CONTRIBUTORS
Mark Pervan Global Head of Commodity Strategy +61 3 8655 9243 Mark.Pervan@anz.com Paul Deane Senior Agricultural Economist +613 8655 9078 Paul.Deane@anz.com Victor Thianpiriya Commodity Strategist +65 6681 8869 Victor.Thianpiriya@anz.com Natalie Rampono Commodity Strategist +613 8655 9258 Natalie.Rampono@anz.com

ANZ CHINA COMMODITY INDEX
FIGURE 1. RECENT BOUNCE JUST A FALSE START
Points 500 480 460 440 420 400 380 Jan Mar May Jul Sep Nov Jan Mar May Jul -- 2012 --> ANZ CCI
Source: ANZ Commodity Strategy

-- 2013 --> Period in Reference

ANZ Commodity Call / 10 July 2013 / 2 of 18

MACRO BACKDROP
SEASONAL DEMAND PASSING • • • False starts expected as less negative data triggers relief rallies Passing peak in seasonal demand and unclear China outlook continue to blur the picture Oil to hold up better as unpredictable supply outages emerge inflows, coinciding with near-term Fed tapering expectations. US data has recently surprised on the upside, supporting the case for Fed asset tapering, with and global bond markets have re-priced for higher rates across the yield curve. The perception and eventual withdrawal of USD liquidity from global financial markets should be negative for exchange-traded commodities, especially gold. Oil could continue to hold up better than other commodity markets. Rising tensions in Egypt and potentially other regions in the Middle East should support a USD 5-10/bbl geopolitical risk premium. A reestablished positive correlation with equity markets could also make oil more sensitive to macro-economic data and earnings results. This may prompt greater divergence between US oil and Brent oil benchmarks. However, with record high speculative net long positioning in oil, the market would also be vulnerable to some profit-taking. In contrast, agricultural leveraged fund positioning has moved net short for the first time in 18 months. Fund outflows were particularly aggressive in grain markets in the past month, a key factor behind grains being one of the worst performing commodity markets. A warmer and drier weather outlook in the US Mid West, improving US corn yield prospects, and higher than expected corn planting area, were behind the sell-off. The market had expected US corn plantings in 2013 to be around 2 million acres below 2012, as cool, wet weather early in the year delayed corn and soybean plantings. However, a USDA report indicated the area planted to corn in the US this season was 97.4 million acres, slightly above last year. Looking forward, given the large price falls in the past month, we expect grain prices to stabilise until there is more clarity on US corn yields.
FIGURE 2. PRICE MOVEMENTS IN JUNE
Iron ore WTI Oil C otton Brent Oil Sugar ANZ C CI ANZ CCI Thermal C oal C hina Hot Roll Palm Oil Zinc Soybean C oking C oal Nickel C opper Lead Aluminium Wheat Platinum C orn Gold Silver Palladium (15) Hard/Energy Ags/Softs

June was a volatile month for commodity prices, with significant headwinds from China and the US undermining risk appetite for commodities. Precious metals were the worst performers, hit by a double whammy of a severe credit crunch in China and the US Federal Reserve confirming an earlier timeframe for easing its asset purchase program. Base metals also fell, impacted by weaker manufacturing in China and further uncertainty regarding demand. Despite these headwinds, our proprietary ANZ-CCI ended the month only mildly lower, held up by energy, iron ore and cotton markets. Stronger physical trade or increased supply risks appear to be the underlying support for these markets. We expect commodity markets to experience false starts this month as early signs of a bottom in prices begin to emerge. Investors have priced in a lot of the downside for China, with record high speculative net shorts in markets like copper and we think less negative or encouraging data could trigger relief rallies. But any upside will likely be short-lived. Blurring the picture is the passing of a peak in seasonal demand and an unclear position for China’s near-term growth outlook. Although liquidity tightness in China has started to ease, funding costs are unlikely to return to normal levels any time soon. If China’s central bank continues to tighten market liquidity despite a softer growth and inflation outlook, growth risks could be to the downside in Q3 and Q4. We’re already seeing this play out in commodity markets like coal, with rising expectations of defaults as a series of contracts are renegotiated lower. Banks appear to be taking a particularly hard line on commodity trading activity since the start of the year, following a rapid rise in non-participant commodity-based financing over 2012. China’s property market is also vulnerable. Recent property investment curbs to control prices don’t appear to be working, with home prices and sales up in June. This could further induce property controls, but we feel this may accentuate the problem. Nearer-term, commodities continue to remain sensitive to China’s manufacturing outlook. The latest PMIs suggest momentum is slowing, which is also pressuring our proprietary ANZ global lead indicator (ANZ-GLI). However, this has been partially offset by modest improvements in the US and Japanese manufacturing sectors. We think the ANZ GLI will continue to grind lower this month, with a collapse in Asian (ex-Japan) net capital

M/M % (10) (5) 0 5 10

Source: ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 3 of 18

CHARTS OF THE MONTH
FIGURE 3. COMMODITIES TRACKING EMERGING MARKET DECLINE IN RISK APPETITE
Dev'n 12m trend 3.0 2.0 1.0 0.0 (1.0) (2.0) (3.0) (4.0) (5.0) 05 06 07 08 09 10 11 12 13 Emerging mkts Devp'd mkts ANZ C C I divergence RISK APPETITE & ANZ CCI

FIGURE 4. TURNING POINT FOR BALTIC FREIGHT RATES & SEASONAL DEMAND
points 3,500 3,000 2,500 2,000 1,500 1,000 500 Jan-11 turning point? BALTIC FREIGHT INDICES

Jul-11

Jan-12

Jul-12 C apesize

Jan-13

Jul-13

Baltic Dry Index

Panamax

Sources: Bloomberg, ANZ Commodity Strategy

Sources: Bloomberg, ANZ Commodity Strategy

FIGURE 5. NO RESPONSE IN COKING COAL PRICES AFTER RECENT IRON ORE PRICE BOUNCE
USD/t 200 180 160 140 120 100 200 150 IRON ORE & COKING COAL PRICE USD/t 350 no coking coal 300 recovery 250

FIGURE 6. MIDDLE EAST POLITICAL RISK BUOYS SPECULATIVE OIL NET LONGS TO RECORD HIGHS
mbbls CFTC NON-COMMERCIAL OIL POSITIONS 300 280 260 240 220 200 180 160 140 120 100 Jan-11 record highs

100 80 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Iron Ore Price Hard C oking C oal Price (RHS)

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

WTI Net Long

Brent Net Long

Sources: Bloomberg, ArgusCoal, ANZ Commodity Strategy

Sources: Bloomberg, ANZ Commodity Strategy

FIGURE 7. GOLD/SILVER RATIO TRENDING HIGHER AS SILVER MARKETS UNDERPERFORM
times 90 80 70 60 50 40 30 05 06 07 08 09 10 11 12 13 Gold price/Silver price 5-year average gold cheap 57 GOLD/SILVER PRICE RATIO current ratio - 65 gold expensive

FIGURE 8. US CORN CROP CONDITION NOTABLY BETTER THAN AT THIS POINT IN 2012
% 80 70 60 50 40 30 20 May 2010 GOOD TO EXCELLENT CONDITION

Jun

Jul 2011

Aug 2012

Sep 2013

Sources: Bloomberg, ANZ Commodity Strategy

Sources: NASS, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 4 of 18

COMMODITY CALLS
COMMODITY COMMENTS ENERGY
Oil markets should hold up in July. However, bouts of profit-taking could be apparent as oil prices become overvalued. Oil has held up much better than other commodities despite weaker China growth and expectations of US Fed asset tapering. We still expect US oil markets to outperform Brent near-term. While both contracts tend to move in a similar direction, an uneven global economic recovery and divergent demand trends should continue to support a better performing US crude market. We also expect market participants will continue to factor in declining US stocks as domestic transportation bottlenecks are alleviated. Although, supply shocks could emerge from geopolitical risks in the Middle East and the onset of the US hurricane season. The Brent/WTI spread hit a two and a half year low of USD4.5/bbl in June and we think is at risk of falling to a discount. We also expect the steeply backwardated WTI curve to be maintained. WTI has recently re-established a strong positive correlation with US equities and a lift in earnings following recent improved US data flows should buoy the outlook for US oil consumption this year. Markets have been pencilling in easing transportation bottlenecks to the US Gulf Coast. The return of the Tulsa East refinery, the start of a new 250kbbls/day CDU at Whiting and the start or ramp ups of several new pipelines should occur near-term. As a result, inventories at Cushing should experience draws near-term. A more active hurricane season is also on the cards, and could prompt a tighter supply outlook. Demand fundamentals look less favourable for Brent. The onset of slower seasonal demand in the third quarter and unclear position for China’s near-term growth outlook could be a drag. North Sea production should return to normal following maintenance, but any supply outages during the third quarter shoulder period will be closely monitored by the market. Saudi Arabia also continues to raise production to maintain market share, which could offset some of the supply losses from rising Middle East tensions and tighter Russian supplies. Although, rising geopolitical risk sentiment stemming from turmoil in Egypt and potential regional supply shocks will likely support oil markets more generally.
Bearish Neutral Bullish

BULKS
Bulk markets were mixed in June with stronger iron ore prices offsetting weaker coal prices. The diverging performance of iron ore and coking coal was an interesting dynamic – with iron ore gaining on the backdrop of flat to weaker steel and coking coal prices. Reports of shipment defaults in thermal coal are also a shot across the bow that all is not well, and with seasonal demand now declining, we expect bulk prices to consolidate or even weaken off already low bases in the months ahead. Rallying Baltic Capesize rates propped up iron ore prices in the past month as traders bet the bottom in prices had passed. We think the bounce is just that, with prices likely to ease in the coming month as seasonal demand wanes. Freight rates are still high, but have lost their upward momentum suggesting traders have had enough for the time being. Chinese port stocks have also gained 7-8% in the past month suggesting the increased buying activity is going into opportunistic inventory rebuilding rather than better demand. In the absence of stronger steel prices (not apparent right now) spot iron ore prices should retrace back towards the USD110-115/t range in the short term. Coking coal looks in worse shape decoupling from firmer iron ore prices over June. A flat steel market hasn't helped, with ultra skinny steel mills margins making it very difficult to accept higher iron ore and coking coal prices at the same time. Higher coal export volumes out of Australia looks a little misleading, but shows the pricing leverage steel mills have at the moment - taking higher volumes at lower prices. In fact, rising supply in a weak market is fuelling further price declines. Although prices now look distressed (for producers), stronger steel prices will be needed to change the mood. This doesn't look likely in the next few months. Thermal coal is defying logic, with prices dipping heavily into the cost curve. We estimate 30% of the seaborne industry is losing money at current prices - most of it, Australian output. A falling Aussie dollar is not helping, with high cost Australian producers delaying closure decisions on the mild positive currency impact. Reports of shipment defaults highlight the negative tone of the market - and flags even lower prices in the short term. This could also create an overhang of supply into the fourth quarter blunting a price pick up from stronger winter demand. Mild support could come from reports Japan is increasing thermal power capacity, but better news has to come from the bigger "growing" markets of China and India to re-ignite stronger prices.

ANZ Commodity Call / 10 July 2013 / 5 of 18

COMMODITY CALLS
COMMODITY COMMENTS BASE METALS
Base metals could experience relief rallies as signs of a bottom in prices emerge. But these will be short-lived, with the view on China still uncertain. Demand has been underwhelming and sentiment will likely remain cautious with investors keeping a wary eye on tight credit conditions and rising property prices. Recent tight supply conditions and higher premiums should start to ease as the traditional seasonal peak in demand passes and supply outages are brought back online. Global LME inventories are still blurring the picture with inventory financing deals keeping levels inflated and delayed delivery schedules. We think Chinese inventory moves should be a better guide of real demand with a pull-back in local financing deals removing the non-commercial influence. The volatility in copper prices will likely continue near-term. There could be some upside from greater copper imports in June, after the Shanghai/LME differential reached the widest levels in 3 years. Domestic inventories are also posting ongoing declines, down 30% to 173,000 tonnes since early April. However, LME warehouse delays continue to blur the picture, with copper importers being forced to queue for already bought deliveries, as reflected by sticky near-record high LME copper cancelled warrants. As a result, global LME stockpiles remain inflated near 10-year highs. Recent supply tightness should also subside, with the return of Freeport’s Grasberg production to full capacity and commencement of Rio Tinto’s 430ktpa Oyu Tolgoi copper concentrate shipments from Mongolia. A crackdown on financial applications for high energy consumers or heavy polluting companies in China could see more upside in aluminium, zinc and lead markets. Stockpile positions suggest lead is tighter than zinc – while aluminium markets continue to be pressured by overcapacity and near-record high stocks. Nickel probably has the greatest potential for a short term rally, after two months of posting the biggest price declines. About 45% of global nickel producers are operating below current prices and we expect global nickel producers (ex-China) will begin to cut back output. That said, prices should remain under pressure with China’s nickel pig iron (NPI) producers still operating at full capacity. The average cost for Chinese NPI production is estimated to be below USD13,000/t and supplies have been encouraged by ongoing declines for raw material costs (particularly coking coal).
Bearish Neutral Bullish

PRECIOUS METALS
Precious metals declined sharply in June. Spot gold fell 12% in the month, taking losses for the calendar year to 26%. Silver wasn’t spared, also down 12%, but has fared worse than gold with the latest month’s moves taking silver losses this year to 35%. Declines in platinum and palladium, down 8% and 10% respectively rounded off a difficult month for the precious metals complex. Going forward, we think investor sentiment towards these markets will remain negative. The ongoing capital flows into developed markets is boosting the USD and US interest rates, both of which reduce the investment appeal of precious metals. And speculative net long position in both gold and silver are at historical lows of 4.0%-4.5% of open interest, flagging lack of confidence short term. Interestingly, physical gold demand in China remains strong and the onshore-offshore price differential has improved to around USD30/oz, from USD18/oz in late May. Chinese demand remains robust, and imports for the first 5 months of 2013 are almost double year-ago levels. However, India should continue to see weak import volumes amid higher import duties and restrictions on gold consignments. These factors saw Indian gold imports reportedly fall to 31.5mt in June from 162mt in May, according to a government source. However, while we expect this to persist for some months, we should see a pick up in volumes as we approach the wedding season starting in November. We continue to see further near-term downside for gold. Technically, the market is still trying to establish a base, and the style of further dips and rebounds should be closely monitored. We are biased lower in the near-term and are targeting prices sub-USD1,150/oz, but look for a recovery in coming quarters. We expect gold to recover mildly from these levels towards the end of the year and stabilise around USD1,300/oz. Selling by gold-backed exchange traded funds (ETFs) have added the equivalent of 12.5% to global annual gold supplies in 2013 – so far. This is one dynamic that must subside before the market can stage any real recovery. Platinum and palladium markets are supported by supply issues in South Africa, as workers undertook industrial action related to pay disputes. Immediate concerns may have been alleviated as Amplats announced the return of workers, though wage negotiations are set to continue over the next few weeks and could be a source of near-term volatility. Gold and silver are highly vulnerable to short-covering, though we expect the style of these moves to be short, sharp and unsustained as the near-term fundamental picture remains negative.

ANZ Commodity Call / 10 July 2013 / 6 of 18

COMMODITY CALLS
COMMODITY COMMENTS GRAINS
Despite old crop corn prices remaining resilient, new crop prices have fallen sharply in the past fortnight. December 2013 corn future prices have fallen 14% from the high in mid-June, resulting in prices closing below the psychological barrier of 500USc/bu in the past week. Given the extent of these falls, we expect prices to stabilise near term, with markets unlikely to fall further until there is more clarity on US corn yields. A main concern at present with the US corn crop is its development is running behind in some areas. Slightly warm and drier conditions are needed, but such weather forecasts are also unfriendly to prices. This is the exact scenario markets are grappling with. The two week weather outlook in the US Mid West is for average or slightly higher temperatures while rainfall forecasts centred on Iowa are for drier than normal conditions – conditions all favourable for rapid growth. While forecasting skill is lower further out, the weather outlook looks similar through to early August, but importantly, large spikes in temperature are not expected. Overall, with the greatest chance that weather remains benign for the US corn crop over the next six weeks, prices are still at risk of correcting further. We anticipate new crop corn prices will fall another 10% in August as the current weather risk premium built into prices washes out of the market. For wheat, supply dynamics look decidedly different. Uncertainties surrounding global supply have reduced significantly in the last month, with winter wheat harvest well underway throughout the northern hemisphere. As a result CBOT wheat prices have declined 8% in the last five weeks and are expected to remain under pressure as harvest continues. In key US Hard Red Winter (HRW) producing states, harvest is well over half complete. More broadly across the US, 57% of US winter wheat was harvested by 7 July, a slightly slower pace than the 5 year average. In contrast, new wheat supply from the Black Sea region is hitting export markets slightly ahead of normal. Over 25% of the Ukraine’s winter wheat crop has already been harvested, while Russia’s harvest in the south started two weeks ahead of schedule. While export supply will increase from the region this month, peak supply will be most apparent in August and September. This is also likely to coincide with markets becoming more comfortable with spring wheat yields and the state of the US corn crop. Assuming global weather for grain crops remains benign, these factors should all conspire to push wheat prices another 5-10% lower by September.
Bearish Neutral Bullish

SOFTS
Sugar prices look set to remain under pressure in coming months as peak supply from Brazil and Australia hits the market. But with prices testing close to 16USc/lb, the question facing market participants is how far will prices fall below this in Q3? In our view, a further 10% fall cannot be ruled out, but a more dramatic decline looks unlikely. One factor behind recent USD sugar price weakness has been the fall in the Brazilian Real (BRL). Dire sentiment towards emerging market economies and commodities in the past two months has driven the BRL 11% lower against the US dollar. With early signs the worst of the negative sentiment has passed, the same currency headwinds for sugar prices are unlikely to be repeated in the coming two months. Similarly, the impact of an early and dry start to Brazil’s crush this season will wane in the months ahead. Early season trends in Brazil’s centre south crush saw mills in the region extract over 60% more recoverable sugar. But with full season growth likely to be only 15% y/y, this trend will fade, increasing the need for sugar to price itself more competitively against ethanol. After a period of range bound trading, volatility in the cotton market should increase over the next quarter. Chances of an upside breakout above 90USc/lb rest on a weather driven event. With the US crop already in less than ideal condition in Texas, ongoing dryness and a further deterioration in yield prospects in the US is likely to be the main avenue for such a catalyst. Aside from weather concerns, we expect ICE cotton futures to remain capped below 90USc/lb. At this level or higher, profitability for Chinese spinning mills importing cotton becomes marginal. Also if prices persist above this level for a sustained period, cotton risks losing market share to synthetic fibres in some countries. This would increase the risk of downgrades to global cotton demand for 2013-14, pushing ending stocks higher. As to downside price risks, we have materially increased the chance that prices will fall below 80USc/lb in coming months. Investor positioning is extreme, with CFTC net long spec positions up to 36% of open interest, leaving risks prices will fall if this segment of the market decides to liquidate. Further we think a slowdown in China’s imports in the second half will reduce the existing global price distortions from China’s cotton policies, providing less support to global cotton prices.

ANZ Commodity Call / 10 July 2013 / 7 of 18

FEATURE NOTE

COMMODITY PRICE REVISIONS
• • • Weaker China demand and fragile investor sentiment has prompted a price revision Biggest downgrades have precious metals and coal been made to

Price will fall 9% in 2013 but rise 5% in 2014 as investors look to re-enter off a low base

We have downgraded our commodity price forecasts by an average 4.5% in 2013 and 5.5% in 2014 adjusting for a weaker China demand outlook and in some cases, an inelastic supply response. Abrupt selling by investment funds has also prompted a lower short-term price outlook, particularly for the precious metals. Our biggest downgrades have been to precious metals and coal. In most cases, prices will decline further in the coming quarter, before recovering in the fourth. We now expect prices to fall an average 9% in 2013 and rise 5% in 2014. Commodity markets have struggled over the past three months as confidence over the short term China demand outlook deteriorates. Strangely, the data hasn’t been terrible, but the market appears to be struggling to adjust to a more pragmatic leadership regime. There is however growing risks that the handsoff approach is creating additional stress, with tightening credit supply hamstringing key heavy industry demand. This, along with recent downgrades to our China GDP forecasts, is a key reason for our more cautious price outlooks. Another headwind has been heightened expectations of tapering of US quantitative easing (QE). This has manifested itself in a stronger US dollar (negative for commodities) and a broad asset rotation out of US bonds and global commodity markets into a better returning US equity market. The improved accompanying US data flow has largely been ignored (by commodity markets), with the leverage being lost to the much more dominate, but poorer performing, China market. We think this dynamic has largely played out, but can’t see it unwinding or reversing in the short term. Supply dynamics have surprised us on the negative side, with loss-making industry participants unwilling to wind-back or idle capacity. This is mainly showing up in the coal and base metal markets, where pledged supply agreements or government support is making it hard or not necessary to reduce supply. Inventory levels have also swelled. The biggest drag is being felt in coal, nickel and steel. Visible copper stocks also look high, but reports of sharp draw-downs in hidden Chinese ports stocks may be masking tighter conditions.

Our biggest downgrades have been made to precious metals – down an average 8% over 2013/14. The strong negative sentiment swing in the past few months has triggered additional technical selling in a market which is always vulnerable to momentum trading. Gold and silver are also playing a slightly different tune to other commodities, much more sensitive to the asset rotation out of safe-haven US bond markets and the liquidation of large exchange traded fund positions. We still see short term weakness in prices down to the mid USD1,100/oz range, but expect prices to rebound back towards the USD1,450/oz range by mid 2015. Our other big downgrades are in coal and nickel – down an average 7% over the next two years. The coal market is being hamstrung by weaker Chinese demand and stronger Chinese supply. The additional rub, is inelastic high cost Australian coal supply, which is ramping up, rather than winding-down, output in a bid to leverage a flat unit cost structure. Nickel continues to feel the brunt of substitution to Chinese Nickel Pig Iron and excess stainless steel supply. US oil is one market we have upgraded as better domestic demand and easing supply bottlenecks trigger a firmer view.
FIGURE 9. COMMODITY PRICE FORECASTS
Calendar Year - Avg Copper Aluminium Lead Nickel Zinc Gold Silver Platinum WTI Crude Brent Crude Iron Ore Coking Coal Thermal Coal USD/lb USD/lb USD/lb USD/lb USD/lb USD/oz USD/oz USD/oz USD/bbl USD/bbl USD/t USD/t USD/t 2012 3.61 0.92 0.94 7.95 0.88 1669 31.2 1552 94 112 129 210 95 2012 2013F 3.33 0.84 0.97 6.96 0.86 1367 23.1 1469 97 106 126 157 85 2013F -3.8 -5.2 0.0 -8.1 -3.6 -5.5 -8.1 -6.7 1.1 -2.2 -5.6 -5.3 -5.7 -4.5 2014F 3.60 0.91 1.02 7.69 0.97 1355 22.8 1525 108 111 123 166 90 2014F -3.7 -5.1 -6.8 -2.5 -7.4 -10.4 -9.7 4.7 -1.8 -3.7 -10.1 -9.3 -5.5 2015F 3.27 1.00 1.08 7.89 1.04 1455 25.3 1646 101 106 118 179 98 2015F -1.1 -4.9 -2.5 -7.1 -9.0 -3.7 4.5 -2.6 -4.0 -6.3 -3.7 2016F 2.90 1.03 1.04 7.78 1.03 1510 27.0 1653 93 98 113 180 104 2016F -0.1 -3.7 -0.7 0.5 -0.7 -0.9 1.2 -0.2 -0.7 -3.5 -0.9

Change in forecasts Copper Aluminium Lead Nickel Zinc Gold Silver Platinum WTI Crude Brent Crude Iron Ore Coking Coal Thermal Coal Average % % % % % % % % % % % % %

Source: Bloomberg, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 8 of 18

FEATURE NOTE

INDONESIAN WHEAT IMPORTS TO JUMP
• • Indonesian wheat import volumes to surprise on the upside over the next 12 months A widening price disparity between rice and wheat, the curbing of flour imports and high food inflation in Indonesia will drive above trend import growth Australia will see another record year of wheat exports to Indonesia, with volumes forecast to reach 5 million tonnes (mt) per annum for the first time

Indonesia imposed a temporary 20% safeguard duty on imported wheat flour lasting for 200 days, with expiry on 20 June. While no official announcement has been made, the expectation is the government will indefinitely extend the higher tariff. This will be a positive for Australian grain demand, as the measure has effectively shut a small, but significant, supplier of Black Sea wheat into Australia’s largest wheat market. In the three years prior to 2013, Turkey’s flour exports to Indonesia were the equivalent of 45,000 tonnes of wheat exports per month. Since the implementation of the tariff, Turkey’s flour imports have been negligible to Indonesia. Consistent with an expected large jump in wheat imports, the Indonesian flour milling industry is adding new capacity. Over the course of 2013, the completion of four new flour mills is expected to add 25% to current capacity. This large increase in capacity will keep mill utilisation rates under pressure in Indonesia. Even with our forecast of Indonesia importing 7.5mt of wheat over the next 12 months, utilisation rates for the Indonesian flour mill industry are likely to fall back to 66% of installed capacity, a 4 percentage point decline compared with 2012-13. First published as a Commodity Insight on July 2 “Indonesia wheat imports to jump sharply”
FIGURE 10. JUNE INDONESIAN FOOD CPI
y/y % 25 20 15 10 5 0 (5) Meat Vegetables Fruits Food Fish Eggs/Milk Fats/Oils
S

Wheat imports by Indonesia, the world’s second ranked importer by volume, are set to accelerate sharply. We forecast Indonesian wheat imports to jump 15% y/y, implying volume growth of around 1mt over the next 12 months. For Australia, we expect this to mean another record year for wheat exports to Indonesia – hitting 5mt per annum for the first time. Factors driving this stronger than normal growth include: • a widening price disparity between rice and wheat; • the curbing of flour imports by Indonesia; • high food (non-cereal) CPI and fuel inflation in Indonesia; • and new domestic flour milling capacity. A widening price differential between Indonesian rice and Australian wheat in H2 2013 will be a key catalyst in driving wheat demand in Indonesia. Seasonal factors should keep Indonesian rice prices supported, while global wheat prices are expected to still fall further between now and the Australian harvest as northern hemisphere grain supply increases. We expect to see the price spread widen to USD500/t by late Q3, a level more consistent with the first half of 2012. Current high food inflation in Indonesia also favours higher wheat consumption in the months ahead. Food CPI is running at 11%, driven by rising fruit, vegetable, fish and meat prices. However price rises in cereal/grain CPI have been more subdued (Figure 10). Further, petrol retail prices increased by 44% and diesel prices by 22% on the 22 June. This is the first increase in transport fuel prices in Indonesia in five years. With higher fuel prices and non-cereal food CPI sweeping through the Indonesian economy, consumers are likely to be particularly cost conscious, favouring consumption of wheat noodles at the expense of other food items. A continuation of the higher tariff on flour imports into Indonesia is expected to continue to curb wheat flour imports over the next 12 months. In December 2012,

ource: CEIC, ANZ Research.

Cereals

ANZ Commodity Call / 10 July 2013 / 9 of 18

TRADE IDEAS
OIL (initiated 2nd July 2013) We think US WTI markets will continue to outperform Brent near-term and have initiated a long WTI, short Brent spread trade, targeting an USD0.50/bbl premium. While both contracts tend to move in a similar direction, an uneven global economic recovery and divergent demand trends – with the US economy improving and uncertainty in China – should continue to support a better performing US crude market. We also expect market participants to continue to factoring in for declining US stocks at Cushing, as domestic transportation bottlenecks are alleviated from increased pipeline and refinery capacity nearby. Long WTI (CL2), short Brent (CO2) Entry: Buy WTI @ USD98/bbl Sell Brent @ USD103/bbl Target: +USD0.50/bbl Stop Loss: -USD10/bbl Timeframe: 3 months IRON ORE (initiated 10th July 2013) We think iron ore prices will fall near-term, tracking Baltic Capesize freight rates with a 1-2 week lag. The capesize market is expected to fall after a strong run rate in June – up 60%. A slowdown in seasonal demand is already being reflected in the freight rates, which is down 9% since the beginning of July. We are also cautious on China’s steel market, with a little too much steel output produced in the first quarter showing up in high steel inventories. This means we may see sightly weaker steel output in the second half as domestic steel mills run down steel stocks. Short Nov13 Iron ore Swap (TIOX3) Entry: Sell current @ USD117/t Target: USD110/t Stop Loss: USD120/t Timeframe: 2 months FIGURE 12. PHYSICAL IRON ORE PRICE & BALTIC CAPESIZE INDEX
USD/t 135 130 125 120 115 110 105 J F M A M J J A Iron Ore Price Points 2,200 9% 2,100 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 Baltic C apesize Index (RHS)

FIGURE 11. US CUSHING STOCKS & WTI PRICE
mbbls 50 45 40 35 30 25 20 15 10 10 11 C ushing Oil Stocks 12 13 Oil Price (RHS) USD/bbl 115 110 105 100 95 90 85 80 75 70

Sources: Bloomberg, ANZ Commodity Strategy

Sources: Bloomberg, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 10 of 18

COMMODITY PRICES (% CHANGE)
BASE METALS INVENTORIES

SPOT

1 MTH

3 MTH

6 MTH 12 MTH

YTD

SPOT

1 MTH

3 MTH

6 MTH 12 MTH

YTD

LONDON METALS EXCHANGE (UDS/lb, USD/t) Aluminium Copper Nickel Zinc Lead Tin SHANGHAI (RMB/t) Copper Aluminium Zinc Lead COMEX (USD/t) Copper 8,246 SPOT 1,678 1,626 31.8 1,736 763 SPOT 1.9 1 MTH 1.2 3.1 4.8 8.6 11.0 1 MTH 8.7 3 MTH (2.3) (1.5) 0.0 12.5 24.6 3 MTH 9.3 (4.3) 2.4 YTD 0.1 1.6 4.9 12.8 8.3 YTD 58,900 14,880 16,200 14,975 2.4 (1.2) 2.9 1.2 5.3 (1.7) 6.9 (0.5) 8.1 (3.0) 8.2 0.0 (0.1) (6.6) 1.3 (6.1) 3.4 (1.2) 3.2 1.4 0.93 3.72 8.28 0.97 1.09 11.26 2,059 8,208 18,258 2,143 2,409 24,829 0.9 2.0 4.4 7.9 4.8 0.8 8.5 8.0 14.5 15.1 9.5 22.1 9.6 8.7 16.4 15.3 26.6 36.4 (7.0) (4.1) (14.7) 2.0 12.2 (2.0) 0.9 3.8 7.4 4.6 4.0 6.2

LONDON METALS EXCHANGE (kt) Aluminium Copper Nickel Zinc Lead Tin SHANGHAI (kt) Copper Aluminium Zinc COMEX Copper OIL & GAS - US DOE (mbbls) Crude Gasoline Distillate Refinery utilisation (%) 372 234 130 84.2 SPOT 3.3 3.7 4.5 (6.9) 1 MTH (0.4) 17.3 9.9 (4.0) 3 MTH (0.5) 12.6 4.3 (8.7) 9.6 1.0 (11.6) 1.7 3.3 3.7 4.5 (6.9) YTD 74.5 4.5 31.1 53.0 (16.3) 5.3 197 425 323 (3.8) (4.0) 3.9 2.3 (4.6) 7.5 25.9 30.6 1.1 9.6 49.8 (13.5) (3.8) (4.0) 3.9 5,148 387 151 1,197 290 13 (0.9) 17.5 5.1 (1.7) (5.3) 4.5 1.2 57.4 15.5 2.6 (8.7) 13.4 5.7 57.4 29.2 21.4 (10.8) 13.4 2.3 22.2 60.0 42.5 (22.9) 46.0 (1.2) 20.8 6.3 (1.7) (7.8) 4.7

PRECIOUS METALS
Gold (USD/oz) Gold (AUD/oz) Silver (USD/oz) Platinum (USD/oz) Palladium (USD/oz)

6 MTH 12 MTH 4.1 6.6 13.5 23.2 29.9 (3.2) 1.3 (6.3) 4.4 6.8

AGRICULTURE
CBOT (US¢/bu) Wheat

6 MTH 12 MTH

ENERGY
OIL & GAS (USD/bbl) WTI Cushing (US) Brent Crude (UK) Tapis (Asia) Gasoil 0.5% (Sing) Fuel Oil 180cst (Sing USD/t) THERMAL COAL (FOB USD/t) Newcastle Richards Bay Qinhuangdao

6 MTH 12 MTH

762 723 1,488 52.5 437 810 845 297 211 242 230 470 638 SPOT

2.1 4.1 7.4 5.7 6.7 1.1 0.5 6.1 2.2 (1.8) (2.2) 3.0 9.5 1 MTH

(14.8) (2.9) (1.3) 7.9 (6.9) (13.1) (12.0) (1.5) (4.6) (12.1) (10.3) (2.0) 6.5 3 MTH

(16.6) (11.5) (5.9) 0.1 (8.5) (10.4) (11.3) (2.5) 9.2 (6.7) (8.0) (3.0) 5.8

15.2 12.5 20.8 (0.2) 35.9 11.8 0.4 41.4 26.0 23.1 11.9 12.4 19.5

1.9 6.2 8.8 5.1 9.5 0.7 0.4 5.3 2.5 (0.5) (2.1) 5.4 10.3 YTD

96.6 116.7 122.9 133.7 654.3 77.7 73.4 99.5 SPOT

3.8 4.5 5.1 5.2 3.2 (10.7) (10.9) (2.5) 1 MTH

14.4 9.3 8.8 6.7 5.4 (11.3) (8.2) (2.5) 3 MTH

3.5 4.0 4.2 5.1 (1.8) (13.6) (18.5) (3.7)

(2.1) (0.6) 0.1 1.3 (10.5) (12.4) (17.9) (16.1)

5.2 4.3 7.7 9.2 6.9 -13.6 (18.5) (3.7) YTD

Corn Soybeans Soybean Oil (US¢/lb) Soybean Meal (USD/st) KCBOT (US¢/bu) HRW MGE (US¢/bu) HRS ASX (AUD/t) Wheat EURONEXT Liffe (£/t) Wheat EURONEXT Paris (EUR/t) Wheat Corn Rapeseed ICE Winnipeg (CAD/t) Canola

OTHER
COKING COAL (USD/t) Australia FOB China CIF India CIF STEEL (USD/t) HRC US (Short ton) HRC Russia HRC China OTHER METALS Uranium (USD/lb) Alumina (USD/t) Cobalt (USD/lb) Molybdenum (USD/lb) Coke (USD/t) Iron Ore Spot (USDt)

6 MTH 12 MTH

134.3 144.5 149.3 583 583 603 43.8 346 12.8 11.4 280 155 SPOT 740 1,484 657 SPOT 1.032 0.840 79.7 1.352 93.6

(3.9) (3.1) (4.2) 0.0 9.4 8.6 1.2 4.2 7.6 (3.0) (15.2) (2.1) 1 MTH (0.4) 7.2 (8.4) 1 MTH (1.8) 0.0 (1.0) 3.5 6.6

(15.4) (15.2) (14.5) 1.3 14.2 13.2 1.7 6.7 (1.9) 3.4 (17.7) 27.5 3 MTH (19.2) (29.3) (10.9) 3 MTH (0.8) 2.6 (1.3) 5.9 17.1

(15.7) (16.4) (14.9) (5.3) 5.0 7.6 (12.1) 9.8 (1.2) (0.4) (17.7)

(38.3) (36.5) (36.3) (14.3) (5.3) (3.6) (16.3) 8.3 (21.8) (19.2) (27.3)

(15.7) (16.4) (14.9) 0.0 9.4 8.6 (2.8) 4.2 11.1 (2.2) (15.2) 7.0 YTD (54.4) (49.8) (59.4) YTD (1.4) 1.4 (0.8) 3.6 7.3

SOFTS/PALM
ICE NY (US¢/lb) Sugar #11 Coffee Cocoa Cotton EURONEXT Liffe (USDD/t) Sugar Coffee Cocoa (£/t) MDEX (MYR/t) Crude Palm Oil

6 MTH 12 MTH

18.2 142 2,227 82 497 2,069 1,452 2,547 SPOT 1,512 303 457 3,583 13

(2.8) (3.9) 0.2 9.3 (2.1) 8.3 1.8 5.6 1 MTH 3.5 3.0 3.3 2.5 (2.9)

(4.0) (6.0) (7.2) 17.0 (3.0) 7.3 (6.3) 6.3 3 MTH 8.4 3.9 (5.5) 10.0 (29.7)

(13.8) (18.0) (9.8) 7.5 (15.7) (5.0) (13.1) (11.0)

(25.7) (35.4) (2.2) (12.7) (21.4) 10.2 (1.2) (19.1)

(3.5) (3.6) 0.3 8.9 (2.7) 6.2 2.1 6.4 YTD 3.1 3.0 4.1 2.7 (3.0)

35.0d Security 6 MTH 12 MTH (8.9) 23.3 (21.8) 9.5 2.5 (20.7)

FREIGHT
Baltic Freight Rate Baltic Capesize Baltic Panamax

KEY CURRENCIES
AUD/USD - Aussie NZD/USD - Kiwi DXY - USD trade weighted EUR/USD - Euro USD/JPY - Yen

6 MTH 12 MTH (2.4) 2.9 (3.2) 9.4 19.4 (4.4) 0.6 1.4 2.0 21.5

KEY INDICES
S&P 500 CRB Index S&P GSCI Agri Index LME Metals Index Market Volatility Index (VIX

6 MTH 12 MTH 7.8 (0.5) (10.7) 12.0 (12.5) 12.0 (3.8) 4.0 (4.4) (26.2)

Note: Prices as of 5 July 2013 Sources: Bloomberg, globalCOAL, FIS, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 11 of 18

CFTC DATA
SPOT 1 WK 1 MTH 3 MTH 6 MTH 12 MTH SPOT 1 WK 1 MTH 3 MTH 6 MTH 12 MTH

METALS
GOLD (t) Long Short Net Position Open Interest SILVER (t) Long Short Net Position Open Interest COPPER (kt) Long Short Net Position Open Interest

ACTUAL

ENERGY
WTI CRUDE OIL (mbbls)

ACTUAL

500 403 97 2,416

492 390 102 2,161

524 352 172 2,152

602 258 344 2,012

619 141 478 1,851

577 150 427 2,085

Long Short Net Position Open Interest

424 92 332 1,770

402 93 309 1,809

394 108 286 1,745

391 99 292 1,732

352 107 245 1,473

334 134 201 1,433

NATURAL GAS (1000 mmbtu) 5,682 4,800 882 30,578 5,346 5,090 256 30,350 5,111 4,652 459 31,236 5,678 4,654 1,025 30,177 6,041 1,160 4,880 27,461 4,559 2,736 1,823 24,710 Long Short Net Position Open Interest 3,125 4,131 (1,005) 14,284 3,145 3,978 (832) 14,430 3,464 4,081 (617) 15,331 3,619 4,154 (535) 14,994 2,447 4,085 (1,638) 11,937 2,434 3,360 (926) 11,554

RBOB GASOLINE (m gallons) 509 831 (322) 1,947 532 890 (358) 2,036 440 589 (149) 1,896 553 860 (307) 2,053 516 410 106 1,664 429 579 (150) 1,539 Long Short Net Position Open Interest 2,964 1,405 1,559 11,244 2,914 1,382 1,532 11,804 3,383 1,515 1,868 12,011 4,614 1,083 3,530 13,773 4,169 1,207 2,962 12,150 3,542 669 2,872 11,609

AGRICULTURE
CBOT WHEAT (m bu) Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest CBOT CORN (m bu) Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest CBOT SOYBEANS (m bu) Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest CBOT SOYBEAN OIL (kt) Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest

SPOT

1 WK

1 MTH

3 MTH

6 MTH 12 MTH

ACTUAL

SOFTS
ICE SUGAR (kt)

SPOT

1 WK

1 MTH

3 MTH

6 MTH 12 MTH

ACTUAL

547 754 (207) 894 124 770 2,555

551 642 (91) 899 113 786 2,385

549 669 (120) 949 180 769 2,686

585 659 (74) 924 183 741 2,919

518 615 (97) 1,069 150 919 2,742

609 442 167 1,114 127 988 2,709

Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest ICE COFFEE (kt)

11,494 10,910 584 16,117 1,228 14,890 49,334

11,210 11,221 (10) 16,544 1,601 14,943 49,901

11,399 12,476 (1,077) 16,951 1,180 15,771 53,049

10,299 11,690 (1,391) 16,510 935 15,575 49,551

9,268 6,457 2,811 14,969 1,190 13,779 44,507

8,700 4,163 4,538 14,020 1,486 12,534 40,492

1,620 1,494 126 2,115 223 1,892 8,390

1,771 1,206 565 2,137 215 1,922 8,195

1,870 1,109 761 2,195 294 1,900 8,833

1,851 1,057 793 2,243 313 1,929 9,477

1,526 615 911 2,036 176 1,860 7,644

1,416 393 1,023 2,153 238 1,914 7,977

Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest ICE COCOA (kt)

708 1,041 (333) 988 40 948 3,270

726 1,132 (406) 989 41 948 3,280

726 1,054 (328) 1,011 59 953 4,000

761 1,159 (398) 993 63 930 3,891

622 966 (344) 829 42 787 3,520

477 583 (106) 799 122 677 3,762

346 546 (200) 777 90 687 3,713

365 522 (157) 813 94 719 3,853

376 512 (136) 762 140 622 4,229

327 521 (195) 747 164 583 3,904

317 490 (173) 899 227 671 3,785

291 440 (149) 1,000 229 771 5,529

Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest ICE COTTON (k bales)

654 268 386 354 10 345 1,997

686 256 429 353 10 343 1,993

737 250 487 352 17 335 2,405

625 449 175 369 40 329 2,201

522 184 338 372 5 368 2,182

379 301 78 393 50 343 1,936

2,975 4,103 (1,127) 2,602 100 2,502 9,996

3,000 3,493 (493) 2,549 98 2,451 9,899

2,989 3,640 (651) 2,745 301 2,444 10,804

3,184 3,589 (405) 2,678 300 2,378 10,439

2,819 3,347 (529) 3,030 206 2,824 9,372

3,316 2,408 909 2,755 465 2,290 10,650

Non-Com Long Non-Com Short Net Non-Com Position Index Long Index Short Net Index Position Open Interest

8,260 839 7,421 7,513 236 7,277 22,062

8,261 770 7,491 7,512 196 7,317 21,704

7,911 1,271 6,640 7,799 363 7,436 27,478

10,359 1,096 9,263 8,265 933 7,332 32,424

6,918 2,225 4,692 7,464 536 6,927 24,403

6,049 3,825 2,224 7,824 376 7,447 25,805

Note: Data as of 2 July 2013 Sources: Bloomberg, globalCOAL, FIS, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 12 of 18

CALENDAR HEATMAP
CHINA Foreign Direct Investment (FDI) Exports Imports Producer Price Index (PPI) Consumer Price Index (CPI) New Yuan Loans Money Supply - M2 Fixed Asset Investment (FAI) Retail Sales Industrial Production Leading Index PMI Manufacturing US FOMC Rate Decision GDP Vehicle Sales (Total) Retail Sales (Less Autos) Producer Price Index (PPI) Industrial Production Uni of Michigan Confidence NY Empire Manufacturing Consumer Price Index (CPI) Building Permits Housing Starts Philadelphia Fed Leading Indicators Durable Goods Orders Dallas Fed New Home Sales Chicago PMI ISM Manufacturing Factory Orders Change in Nonfarm Payrolls EURO-ZONE GDP Economic Confidence Consumer Price Index (CPI) Industrial Production Zew Survey (Econ Sentiment) Unemployment Rate PMI Manufacturing Retail Sales ECB Refinancing Rate JAPAN Consumer Confidence GDP BoJ Target Rate Machine Tool Orders Industrial Production Tankan Lge Manufacturers Index Vehicle Sales Leading Index UNIT % y/y % y/y % y/y % y/y % y/y RMB bn % y/y % YTD y/y % y/y % y/y % m/m Points UNIT % % q/q '000,000s % y/y % y/y % m/m Points % y/y % y/y '000s '000s % y/y % y/y % y/y % y/y '000s Points Points % y/y '000s UNIT % y/y Points % y/y % y/y Points % y/y Points % y/y % UNIT Points % QoQ % % y/y % y/y Points % y/y Points PERIOD APR JUN JUN JUN JUN MAY MAY MAY MAY MAY APR JUN PERIOD MAY 1Q JUN MAY MAY MAY JUN JUN MAY MAY MAY JUN MAY MAY JUN MAY JUN JUN MAY JUN PERIOD 1Q MAY MAY APR JUN MAY JUN MAY MAY PERIOD MAY 1Q JUN MAY MAY 2Q JUN MAY -2.4 3.0 101.2 MARKET 6.2 3.7 6.0 -2.6 2.5 815 15.9 20.5 12.9 9.4 50.1 MARKET 0.25 2.4 15.5 0.3 1.4 0.2 84.5 0.0 1.4 975 950 -2.0 0.2 3.0 -1.5 460 55.0 50.5 2.0 165 MARKET -0.1 89.4 1.1 -1.2 12.3 48.7 -1.9 0.50 MARKET 44.7 0.9 0.1 ACTUAL 0.4 -3.1 -0.7 -2.7 2.7 667 15.8 20.4 12.9 9.2 99.6 50.1 ACTUAL 0.25 1.8 15.9 0.3 1.7 0.0 82.7 7.8 1.4 974 914 12.5 0.1 3.6 6.5 476 51.6 50.9 2.1 195 ACTUAL -0.2 89.4 1.2 -0.6 30.6 12.2 48.8 -1.0 0.50 ACTUAL 45.7 1.0 0.1 -7.4 -1.0 4.0 -15.8 110.5 PREVIOUS 5.7 1.0 -0.3 -2.9 2.1 793 16.1 20.6 12.8 9.3 99.6 50.8 PREVIOUS 0.25 2.4 15.2 0.0 0.6 -0.4 84.5 -1.4 1.1 1005 856 -5.2 0.8 3.6 -10.5 466 58.7 49.0 1.3 195 PREVIOUS -0.6 88.6 1.0 -1.4 27.6 12.1 48.7 -1.0 0.50 PREVIOUS 44.5 0.9 0.1 -7.4 -3.4 -8.0 -7.3 107.7 DATE 16-May 10-Jul 10-Jul 9-Jun 9-Jun 9-Jun 9-Jun 9-Jun 9-Jun 9-Jun 1-Jul 1-Jul DATE 2-May 30-May 4-Jun 13-Jun 14-Jun 14-Jun 14-Jun 17-Jun 18-Jun 18-Jun 18-Jun 21-Jun 21-Jun 25-Jun 25-Jun 26-Jun 28-Jun 2-Jul 3-Jul 5-Jul DATE 15-May 30-May 31-May 12-Jun 18-Jun 1-Jul 1-Jul 3-Jul 4-Jul DATE 10-Jun 10-Jun 11-Jun 18-Jun 28-Jun 1-Jul 1-Jul 5-Jul

Note: Blue is stronger than expected (+5%), orange is weaker than expected release (-5%). Source: Bloomberg, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 13 of 18

FORWARD CURVES
USD/t 8,300 8,100 7,900 7,700 7,500 7,300 7,100 6,900 6,700 6,500 1M 3M6M USD/t 2,400 2,350 2,300 2,250 2,200 2,150 2,100 2,050 2,000 1M 3M6M 1Y 2Y 3Y 1Y 2Y 3Y

COPPER

USD/t 2,400 2,300 2,200 2,100 2,000 1,900 1,800 1,700 1M 3M6M USD/oz 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1M 3M6M

ALUMINIUM

USD/t 18,000 17,500 17,000 16,500 16,000 15,500 15,000 14,500 14,000 13,500 13,000

NICKEL

USD/t 2,250 2,200 2,150 2,100 2,050 2,000 1,950 1,900 1,850 1,800 1,750 3Y 1M 3M6M USD/oz 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1Y

ZINC

1Y

2Y

3Y

1M 3M6M USD/oz 32.0 30.0 28.0 26.0 24.0 22.0 20.0 18.0

1Y

2Y

2Y

3Y

LEAD

GOLD

SILVER

PLATINUM

1Y

2Y

3Y

1M 3M6M

1Y

2Y

3Y

1M

3M

6M

1Y

USD/oz 770 760 750 740 730 720 710 700 690 680 670 1M CNY/t 1,250

PALLADIUM

USD/bbl 104 102 100 98 96 94 92 90 88 86 84 82 1Y USD/t 140 135 130 1M 3M6M 1Y

WTI

USD/bbl 108 106 104 102 100 98 96 94 92 90 2Y 3Y CNY/t 4,100 4,000 3,900 3,800 3,700 3,600 3,500 3,400 3,300 3,200 3,100 1M US¢/lb 88 86 84 82 1M 3M6M 1Y

BRENT

USD/t 102 100 98 96 94 92 90 88 86 84 82 80 78 76 3Y US¢/lb 20.5 20.0 19.5 19.0 18.5 18.0 17.5 17.0 16.5 16.0

NEWC THERMAL COAL

3M

6M

2Y

1M 3M

6M

1Y

COKING COAL

IRON ORE

CHINA REBAR

RAW SUGAR

TBC

125 120 115 110

1,200 1M USD/lb 180 170 160 150 140 130 120 110 1M 3M6M US¢/bu 1,500 1,450 1,400 1,350 1,300 1,250 1,200 1M3M 6M 1Y 2Y 1Y 2Y 3Y 3M 6M

105 1M 3M USD/t 2,400 2,350 2,300 2,250 2,200 2,150 1M3M 6M 1Y 2Y 6M 1Y

3M

6M

1Y MYR/t 2,650 2,600 2,550 2,500 2,450 2,400 2,350

1M 3M6M

1Y

2Y

3Y

COFFEE

COCOA

COTTON

PALM OIL

80 78 76 1M 3M6M 1Y 2Y 3Y

1M3M 6M

1Y

2Y

SOYBEANS

US¢/bu 790 770 750 730 710 690 670 650

CHICAGO WHEAT

US¢/bu 700 650 600 550 500 450

CORN

Points 85.0 84.5 84.0 83.5 83.0 82.5 82.0 81.5 81.0 80.5 80.0 3Y 1M 3M

USD DXY

1M3M 6M

1Y

2Y

1M 3M6M

1Y

2Y

6M

Note: Prices as of 5 July 2013 Sources: Bloomberg, globalCOAL, FIS, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 14 of 18

MOVING AVERAGES
USD/t 10,000 9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/t 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/oz 850 800 750 700 650 600 550 500 450 400 Jan-10 USD/t 350 300 250 200 150 100 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/lb 300 260 220 180 140 100 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 US¢/bu 1,800 1,600 1,400 1,200 1,000 800 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Oct-10 Jul-11 Apr-12 1,100 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/bbl 115 110 105 100 95 90 85 80 75 70 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/t 200 180 160 140 120 100 80 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/t 3,700 3,500 3,300 3,100 2,900 2,700 2,500 2,300 2,100 1,900 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 US¢/bu 1,000 900 800 700 600 500 400 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 1,700 1,500

COPPER

USD/t 2,800 2,600 2,400 2,200 2,000 1,800

ALUMINIUM

USD/t 30,000 28,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000

NICKEL

USD/t 2,600 2,500 2,400 2,300 2,200 2,100 2,000 1,900 1,800

ZINC

1,600 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/oz 1,900

12,000 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD$/oz 48 42 36 30 24

1,700 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/oz 1,900 1,800 1,700 1,600 1,500 1,400 1,300 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/t 140 130 120 110 100 90 80 70 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 US¢/lb 35 33 31 29 27 25 23 21 19 17 15 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 MYR/t 4,000 3,600 3,200 2,800 2,400 2,000 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 Points 86 84 82 80 78 76 74 72 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13

LEAD

GOLD

SILVER

PLATINUM

1,300 18 12 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/bbl 130 120 110 100 90 80 70 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 USD/t 5,000 4,800 4,600 4,400 4,200 4,000 3,800 3,600 3,400 3,200 Jan-10Oct-10 Jul-11 Apr-12Jan-13 US¢/lb 220 200 180 160 140 120 100 80 60 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13 US¢/bu 850 800 750 700 650 600 550 500 450 400 350 Jan-10 Oct-10 Jul-11 Apr-12 Jan-13

PALLADIUM

WTI

BRENT

THERMAL COAL

COKING COAL

IRON ORE

HOT ROLLED STEEL

SUGAR

COFFEE

COCOA

COTTON

PALM OIL

SOYBEANS

WHEAT

CORN

USD DXY

Note: Prices as of 5 July 2013 Sources: Bloomberg, globalCOAL, FIS, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 15 of 18

ANZ PRICE FORECASTS
ANZ FORECAST TABLE
COMMODITY
BASE METALS Aluminium Copper Nickel Zinc Lead Aluminium Copper Nickel Zinc Lead PRECIOUS METALS Gold Platinum Palladium Silver ENERGY WTI NYMEX Dated Brent Uranium BULKS Iron ore Spot (CIF China, fines) Coking coal - Premium hard Coking coal - Semi-soft Low Val PCI coal Newc Thermal Coal (Spot) Newc Thermal Coal (JPY Contract) OTHER METALS Alumina (contract) Molybdenum Cobalt AGRICULTURE Corn Wheat Soybeans Cotton Sugar Palm Oil US¢/bu US¢/bu US¢/bu US¢/lb US¢/lb MYR/t 711 742 1,437 90 18 2,473 600 699 1,389 93 17 2,354 527 632 1,300 83 16 2,400 473 599 1,200 87 17 2,400 544 638 1,185 90 17 2,400 551 637 1,116 88 17 2,400 491 680 1,104 88 17 2,400 578 668 1,331 88 17 2,407 520 658 1,150 90 17 2,400 550 661 1,150 92 20 2,400 550 661 1,150 95 20 2,450 550 661 1,150 95 20 2,450 USD/t USD/lb USD/lb 234 10.8 12.0 215 10.4 14.6 226 10.8 14.5 234 11.0 14.5 242 11.5 14.8 251 12.0 14.9 256 12.5 15.1 234 11.0 14.5 273 13.0 15.2 281 14.5 15.6 284 14.8 15.8 276 15.0 15.0 USD/t USD/t USD/t USD/t USD/t USD/t 137 138 165 117 124 88 115 117 125 172 119 141 78 95 112 105 145 105 116 82 95 120 104 145 105 115 86 95 123 110 155 112 120 88 95 125 111 165 120 127 91 92 122 112 170 124 130 92 92 120 104 145 105 115 86 95 120 110 175 128 133 95 92 116 110 180 133 138 103 98 115 105 180 134 139 105 105 100 90 175 130 135 95 95 USD/bbl USD/bbl USD/lb 98 109 42 97 102 40 100 103 40 105 105 42 107 108 44 109 112 46 110 114 48 105 105 42 108 112 50 97 102 62 93 98 65 90 95 70 USD/oz USD/oz USD/oz USD/oz 1,599 1,572 772 28.5 1,235 1,327 659 19.7 1,150 1,390 690 18.5 1,300 1,450 735 21.6 1,330 1,490 770 22.3 1,360 1,530 800 22.8 1,380 1,560 820 23.2 1,300 1,450 735 21.6 1,400 1,590 825 23.9 1,500 1,680 810 26.5 1,500 1,625 765 27.0 1,450 1,480 700 26.5 USD/lb USD/lb USD/lb USD/lb USD/lb USD/t USD/t USD/t USD/t USD/t 0.85 3.41 7.53 0.85 0.95 1,880 7,510 1,860 2,090 0.78 3.05 6.25 0.82 0.93 1,720 6,730 1,820 2,040 0.82 3.25 6.60 0.85 0.95 1,810 7,160 1,870 2,090 0.85 3.40 6.90 0.88 0.97 1,870 7,500 1,940 2,140 0.88 3.60 7.40 0.92 1.00 1,940 7,940 2,030 2,200 0.91 3.65 7.90 0.99 1.02 2,010 8,050 2,180 2,250 0.93 3.65 8.00 1.01 1.05 2,050 8,050 2,230 2,310 0.85 3.40 6.90 0.88 0.97 1,870 7,500 1,940 2,140 0.99 3.60 8.00 1.03 1.07 2,180 7,940 2,270 2,360 1.02 2.97 7.85 1.04 1.07 2,250 6,550 2,290 2,360 1.03 2.85 7.70 1.02 1.02 2,270 6,280 2,250 2,250 1.00 2.80 7.50 1.00 1.00 2,200 6,170 2,200 2,200 Unit Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 2013F 2014F 2015F 2016F LT

16,590 13,780 14,550 15,210 16,310 17,420 17,640

15,210 17,640 17,310 16,970 16,530

Iron ore Contract (FOB Aust, fines) USD/t

Note 1:

Base/precious metals, energy and bulk forecasts are end of period prices; Agriculture forecasts are average prices Note 2: Historical data are actuals Sources: Bloomberg, ANZ Commodity Strategy

ANZ Commodity Call / 10 July 2013 / 16 of 18

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ANZ ASIA RESEARCH
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