Agriculture Brief
    June, 2009




1
Monthly Highlights




Canadian Farms incomes up 60%

Global agriculture prices move up

Current crop prospects - droughts...
Farmland Update




Canadian net Farm inComes up over 60%                   Global aGriCulture priCes move up

Statistics ...
Farmland Update (continued)




sugar. The FAO’s index, which tracks a basket of 55      commodities (such as corn, wheat ...
Farmland Update (continued)




for 400,000 hectares and Egypt has secured a                                              ...
Farmland Update (continued)




aGriCulture produCtivity Growth is
                                                       ...
Global Macro Outlook




stoCKs versus bonds in the ”lonG run”

Most investors have heard the statement that stocks       ...
Global Macro Outlook (continued)




Clearly the answer is no. Commodities, while down         the US dollar as can be see...
Global Macro Outlook (continued)




wholesale mortgage rates immediately followed,             current global bail-out ef...
Global Macro Outlook (continued)




is us aaa ratinG at risK?                                                 now Comment...
Global Macro Outlook (continued)




still be zero. If Americans were convinced of the              The	deficit	in	2019	is...
Global Macro Outlook (continued)




how biG is the us deFiCit?                                   inFlation proteCtion

Th...
Global Macro Outlook (continued)




FinanCial seCtor Compensation                            “the guys on Wall Street wit...
Appendix




                               table 3: Fao Food priCe index


                       Food Price
            ...
disClaimer:

                                  The information, opinions, estimates, projections and other materials
     ...
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Agcapita June 2009 Update

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Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with almost $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios. Agcapita publishes a monthly Agriculture Brief which deals with agriculture specific investment issues along with big picture macro-economic issues.

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Agcapita June 2009 Update

  1. 1. Agriculture Brief June, 2009 1
  2. 2. Monthly Highlights Canadian Farms incomes up 60% Global agriculture prices move up Current crop prospects - droughts in China and Argentina Water drives many cross-border farmland investments Agriculture productivity growth is now stagnant at much lower levels than the long run historic average Stocks versus bonds over the long run Emerging economies still growing over 5% per annum Is the US AAA rating at risk Contents 2 Canadian Net Farm Incomes up over 60% 2 Global Agriculture Prices Move Up 3 Current Crop Prospects 3 Cross Border Farmland Investment 4 Water and Farmland Investment 5 Agriculture Productivity Growth is Declining 6 Stocks Versus Bonds in the ”Long Run” 6 May Was Kind to Commodities 8 Emerging Economies Still growing 9 Is US AAA Rating at Risk 9 Now Commentators Want Inflation 10 Chairman of the Fed on Sixty Minutes 10 How Can Trillion Dollar Deficits be Paid 10 Money Supply Growth 11 How Big is the US Deficit? 11 How Much is a Trillion Dollars? 11 Hyperinflation – Google Trends 11 Inflation Protection 12 Financial Sector Compensation 13 Appendix 1
  3. 3. Farmland Update Canadian net Farm inComes up over 60% Global aGriCulture priCes move up Statistics Canada’s 2008 farm income report showed In 2008, United Nations Secretary General Ban Ki- that net farm income (cash receipts less operating moon predicted that world food production had to expenses and depreciation, plus income in kind) increase by 50% by 2030 if it hoped to meet rising totaled $3.3 billion up 63 per cent from 2007. Higher demand. Clearly supply continues to lag demand grain and oilseed prices through the first part of as the Food and Agriculture Organization (“FAO”) 2008 were the primary driver and so Saskatchewan, announced this month that the number of hungry with its large base of grain and oilseed production, people in the world will increase to a record 1 billion benefited the most from the stronger crop prices. this year. “We have never seen so many hungry Total farm cash receipts in Saskatchewan increased people in the world,” Jacques Diouf, director general 22 per cent, the highest of any province. of the FAO said. According to the FAO, global food prices rose in April, led by gains in oils, fats and Chart 1: Food priCe index Chart 2: Food priCe indiCes 2002-2004=100 2002-2004=100 230 300 Oils and Fats 2008 200 250 Dairy Cereals 170 200 2007 Sugar 2009 140 150 Meat 2006 2005 110 100 J F M A M J J A S O N D A M J J A S O N D J F M A Source: FAO Source: FAO 2008 2009 2
  4. 4. Farmland Update (continued) sugar. The FAO’s index, which tracks a basket of 55 commodities (such as corn, wheat and vegetable oil) foods, increased 2% between March and April, from are driving wholesale costs higher. Ultimately if this 140 to 143 (see appendix). upward pressure on wholesale costs continues (as I anticipate), the higher prices will be passed on to As part of this ongoing trend of increasing demand consumers, resulting in an acceleration of consumer for food, Bill Lapp former chief economist for food inflation.” ConAgra Foods recently observed that the wholesale cost of food products continues to rise in the US Current Crop prospeCts despite the recession. The US Producer Price Index for finished food rose by 1.0% from March to April 2009/2010 appears to be developing into another 2009. In Lapp’s opinion “…the underlying strength in challenging season for agriculture supply. Both China the wholesale price of other food products is unlikely and Argentina, typically large cereal crop producers, to abate. Just as we experienced during 2007 and are facing severe drought conditions that are early 2008, increases in the price of underlying expected to materially reduce output. Cross border Farmland investment Chart 3: Countries with poor Middle eastern countries are aggressively pursuing Crop prospeCts foreign farmland deals. What they are basically doing is importing water. In one country alone, the Sudan, South Korea has signed deals for Production 690,000 hectares, the United Arab Emirates (UAE) Africa Shortfall Driver Angola Drought Ethiopia Drought Mozambique Drought Chart 4: Farms raCe Tunisia Drought Asia/Near East 0 200 400 600 800 China Drought China 2.8m Israel Drought South Korea Jordan Drought UAE Syrian Arab Republic Drought Saudi Arabia Latin America and the Caribbean Quatar Argentina Drought Source: International Food Policy Research Institute Source: FAO Selected investors, hectares obtained, 2006-09, ‘000 3
  5. 5. Farmland Update (continued) for 400,000 hectares and Egypt has secured a experienced extreme famine and starvation in the similar deal to grow wheat. An official in Sudan last 50 years bringing food security to the top of the (traditionally known as the breadbasket of the Arab domestic political agenda. world) says his country will reserve roughly a fifth of the cultivated land in Africa’s largest country for In total, the International Food Policy Research Middle Eastern investors. It is not just Gulf states Institute (IFPRI) says between 15 million and 20 that are buying up farms. China secured the right to million hectares of farmland have been subject to grow palm oil for biofuel production on 2.8 million transactions or talks involving foreigner investors hectares in the Congo, which would be the world’s since 2006. Putting a conservative figure on the largest palm-oil plantation. It is negotiating to grow land’s value, IFPRI calculates that these deals are biofuels on 2 million hectares in Zambia. According worth $20 billion-$30 billion. to one estimate, 1 million Chinese farm laborers will be working in Africa this year. China is unique water and Farmland investment amongst the large economies of the world in having Water shortages have provided the hidden driver behind many of the foreign investor farmland deals. Peter Brabeck-Letmathe, the chairman of Nestlé, Chart 5: water use ForeCast states: “The purchases weren’t about land, but 3200 water. For with the land comes the right to withdraw Agriculture Domestic use Industry the water linked to it, in most countries essentially a 2800 freebie that increasingly could be the most valuable 2400 part of the deal.” 2000 Its important to note that producing food requires 1600 significant amounts of water as for example: – 1kg of beef meat requires 15,000 litres of water 1200 – 1kg chicken requires 4,000 litres 800 – 1kg of rice requires 1,400 litres. 400 Rather than import water, which is a bulky and 0 expensive undertaking, it is more cost effective to 1900 1925 1950 1975 2000 2025 1900 1925 1950 1975 2000 2025 1900 1925 1950 1975 2000 2025 import the crops themselves. In fact, agriculture is Extraction Consumtion Cubic km per year the biggest consumer of water in the world (74%). Source: Igor A. Shiklomanov, State Hydrological Institute If the trend towards higher protein diets continues, (SHI, St. Petersburg) and United Nations Educational, then according to the United Nations, agriculture Scientific and Cultural Organization (UNESCO, Paris), will be the overwhelming consumer of global water 1999. resources and the fastest growing category as well. 4
  6. 6. Farmland Update (continued) aGriCulture produCtivity Growth is Chart 6: produCtivity trend deClininG Global agriculture yield growth has been around 2% 5.0% pa over the last 40 years, quite a respectable long 4.0% term average. However, the long term trend disguises the fact that global yield growth has been declining 3.0% steadily and now averages only around 1% pa. 2.0% 1.0% 0.0% 1980 1985 1990 1995 2000 2005 Source: USDA, Agcapita (15 year trailing average) 5
  7. 7. Global Macro Outlook stoCKs versus bonds in the ”lonG run” Most investors have heard the statement that stocks stocks. If the theory is that stocks outperform, then outperform in the long run. Invariably there is never to be completely sure your investment horizon might a clear answer to the obvious question “How long is just have to be a century. Source: Michael Santoli, the long run?”. The theory is certainly not universally Barrons. true over 10 and 20 year periods and even over some 30-year periods. may was Kind to Commodities In an extreme case, bonds outperformed stocks from Commodities and hard assets in general did 1803 to 1871. From the chart, stocks beat bonds extremely well in May. The CRB, an index of major from 1932 to 2000 but in the periods from 1968 to commodities, jumped approximately 12% in May – its 2009, 1803 to 1871, and 1929 to 1949 bonds beat best month since 1974. Crude was up approximately 28% in May - its best month since March 1999. Chart 7: stoCKs vs. bonds Stepping back from the short-term trend that seems to be developing, how do commodities look over the last 10 years. There has been much discussion 1,000 about the recent “collapse” in commodity prices, Equity vs. 20-Year Bond Relative Return however is that actually the case? Most Recent Period of bond Outperformance 100 Bonds Beat Chart 8: reCord month For Crb Bonds Beat Stocks Stocks 1968-2009 255 1929-49 CRB Index 250 10 245 Bonds Beat Stocks 240 1803-71 235 1 230 225 220 0.1 1820 1840 1860 1880 1900 1920 1940 1980 2000 215 Apr25 May02 May09 May16 May23 May30 Source: Research Affiliates, cumulative relative performance 1801-2009 Source: www.agorafinancial.com 6
  8. 8. Global Macro Outlook (continued) Clearly the answer is no. Commodities, while down the US dollar as can be seen in Chart 9, and the from their recent highs, are still comfortably in an markets now seem to be accepting that we have a uptrend compared to 10 year averages. Another developing inflation problem. interesting point is how commodities have fared since the November 2008 lows. Most commodities Inflation is certainly what the heretofore quiescent rebounded significantly more than the stock markets. “bond vigilantes” are starting to predict. Bond yields in the US have moved up significantly (see Chart 10). Why have commodities rebounded more strongly The central banks of the world can control the short recently - investors are optimistic about indications end of the yield curve but not the long end, certainly that growth is accelerating in the BRIC nations not forever. (see Chinese and Indian growth rate data below). However, at Agcapita, we are also focused on the In late May the markets made a large shift in the yield inflation signal that the recent move in the CRB index demanded on US sovereign debt – with the yield on seems to contain. Monetary expansion is rapidly 10-year Treasury notes moving up to 3.75% from depreciating currencies around the globe, in particular 3.19% a week earlier, a six-month high. US 30-year table 1: Commodities priCes 2000-2009 SPX Bull Top High Date High 3/24/2000 Current High to 3/24/2000 3/24/2000 Since Achieved to High Level Current to Current S&P 500 1527.46 1565.15 10/9/2007 2% 893.06 -43% -42% Oil $27.93 $145.80 7/14/2008 422% $63.10 -57% 126% Nat. Gas $2.76 $15.41 12/13/2005 458% $3.41 -78% 24% Gasoline $0.88 $3.43 6/6/2008 292% $1.78 -48% 103% Gold $284.85 $1005.00 3/17/2008 253% $950.60 -5% 234% Silver $5.13 $20.77 3/5/2008 305% $14.77 -29% 188% Platinum $479.50 $2273.00 3/4/2008 374% $1149.00 -49% 140% Copper $0.80 $4.07 7/3/2008 408% $2.08 -49% 159% Zinc $0.51 $2.10 11/24/2006 315% $.65 -69% 28% Uranium $9.20 $136.00 6/1/2007 1378% $49.00 -64% 433% Corn $2.09 $7.11 6/27/2008 241% $4.08 -43% 96% Wheat $2.59 $14.07 2/27/2008 444% $5.27 -63% 104% Sugar $0.06 $0.20 2/3/2006 262% $0.17 -17% 199% Cocoa $1020.00 $3593.00 7/1/2008 252% $2608.00 -27% 156% Steer $72.00 $109.25 10/20/2003 52% $84.97 -22% 18% Source: www.zealllc.com 7
  9. 9. Global Macro Outlook (continued) wholesale mortgage rates immediately followed, current global bail-out efforts but the actual desired rising from below 4% to 4.74%. Two catalysts for this outcome? move in US Treasury yields were: – reduced investor demand for a $26bn issuance of emerGinG eConomies still GrowinG US government debt; and – another round of quantitative easing (“QE”) by the − India: India’s economy grew 5.8% in the first US Federal Reserve. quarter, well above the 5% expectation. UBS increased up its growth forecast for the country to QE is simply central banks printing money to buy 6.2% over the next year debt. How long can the central banks of the world − China: China’s economy will expand 7.5% this keep up QE before even the slowest participants in year, up from previous estimates of 7.1%, says the market finally grasp that inflation and currency Bloomberg - 8% in the third quarter and 9% in depreciation is not an unfortunate side effect of the the fourth quarter of 2009. table 2: Commodities priCes 2008-2009 Panic Low March Low Low-to- Panic Low March Low Best Post- Best Gain 11/20/2008 3/9/2009 Low Span to Current to Current Panic Close Since Panic S&P 500 752.44 676.53 -10% 19% 32% 934.70 38% Oil $48.90 $47.13 -4% 29% 34% $63.10 83% Nat. Gas $6.76 $3.87 -43% -50% -12% $6.85 4% Gasoline $1.07 $1.23 15% 66% 45% $1.84 133% Gold $744.60 $920.50 24% 28% 3% $992.20 33% Silver $8.92 $12.91 45% 66% 14% $14.77 66% Platinum $797.00 $1064.00 34% 44% 8% $1222.00 55% Copper $1.56 $1.62 4% 33% 28% $2.16 70% Zinc $0.51 $0.54 5% 26% 21% $0.72 53% Uranium $53.00 $42.00 -21% -8% 17% $55.00 31% Corn $3.34 $3.46 4% 22% 18% $4.08 50% Wheat $4.08 $4.53 11% 29% 16% $5.27 59% Sugar $0.13 $0.14 8% 30% 21% $0.17 46% Cocoa $2367.00 $2764.00 17% 10% -6% $3200.00 35% Steer $89.79 $81.63 -9% -5% 4% $89.78 13% Source www.zealllc.com 8
  10. 10. Global Macro Outlook (continued) is us aaa ratinG at risK? now Commentators want inFlation Bill Gross, the co-chief investment officer of Pimco High profile economists including Gregory Mankiw, predicts that the US will “eventually’ lose its AAA former White House adviser, and Kenneth Rogoff, rating. “Both the U.K. and the U.S. have prospective who was chief economist at the IMF say that the deficits of 10% annually as far as the eye can see. U.S. economy needs a dose of “good old-fashioned At some point over the next several years’ the debt inflation”. They argue that a higher inflation rate of each ‘may approach 100% of GDP, which is a would make it easier for indebted consumers and level at which country downgrades tend to occur,” governments to meet their obligations. They feel he said. Gross made this prediction after he said the inflation will “help” the economy by encouraging U.S. government will need to spend as much as $4 Americans to spend now rather than later when trillion in additional capital in an attempt to stimulate a prices go up. “I’m advocating 6% inflation for at least slowing economy. The Federal Reserve said in March a couple of years,” says Rogoff. “It would ameliorate that it would purchase $1.8 trillion in Treasuries and the debt bomb and help us work through the housing-related debt to lower borrowing costs. ‘We deleveraging process.” Given the Fed’s inability to cut need more than that,’ Gross said. Gross feels that the rates further, Mankiw says the central bank should Fed’s balance sheet ‘will probably have to grow to pledge to produce “significant” inflation. That would about $5 trillion or $6 trillion.” put the real, inflation-adjusted interest rate deep into negative territory, even though the nominal rate would Chart 9: dollar troubles Chart 10: us yields move up 90 5.60 88 Dollar Index 5.50 86 200 Day MA 5.40 84 5.30 82 5.20 5.10 80 5.00 78 4.90 76 4.80 74 4.70 72 5/01 5/03 5/05 5/07 5/09 5/11 5/13 5/15 5/17 5/19 5/21 5/23 5/25 5/29 70 Source: www.agorafinancial.com Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul 2007 2008 2009 Source: www.agorafinancial.com 9
  11. 11. Global Macro Outlook (continued) still be zero. If Americans were convinced of the The deficit in 2019 is expected by the Congressional Fed’s commitment, they’d buy and borrow more now, Budget Office to be $1,200bn. Income tax revenues he says. In advocating that the Fed commit itself to are expected to be about $2,000bn that year, so a generating some inflation, Mankiw likens such a step permanent 60 per cent across-the-board tax increase to the U.S. decision to abandon the gold standard in would be required to balance the budget. Clearly 1933. Inflationary increases in wages and the higher this will not and should not happen. So how else income taxes they generate would make it easier to can debt service payments be brought down as a pay off debt at all levels. “There’s trillions of dollars of share of GDP? Inflation will do it. But how much? debt, in mortgage debt, consumer debt, government To bring the debt-to-GDP ratio down to the same debt,” says Rogoff. “It’s a question of how do you level as at the end of 2008 would take a doubling achieve the deleveraging. Do you go through a long of prices. That 100 per cent increase would make period of slow growth, high savings and many legal nominal GDP twice as high and thus cut the debt- problems or do you accept higher inflation?” Clearly to-GDP ratio in half, back to 41 from 82 per cent. the central banks of the world have listened and A 100 per cent increase in the price level means accepted this type of advice as they are taking all the about 10 per cent inflation for 10 years. But it would steps to create this “useful inflation”. not be that smooth -- probably more like the great inflation of the late 1960s and 1970s with boom Chairman oF the Fed on sixty minutes followed by bust and recession every three or four years, and a successively higher inflation rate after Asked if it’s tax money the Fed is spending, Bernanke each recession.” In simple terms, Taylor is saying that said, “It’s not tax money. The banks have accounts 100% inflation will make the current proposed deficits with the Fed, much the same way that you have an manageable. account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of money supply Growth the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing.” Frank Shostak, adjunct scholar of the Mises Institute, “You’ve been printing money?” Pelley asked. “Well, recently stated that “The whole idea that there is the effectively,” Bernanke said. need for more inflation in order to revive the economy seems preposterous given the fact that the Fed has how Can trillion dollar deFiCits be paid been aggressively inflating since the end of last year. The yearly rate of growth of monetary expansion as Concern about US and global fiscal deficits is rising. revealed by the Fed’s balance sheet jumped from Stanford professor John Taylor was quoted in the 3.8% in August last year to 152.8% by December Financial Times on the US deficit “I believe the risk 2008. At the end of April, the yearly rate of growth posed by this debt is systemic and could do more stood at 138.6%. damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor’s considers. 10
  12. 12. Global Macro Outlook (continued) how biG is the us deFiCit? inFlation proteCtion The US Congressional Budget Office projects a What provides better inflation protection – $1.8 trillion budget deficit for the current fiscal year. government inflation protected bonds or direct Canada’s entire economic output in 2007 was $1.3 investment in hard assets. Marc Faber summed it trillion. So the US deficit could buy the entire annual up succinctly when he said “Never ask the barber if output of the Canadian economy, the ninth largest in you need a haircut. Never ask the realtor if the house the world, with enough left over to buy all of Holland’s you are considering buying is a bargain at the price annual output as well. offered. And never ask the government to calculate the rate of inflation when it can save millions of dollars how muCh is a trillion dollars? in cost-of-living adjustments.” A comparison of TIPS returns versus gold return in Chart shows what A trillion dollar pile of $1,000 bills would reach 69 Faber meant in empirical terms. If you treat gold miles into space. If you spent one million dollars as an inflation indicator TIPS underperformed gold every day since the birth of Christ, over 2,000 years materially – not surprising when the inflation rate used ago, you would be 3/4 of the way to one trillion to determine the TIP rate is calculated by the US dollars today. Now imagine $10 trillion and counting government. being printed and spent to bail-out banks and failed business globally. Chart 12: inFlation proteCtion hyperinFlation – GooGle trends - tips vs. Gold The following is the history of the use of 40% Lipper TIPS Fund Average $35,000 “hyperinflation” as a search term on google over the 35% Annual Gold Price Increase last 12 months. $10,000 Invested in TIPS $30,000 30% $10,000 Invested in Gold 25% $25,000 Chart 11: searCh volume index 20% $20,000 - GooGle trends 15% 10% $15,000 5% $10,000 0% -5% $5,000 2004 2005 2006 2007 2008 2009 -10% $0 News Reference Volume 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 Sources: Allianz Global Investors, Kitco 11
  13. 13. Global Macro Outlook (continued) FinanCial seCtor Compensation “the guys on Wall Street with the fancy cars need to learn to drive tractors and the farmers in the years Among the most profitable areas for Wall Street firms ahead will be buying the fancy cars.” was producing Asset-Backed Securities (ABSs) and Collateralized Debt Obligations (CDOs). To produce Jim Rogers ABSs and CDOs, Wall Street needed a lot of loan “product” and mortgages were a quick and large source. Chart 13: ratio oF FinanCial serviCe waGes to nonFarm private-seCtor It is simple to generate higher and higher volumes of waGes, 1910-2006 mortgage loans: simply lend at higher loan-to-value ratios, with ultra-low teaser rates, to uncreditworthy 1.8 borrowers, and don’t bother to verify their income 1.6 and assets. 1.4 The ratio of financial service wages to non-farm wages seems to indicate that the financial services 1.2 sector is about to shrink - both in absolute and 1.0 relative terms. 1910 ‘20 ‘30 ‘40 ‘50 ‘60 70 ‘80 ‘90 ‘00 ‘10 Source: Ariell Reshef, University of Virginia; Thomas Philippon, NYU; Wall St. Journal, 5/14/09 12
  14. 14. Appendix table 3: Fao Food priCe index Food Price Meat Dairy Cereals Oils and Fats Sugar Index 2000 90 94 95 85 68 116 2001 92 94 107 86 68 123 2002 90 90 82 95 87 98 2003 98 99 95 98 101 101 2004 111 111 123 107 112 102 2005 115 113 135 103 104 140 2006 122 107 128 121 112 210 2007 154 112 212 167 169 143 2008 191 128 220 238 225 182 April 208 123 242 274 268 178 May 209 132 240 267 272 171 June 214 134 241 274 283 172 July 208 134 239 257 265 202 August 197 136 227 239 222 207 September 185 137 203 226 200 192 October 163 135 185 190 153 169 November 150 127 160 178 133 172 December 143 122 142 174 126 167 2009 January 144 119 122 185 134 178 February 139 114 114 177 131 188 March 140 114 118 179 129 190 April 143 114 117 179 147 194 13
  15. 15. disClaimer: The information, opinions, estimates, projections and other materials contained here in are provided as the date hereof and are subject to change without notice. Some of the information, opinions, estimates, projections and other materials contained herein have been obtained from numerous sources and Agcapita Partners LP (“AGCAPITA”) and its affiliates make every effort to ensure that the contents hereof have been compiled or derived from sources believed to be reliable and to contain information and opinions which are accurate and complete. However, neither AGCAPITA nor its affiliates have independently verified or make any representation or warranty, express or implied, in respect thereof, take no responsibility for any errors and omissions which maybe contained herein or accept any liability whatsoever for any loss arising from any use of or reliance on the information, opinions, estimates, projections and other materials contained herein whether relied upon by the recipient or user or any other third party (including, without limitation, any customer of the recipient or user). Information may be available to AGCAPITA and/or its affiliates that is not reflected herein. The information, opinions, estimates, projections and other materials contained herein are not to be construed as an offer to sell, a solicitation for or an offer to buy, any products or services referenced herein (including, without limitation, any commodities, securities or other financial instruments), nor shall such information, opinions, estimates, projections and other materials be considered as investment advice or as a recommendation to enter into any transaction. Additional information is available by contacting AGCAPITA or its relevant affiliate directly. #400, 2424 4th street sw tel: +1.403.218.6506 www.agcapita.com Calgary, alberta t2s 2t4 Fax: +1.403.266.1541 Canada

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