Commodities Research
Deutsche Bank@
July 2006 A User Guide To Commodities
Global Markets Research
Table of Contents
Introduction .................. 1
Energy .......................... 4
Metals ........................ 20
Agriculture .................. 48
Commodity Indices .... 64
Exchanges & Turnover65
Conversion Factors..... 68
London
Michael Lewis
Global Head of Commodities
Research
Hong Kong
Amanda Lee, CFA
Strategist
Johannesburg
Gary Pearson
Strategist
Melbourne
Peter Richardson
Chief Metals Economist
Joel Crane
Strategist
New York
Adam Sieminski, CFA
Chief Energy Economist
Paris
Mark Lewis
Strategist
IMPORTANT: All prices are those current at the end of the previous trading session unless
otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other
vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and
seeks to do business with companies covered in its research reports. Thus, investors should be
aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
Independent, third-party research (IR) on certain companies covered by DBSI's research is
David Folkerts-Landau
available to customers of DBSI in the United States at no cost. Customers can access this IR at
Managing Director
http://gm.db.com, or call 1-877-208-6300 to request that a copy of the IR be sent to them.
Global Head of Research
DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN THE BACK OF THIS REPORT.

Deutsche Bank@ A User Guide To Commodities July 2006
Table of Contents
Introduction......................................................................................................... 3
Energy ..................................................................................................................... 4
Crude Oil....................................................................................................................... 5
Oil Products .................................................................................................................. 8
US Natural Gas ........................................................................................................... 10
Liquefied Natural Gas ................................................................................................. 12
US Power ................................................................................................................... 13
Coal............................................................................................................................. 15
Ethanol........................................................................................................................ 16
CO2 Emissions ........................................................................................................... 18
Metals .................................................................................................................... 20
Precious Metals
Gold ............................................................................................................................ 21
Silver........................................................................................................................... 23
Platinum...................................................................................................................... 25
Palladium .................................................................................................................... 27
Other Platinum Group Metals: Rhodium, Iridium, Ruthenium.................................... 29
Industrial Metals
Aluminium .................................................................................................................. 31
Copper ........................................................................................................................ 33
Lead............................................................................................................................ 35
Nickel.......................................................................................................................... 37
Tin............................................................................................................................... 39
Zinc ............................................................................................................................. 41
Iron Ore ...................................................................................................................... 43
Steel ........................................................................................................................... 44
Other Metals: Cobalt, Molybdenum, Uranium ........................................................... 45
Agriculture ......................................................................................................... 48
Coffee......................................................................................................................... 50
Corn ............................................................................................................................ 52
Cotton......................................................................................................................... 54
Lumber ....................................................................................................................... 56
Soybeans .................................................................................................................... 57
Sugar .......................................................................................................................... 59
Wheat ......................................................................................................................... 61
Deutsche Bank’s Commodity Index Suite .................................... 63
Commodity Exchanges & Turnover ................................................. 64
Conversion Factors ...................................................................................... 67
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July 2006 A User Guide To Commodities Deutsche Bank@
Introduction
July 11, 2006
To Deutsche Bank’s Clients:
The nationalisation of energy resources in Bolivia provides an example of how highly
st
prized commodities have become in the 21 Century. For many emerging market
economies, commodity exports constitute more than 60% of total exports.
To address the growing importance of global commodity markets we are publishing
the Deutsche Bank User Guide To Commodities. It is the second in our Commodity
Guide series following the publication of the Deutsche Bank Investor Guide To
Commodities in April 2005, which examined the properties of commodities as a
distinct asset class.
This report is divided into the four broad sections: energy, precious metals, industrial
metals and agriculture. It covers over 30 commodity markets and identifies, among
other things, the key producer and consumer nations, the commodity’s major uses
and, where applicable, the commodity exchanges on which they are traded.
I hope you, our clients, find this guide instructive.
Michael Lewis
Global Head of Commodities Research
(44 20) 7454 2166
michael.lewis@db.com
Figure 1: Commodity exporters by country Figure 2: Top 25 commodity futures
Iraq
W TI Crude Oil (NYMEX)
Nigeria
No. 1 Soybeans (DCE)
Venezuela
Soy Meal (DCE)
Kuwait
Chile
Alum inium (LME)
Zambia Corn (CBT)
Saudi Arabia Brent Crude Oil (ICE)
Russia Corn (DCE)
Iran Soybeans (CBT)
Peru Copper (LME)
Ecuador Natural Gas (NYMEX)
Bolivia Gold (TOCOM)
Brazil Gasoline (TOCOM)
Colombia Gluten W heat (ZCE)
New Zealand Gold (NYMEX)
Australia
Gasoline (NYMEX)
South Africa
Heating Oil (NYMEX)
UAE
Sugar #11 (NYBOT)
Egypt Major energy Copper (SFE)
Argentina exporting countries
Gasoline (CJCE) Annual turnover in 2005 (m ilion lots)
Canada
Major agricultural Gas Oil (ICE)
Indonesia exporting countries Energy future
Non-GMO Soybean (TGE)
India
Major metal Agricultural future
United States Cotton (ZCE)
exporting countries
Mexico Zinc (LME) Metal future
Malaysia Mixed portfolio of W heat (CBT)
commodity exports
China Fuel Oil (SFE)
0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60
Commodity exports as % of total exports (2005)
Source: DB Global Markets Research, National Sources Source: NYMEX, DCE, LME, ICE, TOCOM, CJCE, TGE, SFE, CBT, ZCE
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Deutsche Bank@ A User Guide To Commodities July 2006
Energy
Energy security and the effects of burning fossil fuels on the environment are
st
considered two of the most pressing issues facing the world economy in the 21
Century. To some, global warming and its effects on the environment pose more
dangers to mankind that the rise in terrorism.
At the same time, the surge in oil prices during this decade is encouraging the
development of alternative energy sources such as nuclear, bio-fuels, fuel cell
technology as well as renewable energies such as wind and hydro power. This is
consequently increasing the strategic importance of many commodities such as
uranium, platinum, ruthenium, water, sugar and possibly even corn.
Even so, the world economy still remains heavily dependent on crude oil. Although
OPEC oil production as a share of world oil production has fallen from 50% to
approximately 35% over the past 30 years, this ratio is expected to rise in the years
ahead. This reflects OPEC’s control of 75% of proved global oil reserves, of which
80% are located in the Middle East.
Energy markets, and specifically crude oil, are the deepest and most liquid of all the
four broad commodity sectors. The NYMEX WTI crude oil futures contract is the
most actively traded commodity future anywhere in the world. Annual turnover in
2005 reached 60 million lots, twice as liquid as its nearest rival the ICE Brent futures
contract.
Figure 1: Global oil reserves by country Figure 2: The world’s energy futures contracts
Estimated world oil reserves Saudi Arabia
OPEC-11 Contract Exchange Turnover (million lots)
1201 billion barrels (end 2005) Iran
17% Iraq WTI Crude Oil New York Mercantile Exchange 59.65
23% Kuwait
Brent Crude Oil Intercontinental Exchange 27.41
United Arab Emirates
Natural Gas New York Mercantile Exchange 19.14
Venezuela
2% Gasoline Tokyo Commodity Exchange 17.45
Libya
Nigeria Unleaded Gasoline New York Mercantile Exchange 13.17
6% Qatar
Heating Oil New York Mercantile Exchange 13.14
Algeria
Indonesia Gasoline Central Japan Commodity Exchange 11.97
11% Russian Federation Gas Oil Intercontinental Exchange 10.97
3% USA
Fuel Oil Shanghai Futures Exchange 9.81
Other
3% Kerosene Central Japan Commodity Exchange 9.79
Kerosene Tokyo Commodity Exchange 7.30
7%
10% Crude oil Tokyo Commodity Exchange 1.98
8% Brent New York Mercantile Exchange 0.99
8%
Natural Gas Intercontinental Exchange 0.44
Source: BP Statistical Review, DB Global Markets Research Source: NYMEX, ICE, TOCOM, SFE, CJCE (2005 data)
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July 2006 A User Guide To Commodities Deutsche Bank@
Crude Oil
History & properties
Petroleum, or crude oil, is a complex mixture of various hydrocarbons found in the
upper layers of the Earth’s crust. The word petroleum derives from the Greek petra
meaning rock and elaion meaning oil. In ancient Mesopotamia around 4000BC, a
tarry crude was used to make ships watertight as well as being used as an adhesive.
Crude oil was also used in the construction of the pyramids, embalming by the
Egyptians and as a body paint by native Americans. It was believed to have medicinal
th
benefits in ancient Persia and Sumatra. The first oil wells were drilled in 4 Century
China using bits attached to bamboo poles. However, the commercial drilling of oil
began in Titusville, Pennsylvania by Edwin Drake in 1859.
There are over 130 different grades of crude oil around the world. Their grades are
mainly a function of sulphur content and gravity. The highest quality crudes are those
with low sulphur content and a high specific gravity. Specific gravities measure the
weight of the oil relative to water. The higher the API gravity (measured in degrees,
º), the lighter the compound. Figure 2 identifies the main benchmark crude oils
according to specific gravity and sulphur content.
On this basis West Texas Intermediate (WTI), the US benchmark crude oil and
Malaysia’s Tapis are the best quality crude oils in the marketplace. The heavier, sour
crudes from the United Arab Emirates and Mexico are of a poorer quality and
consequently trade at a discount to WTI.
Sweet crudes are defined as those with a 0.5% sulphur content or less while sour
crudes have a sulphur content of 1.5% or more. The area between 0.5-1.5% is
sometimes referred to as intermediate sweet or intermediate sour. The reference to
sweet and sour relates to the early days of crude oil production as one of the easiest
ways to judge the sulphur content of crude oil and products was by taste and smell.
Major producers
Saudi Arabia is the world’s largest producer as well as exporter of crude oil. Although
the US is the world’s third largest oil producing nation, it is also the world’s largest
importer of oil, representing 26% of cross-border trade in oil. The largest oil reserves
exist in Saudi Arabia, Iran and Iraq. In terms of annual production, OPEC’s market
share has declined from about 50% in 1973 to around 35% today. However, this
share is expected to rise as non-OPEC oil production flattens and given that the 11
OPEC member countries hold 75% of the world’s proved crude oil reserves. .
Figure 1: Crude oil price since 1960 Figure 2: Different crude oil grades compared
80 4
Crude oil price (USD/barrel) Cheap
70
Maya (Mexico)
3 Arab Heavy (Saudi)
60
SOUR
BCF-17 (Venezuela) Kuwait (Kuwait)
50
Dubai (UAE)
SULPHUR CONTENT (%)
Bow River (Canada)
2 Basrah (Iraq)
40 Mars (US) Saudi Lt (Saudi)
30 Urals (Russia) Expensive
1 Oman (Oman)
ANS (US)
20
Brent (UK)
WTI (US)
10 Bonny Lt (Nigeria)
SWEET
Tapis (Malaysia)
Daqing (China)
0
0 15 20 25 30 35 40 45 50
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 HEAVY °API GRAVITY LIGHT
Source: DB Global Markets Research, IMF (monthly data) Source: DB Global Markets Research, EIA
Global Markets Research 5

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 3: The world’s top 10 oil producers, consumers, exporters and importers in 2005
% of % of % of % of
Producers mmb/d world Consumers mmb/d world Exporters mmb/d world Importers mmb/d world
Saudi Arabia 10.89 12% US 20.66 25% Saudi Arabia 8.84 18% US 12.99 26%
Russia 9.48 11% China 6.59 8% Russia 6.82 14% Japan 5.41 11%
US 7.47 9% Japan 5.41 7% Norway 2.69 5% China 3.14 6%
Iran 4.24 5% Russia 2.66 3% Iran 2.66 5% Germany 2.46 5%
Mexico 3.76 4% Germany 2.60 3% Venezuela 2.40 5% S. Korea 2.17 4%
China 3.62 4% India 2.59 3% UAE 2.35 5% France 1.87 4%
Norway 3.06 4% Canada 2.26 3% Nigeria 2.35 5% India 1.70 4%
Canada 3.01 3% Brazil 2.18 3% Kuwait 2.19 4% Italy 1.66 3%
Venezuela 2.97 3% S. Korea 2.17 3% Iraq 1.82 4% Spain 1.57 3%
UAE 2.88 3% Saudi Arabia 2.06 3% Algeria 1.71 3% Taiwan 1.00 2%
World 84.3 100% World 83.7 100% World 50.0 100% World 50.0 100%
Source: International Energy Agency, BP Statistical Review, DB Global Markets Research
Major consumers
The United States remains the largest consumer of oil, accounting for 25% of world
consumption. In 2005, China overtook Japan to become the world’s second largest
th
oil consumer. Since 1995 India has moved from being the 13 largest oil consuming
th
nation to the world’s 6 . Brazil has also moved up the league table of oil consuming
th th
nations from 12 to 8 place over the same period. Looking ahead, China is expected
to post the largest incremental increase in oil demand during the current decade and
consequently overtaking the US from the previous decade, Figure 4.
Major uses
Fuel products constitute the vast majority of demand for petroleum. Gasoline is used
to power automobiles, light trucks, boats, recreational vehicles and farm equipment.
Kerosene is used for commercial aircraft, while distillate fuel oils such as diesel and
heating oil are used to power buses, trucks, trains and machinery, heat buildings and
fire industrial boilers. Liquefied petroleum gases (LPGs) such as propane, ethane and
butane are used for domestic heating and cooking, farming and as a gasoline
alternative. Petroleum is also used in the petrochemical production of solvents,
lubricating oils, waxes, asphalt, fertilizers, pesticides, synthetic rubber and plastics.
Figure 4: Oil demand growth in key consuming nations (million b/d)
Country 1990-2000 Country 2000-2010E
US 2.69 China 3.86
China 2.23 US 2.14
India 1.13 India 0.78
S. Korea 1.09 Saudi Arabia 0.50
Brazil 0.72 Iran 0.44
Saudi Arabia 0.67 Indonesia 0.39
Indonesia 0.45 Canada 0.36
Spain 0.42 Thailand 0.34
Japan 0.35 Russia 0.33
Thailand 0.32 Taiwan 0.31
Source: IEA, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 5: The price of crude oil relative to income Figure 6: Crude oil turnover by exchange
G7 per capita income divided by the price of oil
70 Annual turnover in m illions of lots for:
2500
Brent futures contract
Oil price decline helps to 60 (ICE)
boost the purchasing power W TI futures contract
2000
of a G7 consumer (NYMEX)
Number of barrels of oil
50
1500 40
30
1000
Higher oil prices cut 20
the purchasing power
500
of a G7 consumer
10
0 0
1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: DB Global Markets Research, IMF Source: NYMEX, ICE
Exchange traded
Crude oil futures and options are traded primarily on the New York Mercantile
Exchange (NYMEX) and the Intercontinental Exchange (ICE). Brent crude is generally
accepted to be the world benchmark, and is used to price two-thirds of the world’s
internationally traded crude oil supplies. In the US, the West Texas Intermediate
(WTI) crude oil is the benchmark.
Price conventions & codes
Crude oil is priced in US dollars per barrel. The Bloomberg tickers for the WTI and
Brent crude oil generic one month futures contracts are CL1 <CMDTY> and CO1
<CMDTY> respectively. The Bloomberg ticker for the DB Crude Oil total returns and
excess returns indices are DBRCLTR <INDEX> and DBRCL <INDEX> respectively.
The Bloomberg ticker for the DB Crude Oil-Optimum Yield total returns and excess
returns indices are DBLCOCLT <INDEX> and DBLCOCLE <INDEX> respectively.
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Deutsche Bank@ A User Guide To Commodities July 2006
Oil Products
History & properties
The commercial drilling of crude oil by Edwin Drake in 1859 was first seen as an
opportunity for kerosene to compete with whale oil in the illumination market.
However, technical progress in petroleum refining from simple distillation (boiling the
crude oil in a vacuum) to the extraction of gasoline and other light products (via more
sophisticated thermal and catalytic cracking and reforming) for transportation and
heating purposes led to rapid demand growth for crude oil.
The different types of oil products contained in a barrel of crude oil will each have
their own boiling temperature. As a result, oil products are lumped into groups called
fractions, which are determined according to that product’s boiling point, Figure 1.
Figure 1: Refined products by type
Boiling Point (ºF) Fraction
Less than 90ºF Liquefied Petroleum Gases: Butanes, Propanes & Lighter
90-220ºF Gasoline
220-315ºF Naphtha
315-450ºF Kerosene, Jet Fuel
450-800ºF Diesel, Gas, Fuel & Heating Oils
800ºF and higher Residue
Source: Petroleum Refining, William Leffler, DB Global Markets Research
Since there are more than 130 different crude oil grades, refineries can be optimised
to produce “cuts” or fractions that are best suited to the characteristics of the crude
oil being run and the type of products that are most in demand in the local markets.
Figure 2 outlines the proportion of the various petroleum products that are derived
from a US and European barrel of crude oil.
Figure 2: A barrel of US and European crude oil: the petroleum products
spectrum
100% Light Propane/LPGs
Gasoline/Naphtha
Kerosene/Jet Fuel
Yields in % volume on crude intake
80%
Diesel/Heating Oil
Residual Fuel Oil
Other Oils
60%
40%
20%
Heavy
0%
US (WTI) Europe (Brent)
Source: EIA, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Refined products by use
Not surprisingly different parts of the crude oil barrel have different uses. The US
tends to favour crudes with a high gasoline cut and favours complex refineries that
can produce clean, light products. Also, the US emphasises liquefied petroleum gas
(LPG). Propane is a liquid under low pressure, is easy to burn and is typically used in
locations where natural gas is not available. It is also used as a chemical feedstock
for making ethylene and propylene. Butane is used predominantly as a motor
gasoline blending component as it is good for starting cold engines. Normal butane is
also used as a chemical feedstock.
Terminology for the other products can vary around the world. For example, heating
oil in the US is referred to as “gas oil” in Europe. Jet fuel in the US and Europe is
referred to as kerosene in Asia. The term gasoline is used globally in spark-ignited
combustion engines although “petrol” is a more common term for gasoline in the UK.
In the US, gasoline is often referred to as “gas” but should not be confused with
natural gas. The term distillate normally refers to middle distillate fuels which
incorporate the middle cuts of the refined barrel: jet fuel, diesel, gas oil, fuel oil and
heating oil.
Figure 3: Refined product futures turnover by contract
20
Annual turnover (futures only, m illion lots 2005)
15
10
5
0
G asoline G asoline H eating oil G asoline G as O il Fuel O il K erosene K erosene
(T O C O M ) (N Y M E X) (N Y M E X) (C JC E ) (IC E ) (S FE ) (C JC E ) (T O C O M )
Source: TOCOM, NYMEX, CJCE, ICE, SFE
Prices
The Bloomberg tickers for the one month generic heating oil and gasoline futures
contract are HO1 <CMDTY> and HU1 <CMDTY> respectively. The Bloomberg
codes for the DB Heating Oil total returns and excess returns indices are DBRHOTR
<INDEX> and DBRHO <INDEX> respectively. The Bloomberg codes for the DB
Heating Oil-Optimum Yield total returns and excess returns indices are DBLCOHOT
<INDEX> and DBLCOHOE <INDEX> respectively.
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Deutsche Bank@ A User Guide To Commodities July 2006
US Natural Gas
History & properties
Natural gas is a colourless, odourless, highly flammable gaseous hydrocarbon which
gives off a great deal of energy when burned. Although it consists primarily of
methane, it can also contain ethane, propane, butane and pentane. It is relatively
clean burning, emitting relatively low levels of harmful combustion by-products.
Although there is some evidence for the abiogenic existence of methane in the
earth’s mantle, most geologists favour the view that gas, like coal and oil, was
formed via the compression and decomposition of organic material over long periods
of time. It is typically found in the same geologic formations below the earth’s
surface that trap oil, that is, in permeable mineral layers that are capped by non-
porous sedimentary rock.
Natural gas seeps were first discovered in Iran between 6000 and 2000BC. These
naturally occurring surface leaks could sometimes be ignited by lightning strikes. A
similar ‘burning spring’ was found in Greece around 1000BC and became the site of
the Temple of Oracle in Delphi. Around 500BC, the Chinese used natural gas to boil
sea water to produce fresh water. The first gas well in the US was drilled in 1825,
and connected by pipeline to users in Fredonia, New York.
Like oil, natural gas is described as sweet or sour depending on, in the case of gas, its
hydrogen sulphide content. Hydrogen sulphide is highly poisonous and is removed
during processing. Because methane is odorless, natural gas distribution companies
add a harmless, but, stinky chemical (mercaptans) to the gas prior to distribution to
end-users so that consumers can more easily detect leaks. Gas is also described as
wet or dry depending on the presence of natural gas liquids (NGLs) and other energy
gases. If natural gas is greater than 90% methane then it is referred to as dry. Wet
gas can be “stripped” of the NGLs (or LPGs) at facilities called gas processing plants.
Finally, natural gas is described as associated or non-associated depending upon
whether or not it is associated with significant oil production. In the US, only 20% of
natural gas reserves are believed to be oil associated.
Major producers
The US and the countries of the former Soviet Union are the largest producers of
natural gas. The Russian natural gas industry is dominated by Gazprom, which
controls 95% of production. In the US, Texas, Louisiana, Alaska, New Mexico and
Oklahoma hold more than half of the country’s reserves. Other major producers
include Canada, the United Kingdom, Algeria, Iran and Norway. World natural gas
reserves are estimated at 5,210.8 trillion cubic feet (Tcf). Europe and the former
Soviet Union together hold 42% of world reserves, while 34% is located in the
Middle East.
Figure 1: The world’s top 10 natural gas producers, consumers, exporters and importers in 2005
% of % of % of % of
Producers bcf/d world Consumers bcf/d world Exporters bcf/d world Importers bcf/d world
Russia 57.9 22% US 61.3 23% Russia 18.7 27% US 11.4 16%
US 49.9 19% Russia 39.2 15% Canada 9.1 13% Japan 7.8 11%
Canada 17.9 7% UK 9.2 3% Norway 7.8 11% Germany 6.8 10%
UK 8.5 3% Canada 8.8 3% Algeria 6.2 9% Italy 6.4 9%
Algeria 8.5 3% Iran 8.6 3% Turkmenistan 4.1 6% Ukraine 5.2 7%
Iran 8.4 3% Germany 8.3 3% Indonesia 3.6 5% France 4.4 6%
Norway 8.2 3% Japan 7.8 3% Trinidad 2.8 4% S. Korea 3.2 5%
Indonesia 7.4 3% Italy 7.6 3% Qatar 2.7 4% Spain 3.1 4%
Saudi Arabia 6.7 3% Ukraine 7.0 3% Malaysia 2.4 3% Turkey 2.6 1%
Netherlands 6.1 2% Saudi Arabia 6.7 3% Netherlands 2.3 2% Mexico 1.0 1%
Total 266.4 100% Total 266.0 100% Total 69.8 100% Total 69.8 100%
Source: BP Statistical Review, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: World natural gas reserves by country Figure 3: US natural gas price since 1990
16
US natural gas price (USD/mmBtu)
Russia
25%
27% 14
Iran
Qatar 12
Saudi Arabia 10
UAE
8
US
3% 6
Nigeria
3%
Algeria 4
3%
Other 2
16%
4%
4% 0
1990 1992 1994 1996 1998 2000 2002 2004 2006
15% World total: 6,112Tcf
Source: DOE/EIA, (2005) Source: DB Global Markets Research, Bloomberg
Major uses
Burning natural gas is relatively clean, producing 30% less carbon dioxide than
petroleum and 45% less than coal. The major use for gas is in homes, businesses
and factories for heating, cooking and cooling. Natural gas is increasingly used as a
source of energy for electricity generation via gas turbines and steam turbines.
Compressed natural gas is used as a vehicle fuel for public transport buses. In
addition, natural gas is used as a base ingredient in the manufacture of ammonia, anti-
freeze, fabrics, glass, steel, plastics and paint.
Regulatory matters
Natural gas was originally considered an undesirable by-product of oil production. As a
gas, it is more difficult to transport than oil and it was often flared-off, or burned at the
wellhead as a disposal method. Gas flares are still common in Africa, the Middle East
and parts of the Former Soviet Union that do not yet have the infrastructure for the
utilisation of gas. Rules that prohibit flaring are now becoming increasingly common.
Around 1950, the development of high-strength steel pipelines made it possible to
transport natural gas over much longer distances and this, combined with the
development of offshore drilling, has resulted in a significant increase in the use of
natural gas. Gas tends to be much more highly regulated than oil (in many countries)
because of the tendency for natural gas transportation and distribution to be
concentrated in the hands of fewer suppliers.
Exchanges & prices
Natural gas futures are traded on the New York Mercantile Exchange (NYMEX) in
units of 10,000 million British thermal units (mmBtu), for delivery via the Sabine Pipe
Line Co. Henry Hub in Louisiana. There is also a natural gas futures contract listed on
the ICE, but turnover in 2005 was negligible. The Bloomberg ticker for the one month
generic US natural gas futures contract is NG1 <CMDTY>.
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Deutsche Bank@ A User Guide To Commodities July 2006
Liquefied Natural Gas (LNG)
History & properties
Liquefied natural gas, or LNG, is a clear, colourless liquid formed when natural gas is
cooled to -162°C. It is odourless, non-toxic and non-corrosive. Liquefaction takes
place in independent units called trains, and begins by removing impurities which
would freeze at low temperatures. The gas is then cooled under high pressure,
condensed, and then reduced in pressure for storage. The resulting liquid is 1/600th
of the volume of natural gas, and about half as dense as water. Purified LNG is
usually composed of 90% methane and small amounts of ethane, propane, butane
and heavier alkanes.
The history of natural gas liquefaction dates back to Michael Faraday, who
th
experimented with the process in the 19 Century. The first compressor refrigeration
machine was built in 1873 in Munich by German engineer Karl Von Linde.
Subsequently, LNG plants were built in West Virginia in 1912 and Cleveland, Ohio in
1941. The first LNG tanker, the Methane Pioneer, transported LNG from Louisiana to
the United Kingdom in 1959, demonstrating the viability of long-range transport. In
1964, Algeria became the first continuous large-scale exporter.
Major producers
The world’s largest LNG producers and exporters are Indonesia and Malaysia, with
exports going to Japan, South Korea and Taiwan. Algeria supplies Europe and the US,
while Qatar exports to Spain and India in addition to Japan and South Korea. Russia
and Iran possess the world’s largest proved gas reserves, but do not yet have
liquefaction capability, although there are LNG projects currently underway in both
countries.
Major uses
LNG’s primary benefit is its ease of transportation and density of storage. It can be
transported efficiently over long distances where pipelines are not an option. Specially
designed seagoing vessels incorporate double hulls and specialized storage tanks. At
the receiving terminal, LNG can be stored or reheated into gaseous form and
distributed via pipeline.
Exchange traded
The trade in LNG is conducted via long-term sale and purchase agreements (SPA)
which typically extend for over 15 years.
Figure 1: Major exporters & importers of LNG Figure 2: US LNG natural gas storage
Exporters bcf/d Share of world total (%) Importers bcf/d Share of world total (%) bcf/d 1995 2000 2005 2010E 2015E
Indonesia 3.05 17% Japan 7.39 40% 25
Malaysia 2.76 15% S. Korea 2.95 16%
Qatar 2.62 14% Spain 2.12 12% 20
Algeria 2.49 14% US 1.73 9%
Australia 1.44 8% France 1.24 7% 15
Trinidad 1.36 7% Taiwan 0.93 5%
Nigeria 1.17 6% India 0.58 3% 10
Oman 0.89 5% Turkey 0.47 3%
Brunei 0.89 5% Belgium 0.29 2% 5
UAE 0.69 4% Italy 0.24 1%
Total 18.28 100% Total 18.28 100% 0
Atlantic Basin Demand Pacific Basin Demand
Source: BP Statistical Review, DB Global Markets Research (2005 data) Source: US DOE/EIA, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
US Power
History & properties
The origins of the US power industry date back to 1882 and the establishment of the
Pearl Street electricity generating station in New York city. Electricity is measured in
watts and watt-hours and unlike other commodities can not be stored.
The market for electricity involves three activities: production, transmission and
distribution. The US operates approximately 10,000 power plants with an average
thermal efficiency of 33%. Efficiency has not changed much since 1960 due to the
long life of a power plant. The average age of a power plant in the US is 30 years. In
terms of transmission, the US operates 275,000 miles of high voltage power lines
arranged in three networks. The average loss in transmission is around 5-7%.
Distribution involves the handoff from high voltage lines to low voltage distribution
networks to deliver power to the consumer. In 1940, 10% of the US’s total energy
consumption was used to produce electricity. Today it is 40%. Annual revenues for
electrical utilities are around USD350bn or 2.5% of GDP. Electricity is also one of the
most capital intensive sectors in the US with current assets valued at USD1.3tn. The
US power market is fragmented along regional lines and according to Regional
Reliability Councils.
The move towards deregulation of the US power sector began in the 1970s. Trust in
the industry was damaged by the Three Mile Island accident in 1979. Moreover the
1970 Clean Air Act as well as the subsequent two oil price shocks encouraged the
more efficient use of fossil fuels as well as the development of alternative energy
source. Technological improvement in power generation also occurred at a time
when there were large price discrepancies in electricity prices across the US,
suggesting that price discrimination was occurring in the industry.
Figure 1: The US power market by region
ECAR Region is dominated by coal power (83%)
MAAC Region has a relatively high nuclear component (38%)
SERC Region has more natural gas capability (12%) than other regions
Source: DOE/EIA, DB Global Markets Research
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Deutsche Bank@ A User Guide To Commodities July 2006
Today there are three types of utility companies in the US:
1) Publicly owned utilities
These are owned and operated by municipalities, states or the federal government.
They produce electricity and sell it to consumers or other utilities at cost.
2) Investor Owned Utilities (IOUs)
These are owned by private shareholders. Most IOUS are beginning to divest their
energy production and focus on distribution. Around three-quarter of the US power
grid is owned by these companies.
3) Cooperative utilities
These were created by the government to provide electricity to rural areas deemed
unprofitable by the IOUs. They are government subsidised non-profit entities free
from state or local taxes.
There are two basic types of power generators today and they can be distinguished
by the type of load they handle namely base or peak load. Baseload plants are
typically steam driven. These must be run at full capacity and are difficult to start up
and shut down. Peak load plants usually use gas turbines. They operate at a lower
efficiency, but can be started up and shut down rapidly.
Exchange traded
In February 2003, the Commodity Futures Trading Commission (CFTC) approved
NYMEX’s monthly, weekly and daily Pennsylvania/New Jersey/Maryland (PJM)
electricity futures contracts. The monthly contract started trading on April 11, 2003
and is based on the electricity prices in the Pennsylvania/New Jersey/Maryland (PJM)
Western hub at 111 delivery points, mainly on the utility transmission systems of PPL
Corporation and FirstEnergy Corporation. This contract is priced in US dollars per
megawatt hour. At the beginning of this year, NYMEX launched a further five
electricity futures contracts. The new contracts are: ISO New England peak daily
futures, NYISO A peak daily futures, NYISO G peak daily futures, NYISO J peak daily
futures and Cinergy hub peak daily futures.
The PJM Interconnection administers the largest electricity market in the world
serving more than 44 million customers in Delaware, Illinois, Indiana, Kentucky,
Maryland, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and
Washington D.C. The power companies within PJM operate more than 1,000
generating units, representing more than 137,000 megawatts of capacity fuelled with
coal, natural gas, oil, nuclear and hydro power. This generating and distribution
network is also tied to the power grids of the Midwest, New York State and other
areas in the mid-Atlantic states.
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July 2006 A User Guide To Commodities Deutsche Bank@
Coal
History & properties
Coal is a fossil fuel. It is combustible, sedimentary, organic rock which is composed
mainly of carbon, hydrogen and oxygen. Coal is classified into four types, lignite, sub-
bituminous, bituminous and anthracite according to their carbon and water content.
The harder the coal, the less moisture it has and the more efficient when it is used as
a fuel. Lignite has the lowest carbon content and heating value and alongside sub-
bituminous coals are used primarily for electricity generation. Anthracite has the
highest carbon content with the lowest amount of moisture and hence has the
highest energy content of all coals. It is used in high-grade steel production.
Bituminous, which is sub-divided into thermal and metallurgical coal, is used for both
electricity generation and for making coke in steel production.
Historians believe coal was first used commercially in China for smelting copper and
th
for casting coins around 1000BC. The demand for coal surged during the 19 Century
during the industrial revolution and at the end of that century, the development of the
coal industry became closely tied to electricity generation when the first coal-fired
electrical power plant came into operation in New York in 1882.
Major producers
The largest coal producing countries are China, USA, India, Australia and South Africa.
China is not only the world’s largest producer, but, also the largest consumer of coal.
Two-thirds of the worl’s coal reserves are located in Europe, Eurasia and the Asia
Pacific. On current technologies, there is enough coal to last for another 200 years.
Major uses
Coal is primarily used to generate electricity, accounting for almost forty percent of
electricity production worldwide. Large quantities of coal are also used in the
manufacture of steel. It is also used in cement manufacturing as a liquid fuel.
Exchange traded
Coal futures are traded on the New York Mercantile Exchange (NYMEX). The contract
trades in units of 1,550 tons and is priced in dollars per ton. The two main coal price
contracts are the Tradition Financial Services (TFS) API#2 and API#4 Coal Indices.
The API#2 is the arithmetic average of the McCloskey Coal Information Services
(MCCIS) NWE Steam Coal Marker, which tracks steam coals used for electricity
generation and the International Index compiled by Energy Argus in its COAL Daily
index. This tracks shipments of coal to northwest Europe. The TFS API#4 price is
the arithmetic average of three prices: the FOM Richards Bay price published in the
McCloskey Fax, the Spot Coal Price Index published in the South African Coal Report
and the FOB Richards Bay published in Energy Argus’s COAL Daily.
Figure 1: The world’s top 10 coal* producers, consumers, exporters and importers in 2004
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (Mn) world Consumers (Mn) world Exporters (Mn) world Importers (Mn) world
China 1,956 42.2% China 1,428 30.7 Australia 219 29.0 Japan 183 24.2
US 933 20.1% US 885 19.0 Indonesia 107 14.2 Korea 79 10.5
India 373 8.0% India 343 7.3 China 86 11.4 Taiwan 60 7.9
Australia 285 6.1% S. Africa 158 3.4 S. Africa 67 8.8 Germany 39 5.1
S. Africa 238 5.1% Japan 143 3.0 Russia 65 8.6 UK 36 4.8
Russia 210 4.5% Russia 142 3.0 Colombia 52 6.9 Russia 27 3.6
Indonesia 129 2.7% Poland 73 1.5 US 43 5.7 India 27 3.6
Poland 100 2.1% Korea 71 1.5 Canada 27 3.6 US 25 3.3
Kazakhstan 83 1.8% Germany 58 1.2 Kazakhstan 22 2.9 Netherlands 23 3.0
Ukraine 62 1.3% Australia 56 1.2 Poland 19 2.5 Spain 23 3.0
Total 4,629 100% Total 4,646 100% Total 754.3 100% Total 754.9 100%
Source: World Coal Institute (* includes both steam and coking coal)
Global Markets Research 15

Deutsche Bank@ A User Guide To Commodities July 2006
Ethanol
History & properties
Ethanol also known as ethyl alcohol, grain alcohol or simply alcohol, is a clear,
colourless, flammable liquid. The natural production of ethanol occurs through the
fermentation of carbohydrates. Archaeological evidence of alcoholic beverages has
been found in 9,000-year-old pottery remains from northern China. However,
th
distillation was developed in the Middle East in the 8 century and pure ethanol was
first prepared in 1796 by Johann Tobias Lowitz by charcoal filtering.
Ethanol’s chemical formula was determined by Nicolas-Théodore de Saussure in
1808, and it was first created synthetically in 1826. Attention in recent years has
been focused on the use of ethanol not just as a pollution-reducing additive to
gasoline, but, also as an alternative renewable fuel. In Brazil, ethanol is made mostly
from sugar while corn is the main feedstock for ethanol in the US.
Major producers & consumers
The United States and Brazil are the dominant producers of fuel ethanol, each
producing approximately 4,200 million gallons, equivalent to 70% of world production
in 2005. Brazil leads the world in the use of fuel ethanol, where it can be produced
competitively as long as oil prices stay above USD30 per barrel. Brazilian gasoline is
required by law to contain at least 25% ethanol. As of 2005, 80% of all new cars in
Brazil have flexible-fuel engines, which can run on any combination of gasoline and
ethanol.
Figure 1: The world’s top 10 ethanol producers in 2005
Millions gallons % of world
US 4,264 35%
Brazil 4,227 35%
China 1,004 8%
India 449 4%
France 240 2%
Russia 198 2%
Germany 114 1%
South Africa 103 1%
Spain 93 1%
UK 92 1%
World 12,150 100%
Source: Renewable Fuels Association
Major uses
The largest single use of ethanol is as a motor fuel and fuel additive. The increasing
use of ethanol as a gasoline additive in the US was enhanced in 2006 by government
action to ban the use of methyl tert-butyl ether (MTBE) as an oxygenate fuel additive,
which has been responsible for groundwater and soil contamination. Ethanol
produces fewer emissions of carbon monoxide and oxides of nitrogen, and can be
produced at lower cost than gasoline.
In the US, all vehicles can run on a 10% ethanol blend, E10, but it is commonly
available only in the US Midwest. However, ethanol production is heavily subsidised
by up to USD0.51 per gallon yet ethanol only has 66% of the energy content of
gasoline. Other countries requiring various ethanol blends include Argentina, Thailand
and India. Brazil is the most efficient producer of ethanol, by virtue of the fact that its
primary feedstock is sugar cane rather than corn. For each unit of energy used in
production, sugar cane yields 8.3 units, while corn yields only 1.3 units. One difficulty
with ethanol is that it cannot be transported by pipeline due to its chemical volatility.
16 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: Corn use in US ethanol production Figure 3: Ethanol price since 2005
4.5
1400 Corn use in US ethanol production Ethanol price (USD/gallon)
(Bushels million )
4.0
1200
3.5
1000
3.0
800
2.5
600
2.0
400
1.5
200
1.0
0
May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06
1980 1983 1986 1989 1992 1995 1998 2001 2004
Source: National Corn Growers Association Source: DB Global Markets Research, Bloomberg
Exchange traded
Ethanol futures contracts have been traded on the Chicago Board of Trade
(CBOT) since 2005. Ethanol futures are also listed on the CME and NYBOT.
The CBOT ethanol futures contract calls for delivery of 29,000 gallons of
denatured fuel ethanol, and is quoted in US dollars and cents per gallon. There
is virtually no liquidity in this contract. The Bloomberg ticker for the CBOT
generic one month futures contract for ethanol is DL1 <CMDTY>.
Global Markets Research 17

Deutsche Bank@ A User Guide To Commodities July 2006
CO2 Emissions
History and properties
CO2 is the molecular formula for carbon dioxide, an atmospheric gas comprising one
carbon and two oxygen atoms. CO2 was first recognized as a gas distinct from air in
th
the 17 Century by the Flemish chemist Jan Baptist van Helmont, who noticed it as a
product of combustion after burning charcoal. CO2 is one of the greenhouse gases
(GHGs) that contribute to the natural greenhouse effect, the process by which solar
energy is trapped within the Earth’s atmosphere.
In recent decades, concern has grown within the international scientific community
over the increasing concentration of GHGs within the atmosphere which is associated
with the industrialisation process of the last 250 years. Antarctic ice-core samples
indicate that CO2 concentrations in the atmosphere were fairly constant at around
280ppm (parts per million) until the Industrial Revolution, but that since 1800 there
has been a steady increase in CO2 concentrations up to today’s level of 375ppm.
This concentration continues to increase at the rate of approximately 1.5ppm per
year, and a similar pattern has been observed with concentrations of other GHGs.
The concern is that this increase in GHG concentration levels has intensified the
natural warming effect of existing GHGs in the atmosphere, and increased the
average temperature of the Earth by approximately 0.6°C between 1850 and 2000.
The International Panel on Climate Change (IPCC), a UN body set up in 1988 to
improve understanding of global warming, estimates that if the current rate of
increase in GHG emissions in general, and CO2 in particular, is not arrested, the
Earth’s average temperature will rise by between 1.4°C and 5.8°C by 2100, with
increasingly severe and potentially catastrophic consequences for the planet.
Emissions trading as a response to climate change
The recommendations of the IPCC and UNFCCC (the United Nations Framework
Convention on Climate Change) are to slow the rate of increase in and then reduction
of GHG emissions. In adopting this stance the UNFCCC has identified six GHGs. It is
these that the 1997 Kyoto Protocol commits the signatories to reducing relative to
their 1990 emissions levels. The six gases are ranked in terms of an index that
measures their global warming potential (GWP) relative to carbon dioxide. So, carbon
dioxide has a GWP of 1, methane of 23, and so on, all the way up to sulphur
hexafluoride, which is 22,200 times more powerful than carbon dioxide in terms of its
impact on the Earth’s temperature, when released into the atmosphere, Figure 3.
Figure 1: Annual CO2 emissions limits on EU Member States’ industries in Phase 1 (2005-2007) of the ETS
Member CO2 Member CO2 Member CO2
State allowance % of total State allowance % of total State allowance % of world
Germany 499.0 22.8 Belgium 62.9 2.9 Estonia 19.0 0.9
UK 245.3 11.2 Finland 45.5 2.1 Lithuania 12.3 0.6
Poland 239.1 10.9 Portugal 38.2 1.7 Slovenia 8.8 0.4
Italy 232.5 10.6 Denmark 33.5 1.5 Cyprus 5.7 0.3
Spain 174.4 8.0 Austria 33.0 1.5 Latvia 4.6 0.2
France 156.5 7.1 Hungary 31.3 1.4 Luxembourg 3.4 0.2
Czech Rep. 97.6 4.4 Slovakia 30.5 1.4 Malta 2.9 0.1
Netherlands 95.3 4.3 Sweden 22.9 1.1 Total 2,191 100
Greece 74.4 3.4 Ireland 22.3 1.0
Source: European Commission, Deutsche Bank estimates (units are million metric tons)
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: Liquidity in emissions trading since Figure 3: Index of global warming potential of
December 2005 GHGs relative to CO2
100 Monthly turnover in carbon credits (million tonnes)
Greenhouse Gas Global Warming Potential (GWP)
80
Carbon dioxide(CO2) 1
60
Methane (CH4) 23
40 Nitrous Oxide (N2O) 296
20 Hydrofluorocarbons (HFCs) 12-12,000
Perfluorocarbons (PFCs) 5,700-11,900
0
Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06
Sulphur hexafluoride (SF6) 22,200
Source: RWE Source: UNFCCC
Under the Kyoto Protocol, a global scheme for trading these GHGs in units of one
tonne of CO2 equivalent (CO2e) will begin from the start of Phase 2 (2008-2012)
amongst those countries that have ratified the Protocol. There will be four main
types of carbon credits tradable under the Kyoto Protocol: Assigned Amount Units
(AAUs), Certified Emissions Reductions (CERs), Emissions Reductions Units (ERUs)
and Removal Units (RMUs). However, a European trading scheme for CO2 emissions
(the ETS) has already been operating in the European Union since 2005, and the unit
of currency in the ETS is European Allowances (EUAs).
Exchange traded & price conventions
EUAs are traded over the counter and on various European exchanges, for
example, Powernext, the EEX, and Nordpool. CERs are traded over the counter
and are already fungible with EUAs within the ETS. ERUs will also be fungible
within the ETS from 2008 onwards. CO2 emissions-allowances are priced in
euros per tonne.
Global Markets Research 19

Deutsche Bank@ A User Guide To Commodities July 2006
Precious & Industrial Metals
The annual production of aluminium, which reached 31.9 million tonnes in 2005,
exceeds the output of all other industrial and precious metals combined, with the
exception of steel. Not surprisingly, aluminium is the most actively traded metal in
the world. Moreover, the combined turnover of aluminium, copper and zinc on the
LME represents around 85% of all turnover on the exchange. Despite the
importance of steel to the world economy, it is not financially traded due to the
various grades available. Instead prices are determined by individual contracts
between producers and consumers.
For precious metals, annual production ranges from just under 20,000 tonnes for
silver to a mere 3 tonnes for iridium. Iridium is one of the rarest metals on the planet.
However, it is regularly found in meteorites and has been linked to theories on the
extinction of dinosaurs. Rhodium is also rare with annual production of just over 20
tonnes per annum. Iridium represents less than 1 part per billion of the earth’s crust
and is six times more expensive than gold.
One of the most important trends during this decade has been China’s voracious
appetite for industrial metals. This has led the country’s share of world consumption
for a wide selection of commodities to increase substantially. Since 2000, China has
increased its consumption of iron ore as a proportion of the world from 15% to
approximately 40%, Figure 3.
Figure 1: Precious metals production in 2005 Figure 2: Industrial metals production in 2005
3000 2005 production (tonnes) 35 2005 production
Silver production = 19,956 31.9 (million tonnes)
2,519
30
2500
25
2000
20
1500
15
15.0
1000
10
10.0
500
214 206 5 3.3
24 24 3 1.4 0.3
0 0
Gold Palladium Platinum Ruthenium Rhodium Iridium Aluminium Copper Zinc Lead Nickel Tin
Source: DB Global Markets Research, GFMS, Johnson Matthey Source: DB Global Markets Research, WBMS, INSG, ILZSG, Brook Hunt
Figure 3: China’s consumption* of commodities Figure 4: The top metals futures contracts
45% Contract Exchange Turnover (million lots)
2000 2001 2002 2003 2004 2005E
40% Aluminium London Metal Exchange 30.4
35% Copper London Metal Exchange 19.2
Gold Tokyo Commodity Exchange 18.0
30%
Gold New York Mercantile Exchange 15.9
25%
Copper Shanghai Futures Exchange 12.4
20%
Zinc London Metal Exchange 10.6
15%
Platinum Tokyo Commodity Exchange 8.6
10%
Silver New York Mercantile Exchange 5.5
5% Lead London Metal Exchange 4.1
0% Copper New York Mercantile Exchange 4.0
Nickel London Metal Exchange 3.5
nc
er
re
a
m
l
el
m
el
l
oi
ee
in
p
O
ick
Zi
u
e
iu
Aluminium Shanghai Futures Exchange 2.1
de
um
op
in
st
St
in
n
N
at
ru
Ir o
C
um
d
Al
s
Pl
e
es
Aluminium Osaka Mercantile Exchange 1.1
C
sh
Al
nl
ni
ai
Fi
Tin London Metal Exchange 1.1
St
Silver Tokyo Commodity Exchange 0.8
* China’s consumption as a percentage of world consumption
Source: LME, TOCOM, NYMEX, SFE, OME (2005 data)
Source: CEIC, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Gold
History & properties
Gold has the symbol Au derived from the Latin word aurum. Gold has the atomic
number 79 and was first mined in Egypt more than 4,000 years ago. It was used in
the world’s first coinage around 640BC in Lydia, in what is now modern day Turkey.
Gold is a dense, lustrous, yellow precious metal that has been used for millennia as a
store of value, as a unit of exchange and in jewellery. It is the most malleable and
ductile metal known to man such that a single gram of gold can be beaten into a
sheet of one square metre or a wire more than one mile long. Gold is a good
conductor of heat and electricity, and it is unaffected by air, heat, moisture and most
solvents. It is occasionally found in nuggets, but occurs more commonly as minute
grains between mineral grain boundaries. Historically, gold was obtained by panning
streambeds, but modern extraction techniques can economically recover gold from
ore grades as low as 0.5 parts per million. Gold was used as a benchmark for the
world monetary system between 1944 and 1971, when the Bretton Woods
agreement fixed the world’s paper currencies to the US dollar, which, in turn, was
tied to gold. The collapse of this system at the end of 1971 heralded not only freely
floating exchange rates, but, also gold prices.
Major producers
South Africa, Australia and the US account for approximately one-third of the world’s
annual gold production. The bulk of South African production takes place in the
Witwatersrand region of the Transvaal, near Johannesburg. South Africa’s reserves
are estimated at 40,000 tonnes, or 40% of the world’s total. In the US, the largest
gold producing states are Nevada, followed by Alaska and California.
Major holders
Global central banks remain a powerful community in terms of the world gold market.
Their combined holdings amounted to 30,733 tonnes as of April 2006. The largest
holder of reserves is the United States with 8,135 tonnes, equivalent to 75.1% of
their total reserves. Only Greece has a higher proportion at 79.8%. The average gold
to total reserve ratio across all central banks is 11.2%. In 2004, Greece became a
signatory to the 2004 Central Bank Gold Agreement (CGBA). Currently the 15
signatories of the CGBA hold an average of just over 50% of their reserves in gold.
This compares with the European Central Bank’s gold to total reserve holdings of just
15%. While European central banks are ‘overweight’ gold, aggressive central bank
intervention across Asia over the past few years has led to a dramatic increase in
their FX reserves. This has led their gold to total reserve ratios to fall steadily in this
part of the world. In the case of Japan and China, their gold to total reserve ratios
currently stand at 1.8% and 1.4% respectively.
Figure 1: The world’s top 10 gold producers and consumers* in 2005
Producers Tonnes % of world Consumers Tonnes % of world
South Africa 296.3 11.8% India 694.5 21.2%
Australia 252.9 10.0% Turkey 303.4 9.2%
US 251.7 10.0% Italy 284.1 8.7%
China 224.1 8.9% China 257.0 7.8%
Peru 207.8 8.2% US 219.8 6.7%
Russia 175.5 7.0% Japan 166.7 5.1%
Indonesia 166.6 6.6% Saudi Arabia** 124.6 3.8%
Canada 118.5 4.7% Indonesia 86.5 2.6%
Uzbekistan 79.3 3.1% S. Korea 80.1 2.4%
Papua New Guinea 68.8 2.7% Malaysia 74.3 2.3%
World 2,519 100% World 3,280 100%
* World consumption data includes the use of scrap; ** Saudi Arabia data includes Yemen
Source: GFMS
Global Markets Research 21

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Gold demand by first use Figure 3: Top 10 gold producing companies
9% Jewellery Company Tonnes Moz Share of world total (%)
3%
Electronics Newmont 199.7 6.42 7.9%
6% AngloGold Ashanti 191.8 6.17 7.6%
Dentistry
1% Other industrial uses Barrick Gold 169.8 5.46 6.7%
3%
Coins
Gold Fields 130.6 4.2 5.2%
2%
2% Placer Dome 113.4 3.65 4.5%
Medals
Freeport McMoRan 86.8 2.79 3.4%
Bar hoarding
7%
Harmony 80.5 2.59 3.2%
Net producer hedging
67% Navoi Metals and Mining 59.0 1.9 2.3%
Implied net investment
Cia Minas Buenaventura 56.4 1.81 2.2%
Rio Tinto 53.7 1.73 2.1%
Source: DB Global Markets Research, GFMS (2005 data) Source: DB Global Markets Research, GFMS (2005 data)
Major uses
The majority of gold consumption relates to jewellery demand. Alloys of gold with
silver, copper and other metals are often used because pure gold is too soft for
ordinary use. When used in jewellery, it is measured in karats (k), with pure gold
being 24k, and lower numbers indicating higher copper or silver content. Gold has
some industrial uses, due to its electrical conductivity, resistance to corrosion,
reflectiveness, and other physical and chemical properties. It is used in electrical
connectors and contacts, electronics, restorative dentistry, medical applications,
chemistry and photography. However, its cost relative to other metals limits the
more wider use of gold for industrial purposes.
Exchange traded & price conventions
Gold is traded on both TOCOM and the COMEX division of the New York Mercantile
Exchange (NYMEX). The Bloomberg ticker for the spot gold price is GOLDS
<CMDTY>. The Bloomberg codes for the DB Gold total returns and excess returns
indices are DBRGCTR <INDEX> and DBRGC <INDEX> respectively. The Bloomberg
codes for the DB Gold-Optimum Yield total and excess returns indices are
DBLCOGCT <INDEX> and DBLCOGCE <INDEX>.
Figure 4: Gold price since 1964 Figure 5: Gold turnover by exchange
800 Gold spot price (USD/oz) 20 Annual turnover in 2005 (Futures only, million lots)
700
600 15
500
400 10
300
200 5
100
0 0
1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 Gold (TOCOM) Gold (COMEX)
Source: DB Global Markets Research, IMF (monthly data) Source: TOCOM, NYMEX
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July 2006 A User Guide To Commodities Deutsche Bank@
Silver
History & properties
Silver has the symbol Ag derived from the Latin argentum. It has the atomic number
47. Silver is often found in close proximity to other ores, such as lead, copper and
zinc. Sterling silver is a commonly used alloy of silver containing 92.5% silver and
7.5% copper.
Silver has the highest electrical conductivity of all metals, but its cost being 50 times
more expensive than copper has prevented it from being used more widely for
electrical purposes. First mined on a large scale around five thousand years ago in an
area that is modern-day Turkey, its use was widespread due to its ease of access
since silver deposits were on or near the earth’s surface.
Major producers & consumers
Peru is the world’s largest producer of silver at 3,191 tonnes in 2005, followed by
Mexico, Australia, China and Chile. Large increases in Mexican and Australian
production in 2005 brought global production to a new high of 641.6 million ounces or
just under 20,000 tonnes. However, production decreases have occurred in Canada
and Poland. Given silver’s importance in industrial applications, the US and Japan are
the largest consumers representing more than 35% of world fabrication demand.
India and China are the world’s third and fourth largest consumers of the metal.
Figure 1: The world’s top 10 silver producers and consumers* in 2005
Producers Tonnes % of world Consumers Tonnes % of world
Peru 3,191.2 16.0 US 5,891.0 20.8
Mexico 2,870.8 14.4 Japan 4,006.1 14.1
Australia 2,407.4 12.1 India 3,200.5 11.3
China 2,102.4 10.1 China 1,726.2 6.1
Chile 1,377.9 6.9 Italy 1,530.3 5.4
Russia 1,312.6 6.6 UK & Ireland 1,461.9 5.2
Poland 1,257.7 6.3 Germany 1,275.2 4.5
US 1,219.2 6.1 Thailand 1,241.0 4.4
Canada 1,063.7 5.3 Belgium 814.9 2.9
Kazakhstan 805.6 4.0 Mexico 690.5 2.4
World 19,956 100% World 28,363 100%
* World consumption data includes the use of scrap
Source: GFMS
Major uses
Throughout history, silver has been used in the manufacture of ornaments, utensils,
jewellery and coins. However, unlike gold, silver has significantly more industrial
applications helped by the fact that silver is 50 times cheaper than gold. Due to its
conductivity silver is used extensively in the electronics sector as well as in
photography. In fact industrial uses constituted roughly two-thirds of silver demand in
2005 compared to approximately 10% for gold.
Global Markets Research 23

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Silver demand by first use Figure 3: Top 10 silver producing companies
4%
5% Jewellery & silverware Company Tonnes Moz Share of world total (%)
5% BHP Billiton 1673.4 53.8 8.4%
28% Electrical & electronics
Industrias Penoles 1474.3 47.4 7.4%
Other industrial uses
KGHM Polska Miedz 1244.1 40 6.2%
Photography Kazakhmys 637.6 20.5 3.2%
18%
Polymetal 587.9 18.9 2.9%
Implied net investment
Grupo Mexico 575.4 18.5 2.9%
Brazing alloys &
solders Cia Minas Buenaventura 475.9 15.3 2.4%
Coins & medals Rio Tinto 463.4 14.9 2.3%
20% Coeur d'Alene 426.1 13.7 2.1%
20% Xstrata 413.7 13.3 2.1%
Source: DB Global Markets Research, GFMS (2005 data) Source: DB Global Markets Research, GFMS (2005 data)
Exchange traded
Silver is traded on the COMEX division of the New York Mercantile Exchange
(NYMEX), the Chicago Board of Trade (CBOT), and the Tokyo Commodities Exchange
(TOCOM). The COMEX silver futures contract specifies delivery of 5,000 troy ounces,
and is quoted in US cents per troy ounce. The Bloomberg ticker for the spot silver
price is SLVRLN <CMDTY> and is quoted in US cents per troy ounce.
Figure 4: Silver price from 1969 Figure 5: Silver turnover by exchange
45 Silver spot price (USD/oz) 6 Annual turnover in 2005 (Futures only, million lots)
40
35
4
30
25
20
2
15
10
5
0
0 Silver (COMEX) Silver (TOCOM) Silver (CBOT)
1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Source: DB Global Markets Research, IMF (monthly data) Source: NYMEX, TOCOM, CBOT
24 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Platinum
History & properties
Platinum has the symbol Pt and the atomic number 78. The English word platinum
derives from the Spanish platina meaning little silver. Platinum is one of the noble
metals, that is very few chemicals will react with it or corrode it. It is 30 times rarer
than gold, representing around 5 parts per billion of the Earth’s crust. In addition, it is
both twice as expensive as well as heavy as gold. Like gold, platinum is pliable such
that one gram can be rolled into a fine wire over one mile long.
The metal has excellent catalytic properties and its resistance to tarnishing makes it
well suited for making jewellery. Early reference to the metal dates back to the late
th
15 Century. However, it is claimed to have been discovered by astronomer, Antonio
de Ulloa in the mid-1700s. Until recently, the definition of a metre was based on the
distance between two marks on a platinum/iridium bar housed at the Bureau
International des Poids et Mesures in Sèvres, France. Even today, the definition of a
kilogram is based on a platinum/iridium cylinder also housed in the Bureau.
Major producers
Around 80% of the world’s reserves and production of platinum occur in Southern
Africa primarily in South Africa’s Bushveld Igneous Complex, just north of Pretoria.
Platinum also occurs in Zimbabwe’s Great Dyke, which bisects the country from
north to south. Of the remaining global deposits, Russia’s are the most significant
and these are predominantly a by-product of Norilsk’s nickel deposits. The next major
producers are Canada and the US. Again this production is mostly a by-product of
nickel and palladium production. In terms of yield, 7 to 12 tonnes of ore are required
to produce just one troy ounce, or approximately 31 grams, of platinum.
Figure 1: The world’s top platinum producers and consumers in 2005
Producers Million ounces % of world Consumers Million ounces % of world
South Africa 5.10 78.5 North America 1.43 19.0
Russia 0.96 12.1 Europe 2.45 32.4
North America* 0.35 5.4 Japan 1.57 20.9
Other** 0.23 4.0 Other 2.08 27.7
World 6.64 100% World 7.53 100%
* Of which, Canada produced 0.23 Moz, ** Of which Zimbabwe produced 0.16 Moz
Source: GFMS
Figure 2: Platinum demand by first use Figure 3: Platinum turnover by exchange
6% 10.0 Annual turnover in 2005 (Futures only, million lots)
2% Gasoline autocatalysts
6% 25%
Diesel autocatalysts
7.5
5% Jewellery
Chemical
5%
Electronics
5.0
Glass
Petroleum 2.5
Other industrial demand
24%
27%
0.0
Platinium (TOCOM) Platinum (COMEX)
Source: DB Global Markets Research, GFMS (2005 data) Source: TOCOM, COMEX
Global Markets Research 25

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Major platinum producing companies Figure 5: Platinum price since 1987
Company Moz Tonnes Share of world total (%) 1400 Platinum price (USD/oz)
Anglo Platinum 2.24 69.5 33.7% 1200
Impala 1.23 38.1 18.5%
1000
Lonmin 0.96 30.0 14.5%
800
Norilsk Nickel 0.75 23.4 11.3%
Aquarius Platinum 0.23 7.2 3.5% 600
Northam 0.23 7.0 3.4%
400
Inco 0.17 5.3 2.6%
Stillwater Mining 0.13 3.9 1.9% 200
Zimplats 0.09 2.7 1.3% 0
Koryakgeoldobchya 0.09 2.7 1.3% 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Source: DB Global Markets Research, GFMS (2005 data) Source: DB Global Markets Research, Bloomberg
Major uses
Platinum is used extensively in autocatalytic applications accounting for about 50% of
total platinum usage. Its use is predominantly to clean tailpipe emissions in light duty
diesel automotives. Jewellery is the second most important demand category,
accounting for around 25% of total demand with China constituting approximately
45% of the global platinum jewellery market. Platinum is also becoming increasingly
important as an industrial metal in the chemical, electrical and glass manufacturing
industries. However, it is platinum as well as ruthenium’s role as a catalyst in
hydrogen fuel cell technology which could revolutionise demand for these metals
particularly in an environment of high oil prices. Fuel cells convert the energy of a
chemical reaction directly into electricity, with heat as a by-product. Unlike fossil
fuels, the exhaust product of a fuel cell is water.
Exchange traded & price conventions
The main exchange for trading platinum futures is the Tokyo Commodities Exchange,
but, they are also listed on the New York Mercantile Exchange. The Bloomberg ticker
for the platinum spot price is PLAT <CMDTY>.
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July 2006 A User Guide To Commodities Deutsche Bank@
Palladium
History & properties
Palladium has the symbol Pd and the atomic number 46. The English word palladium
derives from the Greek Pallas, the Greek god of wisdom. Palladium has similar
chemical attributes to platinum, although it is less dense (SG of 12 versus platinum’s
21.5) and has the lowest melting point of all the platinum group metals at 1555˚C
versus platinum’s 1768˚C. The metal has excellent catalytic properties and although
not as resistant to tarnishing as platinum, it is still well suited for jewellery. The metal
was discovered by the English chemist, William Hyde Wollaston in 1803. Until
recently, palladium chloride was used in the treatment of tuberculosis and has played
an important role in cold fusion experiments.
Major producers
The Russian mining company Norilsk Nickel is a major producer of palladium as a by-
product of its nickel operations. In 2005, it represented around 45% of world supply.
However, 80% of the world’s reserves of palladium occur in Southern Africa primarily
in South Africa’s Bushveld Igneous Complex, but, also in Zimbabwe’s Great Dyke. Of
the remaining global deposits, the United States and Canada constitute a few percent
of global reserves, with little of any consequence elsewhere in the world.
Major uses
Like platinum, palladium is used extensively in autocatalytic applications accounting
for 54% of total palladium usage. Jewellery is the second most important demand
use, accounting for around 25% of total demand, with China by far the most
important market. Not only is palladium important to the electronic and dental
industries, but, also in anti-cancer medication as it works to inhibit cell division.
Figure 1: The world’s top palladium producers and consumers in 2005
Producers Million ounces % of world Consumers Million ounces % of world
Russia 3.13 45.5 North America 2.34 29.9
South Africa 2.60 37.7 Japan 1.74 22.2
North America* 0.91 13.2 Europe 1.54 19.7
Other** 0.25 3.6 Other 2.21 28.2
World 6.89 100% World 7.83 100%
* Of which, Canada produced 0.48 Moz; ** Of which, Zimbabwe produced 0.13 Moz
Source: GFMS
Figure 2: Palladium demand by first use Figure 3: Palladium turnover by exchange
Autocatalysts
4% 7 TOCOM Annual turnover (Futures only, million lots)
14%
Jewellery
6 NYMEX
Dental
5
4% Chemical
4
Electronics
3
54%
Other industrial
10%
demand 2
1
0
1992 1994 1996 1998 2000 2002 2004
14%
Source: DB Global Markets Research, GFMS (2005 data) Source: TOCOM, COMEX
Global Markets Research 27

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Major palladium producing companies Figure 5: Palladium price since 1993
Company Moz Tonnes Share of world total (%) 1200 Palladium price (USD/oz)
Norilsk Nickel 3.1 97.4 45.5%
1000
Anglo Platinum 1.2 38.0 17.7%
Impala 0.6 18.8 8.8% 800
Stillwater Mining 0.4 13.3 6.2%
600
Lonmin 0.4 12.8 6.0%
Inco 0.2 6.8 3.2% 400
North American Palladium 0.2 5.5 2.6%
200
Aquarius Platinum 0.1 3.7 1.7%
0
Northam 0.1 3.4 1.6%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Falconbridge 0.1 2.6 1.2%
Source: DB Global Markets Research, GFMS (2005 data) Source: DB Global Markets Research, Bloomberg
Exchange traded & price conventions
Until 2000 when onerous restrictions were imposed on various contracts, the Tokyo
Commodities Exchange was the main exchange for trading palladium futures. Since
then exchange turnover is evenly split between NYMEX and TOCOM. The
Bloomberg ticker for the palladium spot price is PALL <CMDTY>.
28 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Other PGMs: Rhodium, Iridium & Ruthenium
History & properties
Rhodium has the symbol Rh and the atomic number 45. The English word rhodium
derives from the Greek rhodon meaning rose. Rhodium is an extremely rare metal,
representing less than 1 part per billion of the Earth’s crust. The metal was
discovered by the English chemist, William Hyde Wollaston in 1803, shortly after he
discovered palladium. Around 400g of rhodium can be recovered from each ton of
spent nuclear fuel. These rhodium isotopes have a half life of three years and as a
consequence need to be stored for at least 20 years.
Iridium (Ir) and ruthenium (Ru) are lesser known Platinum Group Metals, discovered in
1803 and 1844 respectively. While iridium is rare on earth, it is relatively common in
meteorites and has been linked to theories on the extinction of dinosaurs. Iridium is
also the most corrosion-resistant metal known to man. Ruthenium is a rare transition
metal of the PGM family and can also be recovered from spent nuclear fuel.
Major producers
Like the rest of the PGM complex, the majority of the world’s reserves occur in
Southern Africa. It is produced primarily as a by-product of platinum mining in South
Africa, which accounts for around 70% of world supply. This figure is expected to
increase further in the next few years.
Major uses
Rhodium is used extensively in autocatalytic applications accounting for about 85%
of total rhodium usage. Like platinum and palladium, it is predominantly used to clean
tailpipe emissions in light duty diesel automotives and “lean-burn” gasoline
automotives. The metal has also become increasingly important to the glass
manufacturing sector where it is used in the tooling for new flat screen and LCD
displays. Annual production is around 754koz.
Ruthenium’s primary demand category is the electronics sector (65%) where it
significantly increases the storage capacity of hard disk drives. It is also used in the
making of plasma display screens. Total ruthenium demand is around 788koz p.a.
Iridium is primarily used in high-strength alloys, capable of withstanding very high
temperatures. It is also used in electronics and in the manufacture of crucibles
required for the production of high quality single crystals, spark plug electrodes and
other chemical applications. Total iridium demand is around 125koz p.a.
Figure 1: The world’s top rhodium producers Figure 2: Rhodium demand according to first use
5% 2%
1%
Producers oz (000s) % of world 5% Autocatalyst
South Africa 627 70.4 Chem ical
Electrical
Russia 90 10.1
Glass
North America 20 2.2 Other
Other 154 7.3
87%
World 891 100%
Source: Johnson Matthey (2005) Source: Johnson Matthey (2005)
Global Markets Research 29

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 3: Rhodium price since 1995 Figure 2: Ruthenium demand by sector
7,000 600 Ruthenium demand by sector
Rhodium price USD/oz
Chemical
6,000 500
Electrochemical
5,000 Electronics
400
Other
4,000
(koz)
300
3,000
200
2,000
1,000 100
0 0
1995 1997 1999 2001 2003 2005 2000 2001 2002 2003 2004 2005
Source: Bloomberg Source: Johnson Matthey (2005)
Exchange traded & price conventions
The markets for rhodium, iridium and ruthenium are exceptionally small and illiquid
and as a result futures markets are non-existent. The Bloomberg tickers for the
rhodium, iridium and ruthenium Johnson Matthey spot price are JMATRHOD
<CMDTY>, JMATIRID <CMDTY> and JMATRUTH <CMDTY> respectively.
30 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Aluminium
History & properties
Aluminium has the symbol Al and atomic number 13. Its name derives from the Latin
word alumen. It is one of the most abundant metallic elements in the earth’s crust.
However, it is very rare in its free form, occurring often in volcanic mud, but more
often is found primarily as the ore bauxite. Its most important characteristics are its
resistance to corrosion and its light weight.
Aluminium is extremely difficult to separate from its ore (bauxite) and consequently
difficult to refine, requiring enormous amounts of energy. Two to three tonnes of
bauxite are required to produce one tonne of alumina (aluminium oxide) and two
tonnes of alumina are required to produce one tonne of aluminium metal. In terms of
substitutes, bauxite is the only raw material used in the production of alumina on a
commercial scale. However, large clay resources, where these are economically
feasible to exploit are possible sources of alumina. Even so, such methods would
require new plants using new technologies for these non-bauxite materials.
The basis for aluminium production today dates back to 1886 and the work of Paul
Louis Toussaint Héroult of France and Charles Martin Hall of the US. These scientists
invented a new electrolytic process whereby when aluminium oxide (alumina) was
dissolved in a bath of molten cryolite and a powerful electric current passed through
them. Molten aluminium would be then deposited at the bottom of the bath. Given
the cost of production, recovery of this metal from scrap has become an important
component of the aluminium industry. Aluminium has only been commercially
produced since 1888. Today aluminium is produced annually than all other non-
ferrous metals combined.
Major producers & consumers
The world’s major primary aluminium producers are China, Russia and Canada. In
terms of exports, Canada accounts for the lion’s share with 14.4%. Aluminium is one
of the few commodities that China exports. The main importers are the US, Japan
and Germany. However, in terms of bauxite mine production Australia, Brazil, China
and Guinea accounted for over 70% of world mine production in 2005, Figure 2. In
terms of identified bauxite resources, the US Geological Survey estimates these at
between 55 to 75 billion tonnes located in South America (33%), Africa (27%), Asia
(17%) and Oceania (13%). Alcoa Inc., Alcan Inc. and the State of China are the three
largest companies in terms of aluminium smelting, with a production share of 33% in
2005.
Figure 1: The world’s top 10 aluminium producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production* (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
China 7,806 24.5% China 7,119 22.3% Canada 2,262 14.4% US 3,691 20.2%
Russia 3,647 11.4% US 6,114 19.2% Russia 1,767 11.3% Japan 2,977 16.3%
Canada 2,894 9.1% Japan 2,276 7.1% Australia 1,588 10.1% Germany 1,771 9.7%
US 2,480 7.8% Germany 1,773 5.6% Norway 1,513 9.7% Korea 1,231 6.7%
Australia 1,903 6.0% Korea 1,201 3.8% China 1,324 8.4% Italy 890 4.9%
Brazil 1,499 4.7% Russia 1,020 3.2% Brazil 753 4.8% Belgium 763 4.2%
Norway 1,377 4.3% Italy 977 3.1% S. Africa 671 4.3% Netherlands 656 3.6%
India 942 3.0% India 941 3.0% Netherlands 482 3.1% China 637 3.5%
S Africa 851 2.7% Canada 803 2.5% Venezuela 419 2.7% Taiwan 524 2.9%
Bahrain 708 2.2% Brazil 759 2.4% Germany 392 2.5% France 517 2.8%
World 31,895 100% World 31,935 100% Total 15,678 100% Total 18,278 100%
* Mine production relates to bauxite
Source: World Bureau of Metal Statistics, May 2006; DB Global Markets Research (Units are metric tons)
Global Markets Research 31

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: The world’s top 10 bauxite producers Figure 3: Identified resources of bauxite
Mine Production Tonnes (000s) % Country Reserves (tonnes millions) Reserve Base (tonnes millions)
Australia 59,959 35.8 Guinea 7,400 8,600
Australia 5,700 7,700
Brazil 21,000 12.5
Jamaica 2,000 2,500
China 18,000 10.7 Brazil 1,900 2,500
Guinea 19,237 11.5 India 770 1,400
Jamaica 14,118 8.4 Guyana 700 900
China 700 2,300
India 12,385 7.4
Greece 600 650
Russia 8,409 5.0 Surinam 580 600
Venezuela 5,815 3.5 Kazakhstan 350 360
Kazakhstan 4,702 2.8 Venezuela 320 350
Russia 200 250
Surinam 4,052 2.4 United States 20 40
Total 167,589 100.0 Other countries 3,400 4,000
Source: World Bureau of Metal Statistics, May 2006 Source: US Geological Survey
Major uses
Most materials that claim to be aluminium are in fact an aluminium alloy. Since
aluminium weighs less than one-third as much as steel its high strength-to-weight
ratio makes aluminium suitable for the construction of aircraft, cars and train
carriages. Building construction and transportation equipment account for around
50% of aluminium consumption, Figure 4.
Exchange traded
Aluminium is traded on the London Metal Exchange (LME), the New York Mercantile
Exchange (NYMEX), the Tokyo Commodity Exchange, the Osaka Mercantile
Exchange (OME) and the Shanghai Futures Exchange (SFE). The LME aluminium
forward is quoted in US dollars per tonne. On NYMEX, aluminium is quoted in US
cents per pound. The Bloomberg ticker for the 3M aluminium forward is LMAHDS03
<INDX>. The Bloomberg ticker for the Deutsche Bank Aluminium total returns and
excess returns indices are DBRMALTR <INDEX> and DBRMAL <INDEX>
respectively. The Bloomberg ticker for the DB Aluminium-Optimum Yield total
returns and excess returns indices are DBLCOALT <INDEX> and DBLCOALE
<INDEX> respectively. LSAH <INDEX> tracks aluminium inventories on the London
Metal Exchange.
Figure 4: Aluminium consumption by first use Figure 5: Aluminium price since 1957
6% 4000 Aluminium cash price (USD/tonne)
Building & construction
20%
8% 3500
Transport
Electrical 3000
8% Packaging 2500
Consumer goods 2000
Machinery & equipment 1500
Other
1000
18%
500
31%
0
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
9%
Source: Brook Hunt (2005) Source: DB Global Markets Research, IMF (monthly data)
32 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Copper
History & properties
Copper has the symbol Cu and has the atomic number 29. The word copper
originates from the Mediterranean island of Cyprus, or Kupros in Greek, where it was
mined. It is the oldest mined commodity in the world dating back more than 10,000
years. Its reddish colour made it easy to recognise. When mixed with tin it becomes
bronze and when combined with zinc it produces brass.
In 1967, seven years before the formation of OPEC, the Intergovernmental Council of
Copper Exporting Countries (CIPEC) was founded by Chile, Peru, Zaire and Zambia.
However, its success was limited since the US, the world’s second largest producer
at the time, never became a member. The CIPEC was disbanded in 1992.
Major producers & consumers
The world’s major copper mine producing countries are Chile, the United States,
Indonesia and Peru. However, Chile accounts for almost 40% of world exports. A
recent report by the US Geological Survey indicates that global land based resources
of copper are expected to be much larger than previously published estimates of 1.6
billion tonnes. Resources in deep-sea nodules are estimated to contain 700 million
tonnes of copper according to the US Geological Survey. China is now the world’s
second largest importer of copper after the United States.
The state-owned Chilean mining company Codelco controls 12.4% of the world’s
copper production. BHP Billiton Group, Phelps Dodge Corp. and Grupo Mexico SA
are the next three largest mining companies followed by Rio Tinto plc. The top 10
copper mining companies controlled 58% of copper production in 2005. Along with
aluminium and nickel, the copper market is one of the most concentrated in the
mining sector.
Major uses
Copper is used extensively in electrical applications accounting for about 75% of total
copper usage with building construction being the single largest market. Since
copper is biostatic, that is bacteria will not grow on its surface, it is used in air-
conditioning systems and food processing systems. In terms of substitutes,
aluminium is possible for example in power cables, electrical equipment, automobile
radiators and cooling and refrigeration tubes. In addition, titanium and steel can be
used instead of copper in some heat exchanges while optic fibre substitutes for
copper in telecommunication applications. Finally, plastic can substitute for copper in
water pipe, drain pipe and plumbing fixtures.
Figure 1: The world’s top 10 copper producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
Chile 5,321 35.4% China 3,339 21.7% Chile 2,800 38.0% US 1,722 17.6%
US 1,160 7.7% US 2,270 13.5% Peru 514 7.0% China 977 14.1%
Indonesia 1,064 7.1% Japan 1,229 7.3% Zambia 423 5.7% Taiwan 640 9.2%
Peru 1,010 6.7% Germany 1,118 6.7% Kazakhstan 401 5.4% Italy 652 9.4%
Australia 927 3.2% Korea 853 5.1% Australia 315 4.3% Germany 625 9.0%
Russia 805 5.4% Russia 792 4.7% Russia 301 4.1% Korea 428 6.2%
China 651 4.3% Italy 681 4.1% Canada 297 4.0% Malaysia 281 4.1%
Canada 595 4.0% Taiwan 638 3.8% Indonesia 280 3.8% Thailand 235 3.4%
Poland 523 3.5% France 472 2.8% Japan 248 3.4% Turkey 224 3.2%
Zambia 446 3.0% Mexico 437 2.6% Belgium 241 3.3% UK 182 2.6%
World 15,012 100% World 16,793 100% Total 7374 100% Total 6,935 100%
Source: World Bureau of Metal Statistics, May 2006; DB Global Markets Research (Units are metric tons)
Global Markets Research 33

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Refined copper production by country Figure 3: Identified copper resources
Country Tonnes (000s) % Country Reserves (tonnes millions) Reserve Base (tonnes millions)
Chile 140 360
Chile 2,824 17.0
United States 35 70
China 2,583 15.5
Indonesia 35 38
Japan 1,395 8.4 Peru 30 60
US 1,260 7.6 Poland 30 48
Russia 1,008 6.1 Mexico 27 40
Germany 642 3.9 China 26 63
India 518 3.1 Australia 24 43
Canada 515 3.1 Russia 20 30
Zambia 19 35
Peru 510 3.1
Kazakhstan 14 20
Korea 509 3.1
Canada 7 20
World 16,634 100.0
Other countries 60 110
Source: World Bureau of Metal Statistics (May 2006) Source: US Geological Survey
Exchange traded & price conventions
Copper is traded on the London Metal Exchange (LME), the COMEX division of the
New York Mercantile Exchange (NYMEX) as well as the Shanghai Futures Exchange
(SFE). The copper price is quoted in USD per tonne on the LME and US cents per
pound on NYMEX. The Bloomberg ticker for the LME 3M copper forward is
LMCADS03 <INDEX>. LSCA <INDEX> tracks copper inventories on the London
Metal Exchange.
Figure 4: Copper consumption by first use Figure 5: Copper price since 1957
9% 9000
Copper cash price (USD/tonne)
Wire rod
8000
55%
Copper sheet/strip 7000
17%
6000
Copper tube
5000
Copper alloys
4000
Other 3000
11% 2000
1000
0
8% 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Source: Brook Hunt (2005 data) Source: DB Global Markets Research, IMF (monthly data)
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July 2006 A User Guide To Commodities Deutsche Bank@
Lead
History & properties
Lead has the symbol Pb and atomic number 82. The symbol Pb is derived from the
Latin word plumbum. The use of lead in pipes also gave rise to the English word for
plumber. Lead was one of the first metals to be used by man, dating back more than
5,500 years. It is usually found in ore with zinc, silver as well as copper. Lead is a
bluish-white lustrous metal. It is very soft, highly malleable, ductile, but, is a relatively
poor conductor of electricity. It is very resistant to corrosion, but, tarnishes upon
exposure to air.
Major producers & consumers
China and the USA are the world’s major producers as well as consumers of lead.
Secondary production or recycling is now widely practised and currently accounts for
more than 50 per cent of usage worldwide.
Major uses
The prime use of lead is in the manufacture of batteries. In addition, lead was widely
used in plumbing and petroleum products. However, more recently it has been
phased out of piping and petroleum because of its toxic nature.
Exchange traded
The only international exchange where lead is traded is the London Metal Exchange
(LME). The Bloomberg ticker for the 3M forward price is LMPBDS03 <INDEX>.
Figure 1: Lead price since 1957 Figure 2: Lead consumption by first use
1600 Lead cash price (USD/tonne)
Batteries: Starting,
1400 47% lighting & ignition
25% replacement
1200
1000 Batteries: Traction
800
600
Batteries: Stationary
400
16%
200
0 Non battery uses
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 12%
Source: DB Global Markets Research, IMF (monthly data) Source: Brook Hunt (2005)
Figure 3: The world’s top 10 lead producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
China 1,018 30.8% China 1,918 25.0% China 455 27.4% US 298 17.9%
Australia 715 21.6% US 1,552 20.3% Australia 245 14.8% Spain 171 10.3%
US 438 13.3% Germany 399 5.2% Canada 161 9.7% Korea 159 9.6%
Peru 319 9.7% Korea 378 4.9% Peru 115 6.9% France 106 6.4%
Mexico 157 4.8% Japan 291 3.8% Germany 97 5.8% Taiwan 98 5.9%
Canada 79 2.4% UK 271 3.5% Belgium 90 5.4% Germany 85 5.1%
Ireland 64 1.9% Spain 270 3.55 Sweden 63 3.8% Czech Rep 83 5.0%
Morocco 64 1.9% Italy 269 3.5% UK 51 3.0% India 74 4.4%
India 58 1.8% Mexico 265 3.5% USA 46 2.8% Thailand 68 4.1%
Kazakhstan 50 1.5% France 215 2.8% Korea 37 2.2% Brazil 67 4.0%
World 3,305 100% World 7,644 100% World 1,661 100% World 1,661 100%
Source: International Lead and Zinc Study Group, DB Global Markets Research (Units are metric tons)
Global Markets Research 35

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Refined lead production by country Figure 5: Identified lead resources
Country Reserves Reserve Base
Country Tonnes (000s) %
Tonnes (000s) Tonnes (000s)
China 2,383 31.3
Australia 15,000 28,000
USA 1,259 16.6
China 11,000 36,000
Germany 418 5.5
United States 8,100 20,000
Japan 275 3.6
Australia 268 3.5 Kazakhstan 5,000 7,000
Korea 257 3.4 Peru 3,500 4,000
Mexico 256 3.4 Canada 2,000 9,000
Canada 229 3.0 Mexico 1,500 2,000
Italy 211 2.8 Sweden 500 1,000
Kazakhstan 142 1.9 South Africa 400 700
World 7,605 100.0 Other countries 19,000 30,000
Source: International Lead and Zinc Study Group, May 2006 Source: US Geological Survey
In recent years, significant lead resources have been demonstrated in association
with zinc and/or silver or copper deposits in Australia, Canada, Chile, Ireland, Mexico,
Peru, Portugal and the US. Identified lead resources of the world are estimated to
total more than 1.5 billion tonnes, according to the US Geological Survey. In terms of
substitutes, plastics have reduced the use of lead in building construction, electrical
cable covering, cans and containers. Aluminium, iron, plastics and tin compete with
lead in other packaging and protective coating. Tin has replaced lead in solder for
new or replacement potable water systems in the US. In the electronics industry,
there has been a discernible move towards lead-free solders with varying
compositions of tin, bismuth, silver and copper.
Figure 6: Controlling companies in lead mining in 2005 (%)
10 Controlled market share by company (%)
Top 10 = 42% market share
World total = 3.3 million tonnes
8
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Source: Raw Materials Group, Stockholm
36 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Nickel
History & properties
Nickel has the symbol Ni and atomic number 28. Nickel is a hard, malleable, ductile
metal that has a silvery tinge that can take on a high polish. Nickel occurs in nature
principally as oxides, sulphides and silicates. Nickel is primarily used in the production
of stainless steel and other corrosion-resistant alloys. Fluctuations in its price has
been used as a barometer for world growth.
Major producers
The major nickel producing countries are Russia, Australia, Canada and Indonesia.
Ores of nickel are mined in about 20 countries on all continents, and are smelted or
refined in about 25 countries. Russia, Canada and Norway are the world’s largest
nickel exporters accounting for almost 80% of world exports.
Major uses
The chief use of nickel is in the production of stainless steel accounting for almost
70% of nickel usage in 2005. Nickel helps to improve the durability and corrosion
resistance of steel. Apart from the steel industry, nickel has uses in the production of
other steel and non-ferrous alloys including "super" alloys, often for highly specialized
industrial, aerospace and military applications. It is also used in plating and coins.
Exchange traded
Nickel is traded on the London Metal Exchange (LME) and is quoted in US dollars per
tonne. The Bloomberg ticker for the 3M forward is LMNIDS03 <INDEX>.
Figure 1: Nickel price since 1957 Figure 2: Nickel consumption by first use
25000
Nickel cash price (USD/tonne) 5%
3% Primary nickel in
stainless steel
5%
20000
Alloy steel
15000 Non-ferrous alloys
13%
10000 Plating
5000 5% Foundry
69%
0 Battery & other
1957 1962 1967 1972 1977 1982 1987 1992 1997 2002
Source: DB Global Markets Research, IMF (monthly data) Source: Brook Hunt (2005)
Figure 3: The world’s top 10 nickel producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
Russia 269.5 19.6% China 189 14.7% Russia 233 40.5% China 94 16.4%
Canada 198.0 14.4% Japan 175 13.7% Canada 129 22.4% Australia 92 16.0%
Australia 193.3 14.1% US 135 10.5% Norway 84 14.6% US 91 15.8%
Indonesia 147.7 10.8% Korea 100 7.8% UK 46 8.0% Germany 90 15.6%
N Caledonia 112.0 8.2% Germany 97 7.6% Australia 32 5.5% Japan 60 10.4%
Columbia 89.0 6.5% Taiwan 71 5.6% Finland 31 5.4% Belgium 43 7.5%
Cuba 78.0 5.7% Italy 60 4.7% China 30 5.2% Korea 43 7.4%
China 59.8 4.4% Finland 57 4.4% S. Africa 22 3.8% Taiwan 34 5.8%
S. Africa 42.7 3.1% Spain 45 3.5% Belgium 15 2.6% Sweden 29 5.0%
Brazil 36.0 2.6% Belgium 42 3.2% Brazil 12 2.1% Spain 27 4.7%
World 1,374 100% World 1,245 100% Total 575 100% Total 575 100%
Source: International Nickel Study Group, May 2006 (Units are metric tons)
Global Markets Research 37

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Refined nickel production by country Figure 5: Identified nickel resources
Country Reserves Reserve Base
Country Tonnes (000s) % Tonnes (000s) Tonnes (000s)
Russia 264 20.6 Australia 22,000 27,000
Russia 6,600 9,200
Japan 166 12.9
Cuba 5,600 23,000
Canada 140 10.9 Canada 4,900 15,000
Brazil 4,500 8,300
Australia 124 9.7
New Caledonia 4,400 12,000
China 95 7.4 South Africa 3,700 12,000
Indonesia 3,200 13,000
Norway 85 6.6 China 1,100 7,600
Philippines 940 5,200
Colombia 53 4.1
Colombia 830 1,100
New Caledonia 47 3.7 Dominican Republic 720 1,000
Venezuela 560 630
South Africa 43 3.3
Botswana 490 920
Finland 41 3.2 Greece 490 900
Zimbabwe 15 260
Other countries 2,100 5,900
Source: International Nickel Study Group, May 2006 Source: US Geological Survey
Identified land-based resources averaging 1% nickel or greater contain at least 130
million tonnes of nickel. About 60% of this resource is in laterites and the rest in
sulphide deposits. In addition, extensive deep-sea resources of nickel are in
manganese crusts and nodules covering large areas of the ocean floor, particularly in
the Pacific Ocean.
With few exceptions, substitutes for nickel would result in increased cost or a trade-
off in the performance of the final product. Aluminium, coated steels and plastics can
replace stainless steel to a limited extent in many construction and transportation
applications. Nickel-free speciality steels are sometimes used in place of stainless
steels with the power generating, petrochemical and petroleum industries. Titanium
alloys or speciality plastics can substitute for nickel metal or nickel-base alloys in
highly corrosive chemical environments. Recent costs savings in manufacturing
lithium in batteries allows them to compete against NiMH in certain applications.
Figure 6: Controlling companies in nickel mining in 2005 (%)
20 Controlled market share by company (%)
Top 10 = 70% market share
World total = 1,360,000 tonnes
15
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Source: Raw Materials Group, Stockholm
38 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Tin
History & properties
Tin has the symbol Sn and atomic number 50. The symbol Sn is derived from the
Latin word stannum, meaning dripping because the metal melts easily. Tin is one of
the earliest metals known to man and because of its hardening effect on copper, it
was used in bronze implements as early as 3500BC. It is silvery-white, lustrous grey
metallic element. It is also soft and pliable.
Major producers
The principle ore of tin is the mineral cassiterite, which is found in Indonesia, China
and Peru. World resources, principally in west Africa, south east Asia, Australia,
Bolivia, Brazil, China and Russia are sufficient to sustain recent annual production
rates well into this century.
Major uses
The main uses of tin are in soldering in the electronics industry and tinplating. It is
also commonly used in glass manufacture and super-conducting magnets.
Aluminium, glass, paper, plastic or tin-free steels can substitute for tin in cans and
containers. Other materials that substitute for tin are epoxy resins for solders,
copper-based alloys and plastics for bronze, plastic for bearing metals that contain tin
and compounds of lead and sodium for some tin in chemicals.
Figure 1: Tin prices since 1957 Figure 2: US tin consumption by finished
product
20000 Tin cash price 8% Solders
(USD/tonne) 2%
4% Chemicals
15000 Tinplate
35%
8% Bronze & brassware
Bearings
10000
Tinning
Others
5000
20%
0
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 23%
Source: DB Global Markets Research, IMF (monthly data) Source: USGS, Tin Survey 2004
Figure 3: The world’s top 10 tin producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
Indonesia 120.0 36.3% China 115.5 33.2% Indonesia 131.6 36.7% Singapore 68.6 26.9%
China 119.5 36.2% US 42.1 12.1% Singapore 64.4 18.0% US 37.5 14.7%
Peru 42.1 12.7% Japan 33.2 9.5% Malaysia 36.9 17.3% Japan 33.7 13.2%
Bolivia 18.7 5.7% Germany 19.1 5.5% Peru 32.9 9.2% Germany 20.4 8.0%
Brazil 12.6 3.8% S. Korea 17.9 5.1% Thailand 24.9 6.9% S. Korea 18.5 7.2%
Russia 5.1 1.5% Taiwan 13.5 3.9% China 22.9 6.4% Taiwan 14.1 5.5%
Vietnam 3.5 1.1% India 7.7 2.2% Bolivia 13.4 3.7% Hong Kong 8.7 3.4%
Malaysia 2.9 0.9% France 7.0 2.0% Belgium 6.8 1.9% Netherlands 8.6 3.4%
Australia 2.8 0.8% Spain 7.0 2.0% Brazil 5.4 1.5% France 7.3 2.9%
Laos 1.1 0.3% Italy 5.8 1.7% India 4,7 1.3% Spain 7.1 2.8%
World 330.3 100% World 348.3 100% Total 358.7 100% Total 255.4 100%
Source: World Bureau of Metal Statistics, May 2006 (Units are metric tons)
Global Markets Research 39

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Refined tin production by country Figure 5: Identified tin resources
Country Tonnes (000s) % Country Reserves Reserve Base
Tonnes (000s) Tonnes (000s)
China 119.4 33.8
China 1700 3500
Indonesia 78.0 22.1
Malaysia 1000 1200
Malaysia 41.2 11.7
Indonesia 800 900
USA 38.3 10.8 Peru 710 1000
Thailand 29.4 8.3 Brazil 540 2500
Bolivia 15.6 4.4 Bolivia 450 900
Russia 300 350
Brazil 9.0 2.5
Thailand 170 200
Belgium 7.7 2.2
Australia 145 300
Russia 5.4 1.5
Portugal 70 80
India 3.6 1.0 United States 20 40
World 353.3 100.0 Other Countries 180 200
Source: World bureau of Metal Statistics, May 2006 Source: US Geological Survey
Exchange traded
Tin is traded on the London Metal Exchange (LME) and is quoted in US dollars per
tonne. The Bloomberg ticker for the 3M forward is LMSNDS03 <INDEX>. However,
turnover is very illiquid, representing less than 2% of total turnover on the LME in
2005. The State of Indonesia and Minsur SA of Peru are the two leading controlling
companies of tin mining production, Figure 6.
Figure 6: Controlling companies in tin mining in 2005 (%)
20 Controlled market share by company (%)
Top 10 = 50% market share
W orld total = 143,000 tonnes
15
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Source: Raw Materials Group, Stockholm
40 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Zinc
History & properties
Zinc has the symbol Zn and atomic number 30. Centuries before zinc was recognised
as a distinct element, zinc ores were used for making brass in India and China. Zinc
was recognised as a separate metal in Europe in 1546. Englishman William Champion
established the first commercial zinc smelter in Bristol in 1747. Zinc is the fourth
most common metal in use, behind iron, aluminium and copper in terms of annual
production.
Major producers
Zinc ores are mined in more than fifty countries with Canada and Australia being the
leading exporters. China represents almost 30% of all zinc consumed in the world
nd
today and is the world’s 2 largest importer after the United States. Zinc has several
substitutes since aluminium, steel and plastics substitute for galvanised steel. Plastic
coating, paint, cadmium and aluminium alloy coating can also replace zinc for
corrosion protection.
Major uses
Roughly 55 percent of all metallic zinc produced today is used to galvanise other
metals such as steel or iron to prevent corrosion. Large quantities of zinc are used to
produce die castings, which are used extensively by the automotive, electrical and
hardware industries. Zinc is also used as a chemical compound in rubber, ceramics,
paints and agriculture. It is traded on the LME and is quoted in US dollars per tonne.
Figure 1: Zinc price since 1957 Figure 2: Zinc demand by first use
4000 Zinc cash price (USD/tonne) 4%
Galvanising
7%
3500
55%
Rolled & extruded
3000 products
13%
2500 Brass semis & castings
2000
Die-casting alloys
1500
1000 Oxides & chemicals
15%
500
Other
0
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
6%
Source: DB Global Markets Research, IMF (monthly data) Source: Brook Hunt (2005)
Figure 1: The world’s top 10 zinc producers, consumers, exporters and importers in 2005
Mine Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Production (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
China 2,485 24.9% China 3,047 28.6% Canada 527 16.9% US 700 22.4%
Australia 1,329 13.3% US 1,069 10.0% Australia 463 14.8% China 388 12.4%
Peru 1,202 12.1% Japan 602 5.7% Spain 334 10.7% Taiwan 309 9.9%
US 747 7.5% Korea 503 4.7% Netherlands 320 10.3% Italy 261 8.4%
Canada 667 6.7% Germany 501 4.7% Korea 261 8.4% Germany 246 7.9%
India 446 4.5% India 394 3.7% Finland 235 7.5% Netherlands 195 6.3%
Ireland 429 4.3% Italy 373 3.5% Mexico 189 6.1% Spain 195 6.3%
Mexico 418 4.2% Belgium 345 3.2% Norway 135 4.3% France 143 4.6%
Kazakhstan 405 4.1% Taiwan 306 2.9% China 123 3.9% India 142 4.6%
Namibia 246 2.5% France 271 2.6% Peru 101 3.2% UK 139 4.7%
World 9,979 100% World 10,643 100% Total 3,119 100% Total 3,119 100%
Source: International Lead and Zinc Study Group, May 2006 (Units are metric tons)
Global Markets Research 41

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 4: Refined zinc production by country Figure 5: Identified zinc resources
Country Tonnes (000s) % Country Reserves Reserve Base
Tonnes (millions) Tonnes (millions)
China 2,782 27.1
Canada 723 7.0 United States 30 90
Korea 647 6.3 Australia 33 80
Japan 638 6.2
Canada 11 31
Spain 500 4.9
China 33 92
Kazakhstan 363 3.5
USA 342 3.3 Kazakhstan 30 35
Mexico 339 3.3 Mexico 8 25
Germany 335 3.3 Peru 16 20
India 302 2.9
Other countries 59 87
World 10,267 100.0
Source: International Lead and Zinc Study Group, May 2006 Source: US Geological Survey
Exchange traded
Zinc is traded on the London Metal Exchange (LME) and is quoted in US dollars per
tonne. The Bloomberg ticker for the 3M forward is LMZSDS03 <INDEX>. It is the
third most liquid contract on the LME, after aluminium and copper. Figure 6 details
the major mining companies in the zinc market. Unlike nickel and copper, the share
of zinc production in the hands of the top 10 mining companies is less than 50%.
Figure 6: Controlling companies in zinc mining in 2005 (%)
7.5 Controlled market share by company (%)
Top 10 = 43% market share
W orld total = 10 million tonnes
5.0
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Source: Raw Materials Group, Stockholm
42 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Iron Ore
History & properties
Iron ore has the symbol Fe and after aluminium is the most abundant of all metals in
the Earth’s crust. The most important ores are hematite (Fe2O3, 70% iron), magnetite
(Fe3O4, 72% iron), and taconite. Hematite deposits are mostly sedimentary in origin,
often found in alternating layers of chert (a type of quartz), hematite and magnetite.
Also known as “natural ore,” certain hematite ores of high iron content can be fed
directly into blast furnaces as direct charge materials.
Taconite is a silica-rich low-grade iron ore containing up to 30% magnetite and
hematite which can be processed to yield a concentrate that contains 65% iron.
Magnetite is the most magnetic of all minerals, and is processed for steelmaking by
crushing and separating the magnetite from other minerals using a magnet. Ideally,
iron ore contains only iron and oxygen, but contaminants such as silica, phosphorus,
aluminium and sulphur are often present in varying concentrations.
Major producers
China is the largest producer of iron ore, having mined 390 million tons (mt) by natural
weight in 2005, or 26% of world production, followed by Brazil (279mt) and Australia
(263mt). China is also the largest consumer of iron ore, and the largest producer of
steel. The largest company producing iron ore is CVRD, a Brazilian mining company,
followed by the Australian companies BHP Billiton and Rio Tinto Group. Together,
these three companies supply 70% of the world’s iron ore exports.
Major uses
Almost all iron ore mined (98%) is used for steelmaking. It is either used directly or
first converted to pellets, briquettes or concentrates. Although hematite ores are
preferred, their gradual depletion has increasingly led to the production of other ores
having inferior chemical and physical properties and lower iron content, such as
pisolitic ores from Australia. Fortunately, changing blast furnace technology has made
the use of such lower quality ores possible without loss of efficiency or quality.
Other uses of iron ore include metallurgy products, magnets, auto parts, chemical
catalysts, paints, printing inks, plastics, cosmetics, artist colours, laundry blue, paper
dyeing, fertilizer, baked enamel finishes, and polishing compounds
Figure 1: Controlling companies in iron ore mining in 2005 (%)
20 C ontrolled m arket share by com pany (% )
T op 10 = 48% m arket share
W orld total = 1,305,000 tonnes
15
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Source: Raw Materials Group, Stockholm
Global Markets Research 43

Deutsche Bank@ A User Guide To Commodities July 2006
Steel
History & properties
Steel is a metal alloy made up primarily of iron with small amounts of carbon. The
addition of varying amounts of carbon allows for greater hardness and strength, but
also results in increased brittleness. Steel typically contains between 0.2% and 2.1%
carbon by weight; higher carbon content alloys are referred to as cast iron, and lower
carbon content alloys are called wrought iron. Iron is typically found in the form of iron
oxide or iron pyrite. Extraction of iron from iron oxide is performed through a process
called smelting whereby the ore is heated to a liquid state and the oxygen removed
as it bonds with carbon. Following this, the iron is reprocessed to remove excess
carbon. It may be combined with other elements, then cast into ingots, worked at
high temperature to remove cracks and form an initial shape, heat-treated, and cold
worked to produce a final shape.
An iron-nickel alloy obtained from meteorites was first used in Egypt and Sumer to
form weapons and ornaments around 4000 BC. Beginning around 3000 BC, smelted
iron was used in Anatolia, Egypt and Mesopotamia to fashion ornamental weapons.
The widespread adoption of iron, however, did not occur until approximately 1000 BC
in Greece, Mesopotamia, and central Europe. Around 200 BC in China and India,
steel was being produced by melting together wrought iron and cast iron or charcoal.
The first European blast furnaces for smelting were built in Sweden between 1150
and 1350. The modern mass-production of steel was made possible through process
innovations discovered by Henry Bessemer in 1855 and Sir William Siemens in 1867.
Major producers
The largest steel-producing country is China, with 349.4 million metric tons (mt)
produced in 2005, representing 31% of world production. Output growth was
highest in China, with production rising 25% over 2004. Other leading steel-
producing countries are Japan, which produced 112.5mt in 2005, the US (93.9mt),
and Russia (66.1mt). The world’s largest steel-producing company is Mittal Steel,
based in the Netherlands, which produced 63.0mt in 2005, followed by Arcelor S.A.
of Luxembourg, producing 46.7mt. The recently announced merger of the two will
result in a combined group, Arcelor Mittal, which would produce about 10% of the
world’s steel. Steel prices are determined by long-term physical contracts. There are
currently no futures contracts traded on steel, although the London Metal Exchange
is giving active consideration on their introduction.
Major uses
Historically, the high cost of steel meant that it was used only for limited applications
such as knives, razors, springs, swords, and other cutting tools. Today, steel is one
of the most versatile and common industrial materials. The construction industry is
the largest market, utilizing steel in modular building systems, roofing and siding
components, doors, commercial and residential framing, truss plates and connectors,
decking, bridge and highway construction, harbours, tunnels and culverts. In
automobile manufacturing, steel accounts for more than 50% of the weight of a
typical car in the form of the car body, engine, gearbox, transmission, steering,
suspension, springs, and interior. Additional transport uses include the construction
of commuter trains, rail tracks, buses, trucks, ships, aircraft and jet engines. In the
power and energy industries, steel is used in the construction of oil and gas wells,
offshore oil platforms, pipelines, and turbines for power generation. Other important
uses include electromagnets, earth-moving equipment, cranes, forklifts, farm
equipment, storage tanks, domestic appliances, cutlery, food and beverage cans,
tools, office equipment and road signs.
44 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Other Metals
Cobalt
History & properties
Cobalt is a naturally occurring element found in rocks, soil, water, plants and animals.
In its pure form, it is a silvery-blue, hard, brittle metal. It is found in the form of ores
in association with copper or nickel, and is often produced as a by-product of copper
or nickel mining.
The word cobalt is derived from the German “Kobold,” the name of a mischievous
goblin in German mythology. When yields declined in silver mines across Saxony in
th
the 16 Century, Kobold was blamed for stealing the silver and leaving behind
worthless rock. This rock was later found to be cobalt ore, and the name transferred
to cobalt metal. However, it was the Swedish chemist George Brandt who first
isolated cobalt in 1735, and showed that it was the cause of the blue colour in glass.
Cobalt has a high melting point (1493°C) and retains strength at a high temperature. It
is ferromagnetic and retains its magnetism up to 1100°C, which is a higher
temperature (Curie point) than any other material. It is stable in air and water, has low
toxicity, but is a possible carcinogen. As the main component of the vitamin B-12, it is
an essential trace element for humans.
Major producers
In the past decade, there have been major shifts in supply and demand patterns in
the cobalt market. Up until the end of the 1990s, world supply was predominately
from the copper belt of the Democratic Republic of Congo and Zambia, where it was
primarily a by-product of copper mining. However, new production is emerging in
Australia and more recently and perhaps more significantly, from China.
The Cobalt Development Institute (CDI) estimates that from 2000-2005, China
accounted for 23% of world production. This resulted in cobalt becoming
predominately a by-product of nickel (accounting for 41.5% of production in 2005)
rather than copper (7%). It is also mined as a primary product (23.6%) and other
supplies are secured from US government stockpiles and recycled materials. Most
new cobalt will originate as a by-product from nickel operations, such as Inco’s Goro
Nickel Project in New Caledonia and BHP Billiton’s Ravensthorpe Project in Western
Australia.
In 2004, the Democratic Republic of Congo produced 16,000 tons, comprising 30% of
world production. Other significant producers include Zambia, Australia and Canada.
Refinery production is not necessarily located in mining countries, as there are
significant exports of cobalt intermediates to China, Finland, Norway and Belgium for
refining. Top producers of refined cobalt metal in 2004 were China, Finland, Zambia
and Russia.
Major uses
Cobalt is an important metal used in many diverse commercial, industrial, and military
applications, but is mainly used in rechargeable batteries and super-alloys for the
aerospace sector. Cobalt is also used to make magnets and magnetic recording
media, corrosion and wear resistant alloys, catalysts for the petroleum and chemical
industries and drying agents for paints. Presently, the biggest growth for cobalt
stems from rechargeable batteries as more consumers purchase devices that require
these sources of power. In the longer term, the hybrid car and aerospace industries
are also expected to fuel additional demand. In 2005, the cobalt price averaged
USD15.80/lb.
Global Markets Research 45

Deutsche Bank@ A User Guide To Commodities July 2006
Molybdenum
History & properties
Moybdenum is used primarily as an alloying agent in steel, cast iron, and super-alloys
to enhance strength, heat and corrosion resistance. It has one of the highest melting
points of all elements. Moybdenum would have been indistinguishable from other
materials such as lead, galena and graphite in ancient times and consequently were
known collectively by their Greek word molybdos, meaning lead-like.
The most significant naturally occurring compound containing molybdenum is
molybdenite (MoS2) and occurs in association with copper sulphide. Mining of
molybdenum is therefore often performed in conjunction with copper mining.
Molybdenum ore is crushed and ground into fine particles, combined with oil, and
separated by flotation in water. The resulting molybdenite concentrate is then heated
at 600-700°C to yield molybdenum oxide, which is then sold in powder form or as
briquettes for steelmaking.
Major producers
The United States and Chile are the world’s largest molybdenum producing countries,
each producing approximately 41,500 tonnes in 2004, while China produced 29,000
tonnes. The US has the largest reserves, at 5.4 million tonnes, about 28% the world’s
total reserves, located mainly in the southwest of the country. Other reserves are
located in Canada, Central America and South America.
Major uses
Over two-thirds of all molybdenum is used in high-strength alloys with resistance to
corrosion and stress corrosion cracking. These alloys are used in oil refineries, oil
wells, pipelines, power plants, petrochemical plants, mechanical parts, high-speed
cutting tools and construction. A steel containing 2% molybdenum called Type 316 is
used in architectural applications for its resistance to wind-borne chlorides in coastal
environments, such as Canary Wharf in London and the Petronas Towers in Kuala
Lumpur.
Uranium
History & properties
Uranium is a silvery white, weakly radioactive metal which is slightly softer than steel.
It occurs naturally at low levels in virtually all rock, soil and water. All isotopes and
compounds of uranium are toxic to the kidneys and potentially carcinogenic. The
German chemist Martin Klaproth was responsible for discovering uranium in the
mineral called pitchblende in 1789. It was named after the planet Uranus, which had
been discovered eight years earlier.
Natural uranium contains about 0.71% U-235, 99.28% U-238, and about 0.0054% U-
234. Ore is crushed and ground and then treated with acid to dissolve the uranium,
which is recovered from solution. Uranium oxide concentrate (U3O8) is the form in
which uranium is typically sold. Following this, uranium must be enriched to increase
the proportion of U-235 to about 3.5% for it to be used in power generation. The
enrichment process typically consists of converting the uranium oxide to a gas,
uranium hexafluoride (UF6), and then separating the heavier isotopes using a gas
centrifuge. Because natural uranium contains such a small percentage of U-235, the
enrichment process results in the creation of large amounts of depleted uranium,
which is mostly U-238.
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 1: Uranium production by country Figure 2: The leading uranium mining companies
Canada Cameco
16%
20%
Australia
28% Rio Tinto
30%
Kazakhstan
Cogema
7% Russia
Kazatomprom
Namibia
BHP Billiton
Niger
8%
Other Others
20%
8% 9%
23%
10% 9% 12%
Source: DB Global Markets Research, World Nuclear Association (2005) Source: Industry sources
Major producers
Canada is the world’s largest producer of uranium, amounting to 14,000 tonnes of
uranium oxide in 2005, about one-third of total world production. Cameco and Rio
Tinto are the largest uranium-producing companies, each accounting for 20% of world
production. Cameco operates three mines in the Athabasca Basin in northern
Saskatchewan. Australia has the world’s largest reasonably assured reserves of
uranium, amounting to 1,142,000 tonnes, representing 30% of the world’s total.
Aside from Canada and Australia, South Africa is another major producer of uranium.
Although there are deposits in parts of Asia and Africa for example in Kazakhstan,
these regions have a low level of production reliability. Uranium is sold only to
signatories of the Nuclear Non-Proliferation Treaty, which allows international
inspectors to verify that uranium is used only for peaceful purposes
Major uses
The U-235 isotope is used as fuel for nuclear reactors and the explosive material for
nuclear weapons. Uranium enriched to about 3.5% U-235 is used for power
generation in civilian nuclear reactors, while uranium enriched to greater than 90%
U-235 is used for nuclear weapons and nuclear-powered ships and submarines.
Because of its high density, depleted (238U) uranium is used for armour-piercing
bullets, missiles and armour plating. Other uses for uranium include photographic
chemicals and radiation shielding. Over the past year, the price of U3O8 has risen
fourfold to over USD40/lb.
Global Markets Research 47

Deutsche Bank@ A User Guide To Commodities July 2006
Agriculture
Corn and wheat dominate agriculture in terms of world production, each amounting to
more than 600 million tonnes in 2005. The United States is the world’s agricultural
superpower. It is not only among the top two producers of corn, cotton, lumber and
soybeans in the world, but, it also holds a similarly dominant position in terms of
world exports for corn, cotton, soybeans and wheat. In terms of corn, the US
accounts for 70% of world exports. The EU-25 is also an important agricultural
producer. However, it is the rise of Brazil and Argentina over the past few years
which is worth watching going forward. Since 2002, the combined exports of
soybeans for these two countries have exceeded the United States. Moreover farm
subsidies in both Europe and the US are increasingly at odds with the principles of
free trade. The WTO ruling against EU sugar export subsidies last year may not only
herald lower EU agricultural exports in certain markets, but the hope of a less
distorted agricultural market in the years ahead.
Figure 1: Total world production of a selection of Figure 2: US & world exports of a selection of
agricultural commodities agricultural commodities
800 World production (million tonnes, 2005)
120 Rest of world exports (million tonnes)
687
700
620 US exports (million tonnes)
100
600
500 80
400
60
300
220 40
200
141
100 20
29
0.7
0
0
Corn Wheat Soybeans Sugar Cotton Coffee
Wheat Corn Soybeans Sugar Cotton
Source: USDA Source: USDA
While China has historically been relatively self-sufficient in agricultural commodities,
the last few years has seen a dramatic increase in its agricultural imports. One of the
major changing consumption patterns underway in the country is the move to more
high protein diets. This has been brought about by rising incomes, which have
typically led to an increasing demand for meat, Figure 3. This will increase the
country’s demand for animal feeds and on current trends is expected to push the
country into becoming a net importer of corn over the next year.
Figure 3: Meat consumption relative to incomes Figure 4: China’s trade balance in corn
14 Meat consumption as function of income 20000
Chinese net exports in
12 corn (000s tonnes)
15000
10
Kg of meat per capita
8 10000
6
5000
4
China 2006
2 0
China Korea Japan
0
0 5000 10000 15000 20000 25000 30000 -5000
GDP PPP per capita 1978 1982 1986 1990 1994 1998 2002 2006
Source: USDA Source: USDA, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Unlike other parts of the commodity complex, agricultural prices have so far not risen
to record nominal price highs during this cycle. In fact, the majority of agricultural
prices lie significantly below their all time highs hit either in the 1970s or during the
mid-1990s in the case of corn, cotton and wheat, Figure 5.
Figure 5: The scope for price appreciation in the agricultural sector
In USD All time high Date of all time high Current price* Upside price potential
Coffee 3.69 Apr-77 0.98 275%
Sugar 56.6 Nov-74 16.9 235%
Cocoa 4,363 Jul-77 1724 150%
Cotton 1.15 May-95 0.48 140%
Corn 5.48 Jul-96 2.41 130%
Wheat 7.17 Apr-96 3.82 90%
Soybeans 10.58 May-73 6.02 75%
* Current price relates to cob July 7, 2006 (all prices are nominal)
Source: DB Global Markets Research, IMF
In 2005, the two most liquid agricultural futures contracts in the world were the No. 1
soybean and soy meal futures contracts listed on the Dalian Commodity Exchange.
Dalian is China’s third largest port and located 300km south-west of the North Korean
border. China can also claim to be home to five of the top 10 most widely traded
agricultural futures contracts anywhere in the world, Figure 6.
Figure 6: The world’s top 20 agricultural futures contracts in 2005
Contract Exchange Turnover (million lots)
No. 1 Soybeans Dalian Commodity Exchange 40.04
Soy Meal Dalian Commodity Exchange 36.74
Corn Chicago Board of Trade 27.97
Corn Dalian Commodity Exchange 21.86
Soybeans Chicago Board of Trade 20.22
Strong Gluten Wheat Zhengzhou Commodity Exchange 16.62
Sugar #11 New York Board of Trade 12.37
Non-GMO-Soybean Tokyo Grain Exchange 10.96
Cotton Zhengzhou Commodity Exchange 10.86
Wheat Chicago Board of Trade 10.11
Rubber Shanghai Futures Exchange 9.50
Soybean Meal Chicago Board of Trade 8.32
Soybean Oil Chicago Board of Trade 7.68
Rubber Tokyo Commodity Exchange 7.16
Coffee Arabica Tokyo Grain Exchange 5.59
Corn Tokyo Grain Exchange 5.17
Coffee ‘C’ New York Board of Trade 3.99
Cotton #2 New York Board of Trade 3.85
Wheat Kansas City Board of Trade 3.68
Coffee Robusta EURONEXT UK 3.26
For a list of all futures turnover across all commodity sector in 2005 please go to back of this report
Source: DCE, CBT, NYBOT, ZCE, TGE, SFE, KCBT
Global Markets Research 49

Deutsche Bank@ A User Guide To Commodities July 2006
Coffee
History & properties
Coffee first came to prominence in Ethiopia more than 2,000 years ago. According to
legend, an Ethiopian goatherd witnessed the lively behaviour of his goats after they
consumed the berries of a coffee tree. He then enjoyed their unusual properties and
monks in a local monastery took this discovery and turned it into a beverage. The
first coffee houses sprang up in and around Mecca and pilgrims helped to spread the
beverage beyond Arabia. Coffee was then traded through Mocha, a port city on the
th
Red Sea coast of Yemen, which gave its name to a fine quality of coffee. By the 17
Century coffee houses had spread across Europe and had become an important
meeting place for traders and merchants. Both Lloyd’s of London and the London
Stock Exchange were founded in coffee houses.
Coffee is generally classified according to two types of bean: Arabica and Robusta.
The most widely produced coffee is arabica which makes up about 70% of world
production. It is also considered superior and trades at a premium to the robusta
bean. Robusta is the stronger of the two beans with more caffeine, a bitter taste and
is grown at lower altitudes.
Major producers & consumers
Coffee was introduced to Brazil in 1727 from French Guiana. Today, Brazil and
Colombia are the world’s largest producers of arabica coffee. 80% of all coffee
produced in Brazil is of the arabica variety. Coffee in Brazil is grown in the states of
Paraná, Espirito Santos, São Paulo, Minas Gerais, and Bahia. Vietnam, which
specializes in robusta production, has seen strong growth in its coffee production
over the past few years. Robusta coffee production is also concentrated in Indonesia
and West Africa. The EU and the US constitute 70% of world coffee consumption.
Major uses
Coffee berries are picked, defruited, dried, sorted and sometimes aged to yield the
green coffee bean. The beans are then roasted and ground before being prepared to
make coffee.
Exchange traded
Coffee futures and options are traded on the Tokyo Grain Exchange (TGE), the
Coffee, Sugar and Cocoa Exchange Division of the New York Board of Trade
(NYBOT), the EURONEXT London and the Brazilian Mercantile & Futures Exchange
(BM&F). The NYBOT Coffee “C” Futures contract calls for delivery of arabica coffee,
in a contract size of 37,500 pounds, quoted in US cents per pound. The EURONEXT
London robusta coffee futures contract calls for delivery of robusta coffee in a
contract size of 5 metric tonnes, quoted in US dollars per tonne. The TGE trades both
the arabica and robusta bean futures contracts.
Figure 1: The world’s top 10 coffee producers, consumers, exporters and importers in 2004
% of % of % of % of
Producers 000s world Consumers 000s world Exporters 000s world Importers 000s world
Brazil 33,200 30.5% US 20,783 24.4% Brazil 26,421 28.6% US 23,305 25.7%
Vietnam 15,000 13.8% Germany 10,168 11.9% Vietnam 14,859 16.1% Germany 17,632 19.4%
Colombia 11,053 10.2% Japan 7,117 8.4% Colombia 10,194 11.0% Japan 7,254 8.0%
Indonesia 6,000 5.5% Italy 5,405 6.3% Indonesia 5,456 5.9% Italy 7,064 7.8%
India 4,500 4.1% France 5,001 5.9% India 3,647 4.0% France 6,135 6.8%
Mexico 4,428 4.1% Russia 3,409 4.0% Guatemala 3,310 3.6% Spain 4,249 4.7%
Ethiopia 3,874 3.6% Spain 2,790 3.3% Peru 3,184 3.4% Belgium 4,123 4.5%
Guatemala 3,671 3.4% Canada 2,777 3.3% Honduras 2,779 3.0% UK 3,434 3.8%
Honduras 2,972 2.7% UK 2,391 2.8% Uganda 2,627 2.8% Netherlands 3,310 3.6%
Peru 2,870 2.6% Poland 2,202 2.6% Cote d’Ivoire 2,573 2.8% Poland 2,872 3.2%
Total 108,855 100% Total 85,150 100% Total 92,325 100% Total 90,703 100%
Source: USDA, International Coffee Organization (Units are 60kg bags)
Note: Russia, Serbia, Algeria & South Korea consumption data relate to 2003.
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: Coffee turnover by exchange Figure 3: Coffee prices since 1957
5 Annual turnover in 2005 (Futures only, million lots) 400 Coffee price (USc/pound)
350
4
300
3 250
200
2
150
1 100
50
0
Coffee Arabica Coffee C Coffee Robusta Coffee Robusta Coffee Arabica 0
(TGE) Arabica (EURONEXT) (TGE) (BM&F) 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
(NYBOT)
Source: TGE, NYBOT, EURONEXT, BM&F Source: DB Global Markets Research, IMF monthly data)
Price conventions & organisations
The coffee price is quoted in US cents per pound as well as US dollars per tonne.
The Bloomberg ticker for the NYBOT Coffee ‘C’ one month generic coffee futures
contract is KC1 <CMDTY>. The International Coffee Organization was set up in
London in 1963. The last International Coffee Agreement was signed in 2001 and
outlined among its objectives to promote not only coffee consumption, but, also its
quality.
Global Markets Research 51

Deutsche Bank@ A User Guide To Commodities July 2006
Corn
History & properties
Corn or maize is a native grain of the Americas. Fossils of corn pollen have been
found in lake sediment under Mexico City dating back over 80,000 years. Corn is a
hardy crop that can grow in many different parts of the world and in different
environments from sea level to as high as 12,000 feet. It can also grow in climates
with as little as 12 inches or as much as 400 inches of rainfall per annum.
Major producers & consumers
Corn is the world’s largest cereal crop in terms of global production. The United
States is the largest producer and exporter of corn in the world, representing 41% of
world production and 70% of global exports. The largest corn producing states in the
US are Iowa, Illinois, Nebraska, Minnesota and Indiana. After the US, Argentina is the
nd
second largest exporter of corn in the world. China is the world’s 2 largest
consumer of corn. The level of corn consumption is expected to rise further given
the rising per capita demand for meat and consequently the country’s growing
requirements for animal feeds.
Major uses
Corn is used primarily as livestock feed. However, corn is increasingly being used for
the production of ethanol production in the US. Since 1990, corn demand for ethanol
purposes has risen from 360 million bushels to 1,260 million bushels or just over 10%
of total corn use. The United States Department of Agriculture estimates that by
2010 this will have risen to 2.6 billion bushel per annum . Other feedstocks used for
ethanol production include sugar and sorghum.
Exchange traded
After China’s Dalian Commodity Exchange (DCE) No. 1 soybeans and soy meal
futures contracts, the Chicago Board of Trade’s corn future was the world’s third
largest agricultural futures contract in terms of annual turnover in 2005. Corn futures
are also traded on the DCE and the Tokyo Grain Exchange (TGE). Other exchanges
trading corn futures are the MidAm Commodity Exchange, Bolsa de Mercadarios &
Futuros (BM&F) in Brazil, the Budapest Commodity Exchange, the Mercado a
Termino de Buenos Aires in Argentina, EURONEXT Paris and the Johannesburg
Securities Exchange. The CBOT futures exchange calls for the delivery of 5,000
bushels of No. 2 yellow corn.
Figure 1: The world’s top 10 corn producers, consumers, exporters and importers in 2005
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
US 282,260 41% US 228,230 33% US 51,437 70% Japan 16,500 22%
China 134,000 20% China 133,000 19% Argentina 9,000 12% Korea 8,400 11%
EU-25 48,318 7% EU-25 48,500 7% China 5,000 7% Mexico 7,500 10%
Brazil 41,000 6% Brazil 40,000 6% Ukraine 2,300 3% Taiwan 4,600 6%
Mexico 19,200 3% Mexico 28,400 4% Brazil 1,100 1.5% Egypt 4,300 6%
India 14,990 2% Japan 16,600 2% Senegal 800 1.1% EU-25 3,000 4%
Argentina 14,000 2% India 14,300 2% S. Africa 750 1.0% Malaysia 2,500 3%
Romania 10,300 2% Canada 11,000 2% Paraguay 400 0.5% Colombia 2,400 3%
Canada 9,470 1% Egypt 10,100 1% EU-25 300 0.4% Iran 2,300 3%
S. Africa 7,500 1% Romania 9,700 1% Romania 300 0.4% Algeria 1,900 3%
World 686,470 100% World 689,848 100% World 73,513 100% World 74,878 100%
Source: USDA (metric tons); To convert tonnes into bushels multiply by 39.367
52 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: Corn turnover by exchange Figure 3: Corn price since 1972
30 Annual turnover in 2005 (Futures only, million lots) 600
1st nearby corn futures price
(USD/bushel)
500
20
400
300
10
200
0
100
Corn (CBT) Corn (DCE) Corn (TGE)
1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Source: CBT, DCE, TGE Source: DB Global Markets Research, Bloomberg
Price conventions
The corn price is quoted in US cents per bushel. The contract months for the Chicago
Board of Trade corn future are March, May, July, September and December. The
Bloomberg ticker for the first nearby corn futures contract is C 1 <CMDTY>. The
Bloomberg ticker for the Deutsche Bank total returns and excess returns corn index is
DBRCTR <INDEX> and DBRC <INDEX> respectively. The DB Corn-Optimum Yield
total returns and excess returns index codes are DBLCOCNT <INDEX> and
DBLCOCNE <INDEX> respectively.
Global Markets Research 53

Deutsche Bank@ A User Guide To Commodities July 2006
Cotton
History & properties
Cotton is one of the oldest fibres known to man. It has been in use for over 5,000
years and has its origins in modern day Pakistan. However, there is evidence that it
was prevalent in Mexico even earlier. The English name derives from the Arabic
word al qutun. The quality of the cloth compared to wool so impressed Europeans
th
during the 14 century that they believed cotton fibre came from lambs that grew on
trees, hence the German word “baumwolle” or “tree wool”. Today, cotton is the
most important textile fibre in the world, making up more than 40% of total world
fibre production. Cotton is classified according to the staple, grade and character of
each bale. Staple refers to the fibre length. Grade ranges from coarse to premium
and is a function of colour, brightness and purity. Character refers to the fibre’s
strength and uniformity.
Major producers & consumers
The largest producers of cotton are China, the US and India, constituting 60% of
world production. China is not only the world’s largest producer, but also the largest
consumer and hence importer of cotton. China’s cotton needs are a result of the
growth of its textile industry. The majority of Chinese cotton acreage is grown on
small farms located in the Yellow River valley, Yangtze River valley and Northwest
region. The US is the second-largest producer of cotton, and also the world’s top
exporter, making up more than a third of total world trade in cotton. The US cotton
belt extends from Florida and northern Carolina westward to California. Although
representing just 5% of world exports, Brazil is expected to move up the league table
of cotton exporters in the years ahead.
Major uses
Cotton’s properties such as softness, absorbency and insulation make it suited to a
diverse range of applications. Its fibres are used to make a variety of textiles that are
used in clothing, furnishings and industry.
Exchange traded & prices
Cotton futures and options trade on the New York Board of Trade (NYBOT) as well as
the Zhengzhou Commodity Exchange. The NYBOT Cotton No. 2 futures contract
specifies delivery of 50,000 pounds net weight, certain minimum standards of basis
grade and staple length, and is quoted in terms of US cents per pound. The five
delivery months are March, May, July, October and December. The cotton price is
quoted in US cents per pound. The Bloomberg ticker for the NYBOT one month
generic cotton futures contract is CT1 <CMDTY>.
Figure 1: The world’s top 10 cotton producers, consumers, exporters and importers in 2005
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
China 5,704 23% China 9,841 39% US 3,658 39% China 4,137 43%
US 5,201 21% India 3,440 14% Uzbekistan 1,045 11% Turkey 751 8%
India 4,137 17% Pakistan 2,564 10% Australia 675 7% Indonesia 479 5%
Pakistan 2,145 9% Turkey 1,502 6% India 544 6% Bangladesh 446 5%
Uzbekistan 1,241 5% US 1,310 5% Brazil 446 5% Thailand 435 5%
Brazil 1,023 4% Brazil 904 4% Burkina 294 3% Pakistan 370 4%
Turkey 773 3% Indonesia 484 2% Greece 294 3% Mexico 348 4%
Australia 588 2% Thailand 474 2% Mali 239 3% Russia 327 3%
Greece 430 2% Bangladesh 453 2% Syria 180 2% Taiwan 245 3%
Syria 327 1% Mexico 441 2% Kazakhstan 136 1% S Korea 239 3%
Total 24,841 100% Total 25,234 100% Total 9,387 100% Total 9,524 100%
Source: USDA (metric tons)
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July 2006 A User Guide To Commodities Deutsche Bank@
Figure 2: Cotton turnover by exchange Figure 3: Cotton price since 1957
14 Annual turnover in 2005 (Futures only, million lots) 140 Cotton price (US cents/pound)
12 120
10 100
8 80
6
60
4
40
2
20
0
0
Cotton (ZCE) Cotton #2 (NYBOT)
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Source: ZCE, NYBOT Source: DB Global Markets Research, IMF (monthly data)
Global Markets Research 55

Deutsche Bank@ A User Guide To Commodities July 2006
Lumber
History & properties
Lumber has been used for construction purposes for millennia. However, the
th
industrial harvesting of lumber had to wait until the Industrial Revolution in the 19
Century. Given lumber’s importance in the housing sector its price can be a useful
barometer of US economic activity. Lumber that can be cut into boards is classified
according to whether it is hardwood or softwood as well as rough or finished.
Hardwood lumber comes from deciduous trees including oak, gum, maple and ash.
Softwood lumber, which forms the bulk of US lumber production, is produced from
coniferous trees such as pine, cedar, hemlock, fir or spruce. Rough lumber is usually
hardwood and may be shipped directly from sawmills without further cutting or
shaping. Finished lumber is cut into standard sizes and is usually softwood. Rough
lumber is sold in random lengths and widths and is measured by the board foot (144
cubic inches).
Major producers & consumers
Canada and the United States are the world’s top two producers of softwood lumber,
together representing 55% of global production. However, the US is also the world’s
largest consumer of lumber. Canada traditionally accounts for around 50% of world
exports, but, production has recently been adversely affected by the mountain pine
beetle in British Columbia. Since Canada has responded by increasing annual
allowable cuts in order to salvage affected stands, softwood lumber production is
expected to increase in 2006.
Major uses
Primary uses for lumber include the production of homes and furniture. Softwood
lumber is used for the construction of single-family homes and low-rise buildings.
Hardwood lumber is used in the manufacture of furniture and cabinetry. Other
products include boats, stringed instruments, decking, tool handles and scaffoldings.
Residual wood from lumber production is used to make sawdust, trimmings and
wood chips. Uses for beetle-damaged wood can include wood pellets for power
generation.
Exchange traded
Lumber futures and options are traded on the Chicago Mercantile Exchange
(CME). The CME random length lumber futures contract was listed on the
exchange in 1969 for the delivery of 110,000 board feet of random length 8 foot
to 20 foot softwood 2x4s, with prices quoted in terms of US dollars and cents
per 1,000 board feet.
Figure 1: The world’s top 10 softwood lumber producers, consumers, exporters and importers in 2005
% of % of % of % of
3 3 3 3
Producers M (000s) world Consumers M (000s) world Exporters M (000s) world Importers M (000s) world
Canada 79,000 30% US 121,991 52% Canada 53,000 50% US 57,691 74%
US 66,000 25% Canada 26,550 11% Russia 13,285 13% Japan 8,200 10%
Sweden 17,600 7% Japan 22,194 9% Sweden 11,600 11% Mexico 4,260 5%
Russia 17,160 7% China 9,400 4% Finland 8,600 8% Egypt 2,000 3%
Finland 14,200 5% Brazil 7,350 3% Austria 7,000 7% China 1,870 2%
Japan 14,000 5% Mexico 6,170 3% Poland 3,000 3% Austria 1,500 2%
Austria 10,625 4% Sweden 6,150 3% Chile 2,970 3% Australia 764 1%
Brazil 8,770 3% Finland 5,850 2% US 1,700 2% Canada 550 1%
Chile 8,770 3% Chile 5,800 2% Brazil 1,695 2% Poland 450 1%
China 7,710 3% Austria 5,125 2% New Zealand 1,632 2% S. Korea 300 0.4%
Total 263,430 100% Total 235,866 100% Total 105,941 100% Total 78,377 100%
Source: USDA (Units are cubic metres)
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July 2006 A User Guide To Commodities Deutsche Bank@
Soybeans
History & properties
The soybean is a member of the oilseed family, which also includes canola, peanuts,
rapeseed and sunflower seed. Soybeans are native to Asia and specifically China,
Japan and Korea. The English word soy is derived from the Japanese word shoyu. It
th
was introduced into the US at the end of the 18 Century.
Major producers & consumers
The United States is the largest producer of soybeans in the world. It is the country’s
third largest crop after corn and wheat and its production is concentrated in Illinois,
Iowa, Minnesota, Indiana, Nebraska and Ohio. Soybean crops in the US are planted
in May or June and are harvested in autumn as the crop typically matures between
100-150 days after planting. Brazil and Argentina are the world’s second and third
largest soybean producers. However, since 2002 the combined exports of these two
countries has exceeded US soybean exports for the first time. Currently, 80% of all
soybeans cultivated for the commercial market are genetically modified.
Major uses
Soybeans are used to produce a wide variety of food products. The key value of
soybeans is their relatively high protein content without the many negative factors
associated with animal meat. Common forms of soy include soy meal used as animal
feed for poultry and swine and more recently the aquaculture of catfish. Soy milk is
used in imitation dairy products, such as soy yogurt, ice cream and soy cheese.
Soybeans are also used in the industrial production of soap, cosmetics, resins,
plastics, inks, crayons, solvents, and bio-diesel.
Exchange traded
Soybean futures and options are traded on the Dalian Commodity Exchange in China,
the Chicago Board of Trade (CBOT) and the Tokyo Grain Exchange (TGE). The CBOT
soybean futures contract calls for the delivery of 5,000 bushels of No. 2 yellow
soybeans, quoted in US cents per bushel. Soybean meal and soybean oil futures
contracts are also listed on the DCE and CBOT.
Price conventions
The soybean price is quoted in US cents per pound. The Bloomberg ticker for the
CBT one month generic soybean futures contract is S 1 <CMDTY.
Figure 1: The world’s top 10 soybean producers, consumers, exporters and importers in 2005
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
US 83,999 38% US 51,071 24% Brazil 25,991 39% China 27,500 42%
Brazil 55,700 25% China 45,100 21% US 24,494 37% EU-25 14,800 23%
Argentina 40,500 18% Argentina 30,822 15% Argentina 10,499 16% Japan 4,100 6%
China 17,200 8% Brazil 30,548 14% Paraguay 2,650 4% Mexico 3,725 6%
India 6,300 3% EU-25 15,487 7% Canada 1,217 2% Taiwan 2,440 4%
Paraguay 4,000 2% India 6,312 3% Uruguay 520 1% Thailand 1,575 2%
Canada 3,160 1% Japan 4,290 2% China 400 1% Indonesia 1,300 2%
Bolivia 2,060 1% Mexico 3,875 2% Ukraine 200 0.3% S. Korea 1,200 2%
EU-25 862 0.4% Taiwan 2,420 1% Bolivia 140 0.2% Iran 1,180 2%
Indonesia 832 0.4% Indonesia 2,127 1% S. Africa 95 0.1% Turkey 890 1%
Total 220,193 100% Total 211,885 100% Total 66,427 100% Total 65,705 100%
Source: USDA (metric tons)
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Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Soybean trading by exchange Figure 3: Soybean price since 1972
25 Annual turnover in 2005 (Futures only, million lots) 1100 Soybean price (US cents per pound)
1000
20
900
15 800
700
10
600
500
5
400
0 300
No. 1 Soybeans Soybeans (CBT) Non-GMO Soybean Soybeans (TGE) 1972 1976 1980 1984 1988 1992 1996 2000 2004
(DCE) (TGE)
Source: DCE, CBT, TGE Source: DB Global Markets Research, Bloomberg
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July 2006 A User Guide To Commodities Deutsche Bank@
Sugar
History & properties
Sugar cane is thought to have originated in New Guinea as much as 9,000 years ago.
However, the first production of sugar from sugar cane took place in India around
2,000 years ago. The word sugar originates from the Indian Sanskrit word sharkara,
which later became al zukkar in Arabic. Sugar can be derived from both sugar cane
and sugar beets, the latter being more costly to produce. There is little perceptible
difference between the sugar derived from either source. Most sugar cane comes
from countries with warm climates, such as Brazil, India, China and Australia. Beet
sugar is grown in regions with cooler climates. Of all the sugar produced, about 75%
is processed from sugar cane.
Major producers & consumers
Brazil is the largest producer and exporter of sugar in the world with the European
Union a distant second in terms of exports. Brazil, Australia, Thailand, the EU-25 and
Cuba account for more than 70% of total world free market exports. US production is
evenly divided between beet and cane sugar. The largest sugar beet producing
states are Minnesota, Idaho, North Dakota and Michigan. The largest cane producers
are Florida, Louisiana, Texas and Hawaii. Subsidies and high import tariffs have made
it difficult in the past for other countries to export into the EU or compete with it on
world markets. The World Trade Organisation ruling in April 2005 against EU sugar
export subsidies is heralding a four-year programme of cuts, which should see a
decline in EU sugar exports going forward.
Exchange traded
The most actively traded sugar futures contract is the No. 11 (world) sugar contract
on the New York Board of Trade. Other exchanges include Bolsa de Mercadorias &
Futuros (BM&F), the Kansai Commodities Exchange (KANEX), the Tokyo Grain
Exchange (TGE) and EURONEXT.
The NYBOT No. 11 contract calls for the delivery of 112,000 pounds (50 long tons) of
raw cane centrifugal sugar from any of the 28 foreign countries and the United
States. The majority (almost 80% of the total tonnage) delivered against the
NYBOT’s sugar futures contract is accounted for by Brazilian sugars. Futures on
white sugar are traded on EURONEXT and call for the delivery of 50 metric tons of
white beet sugar, cane crystal sugar or refined sugar of any origin.
Figure 1: The world’s top 10 sugar producers, consumers, exporters and importers in 2005
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
Brazil 28,175 20% India 19,980 14% Brazil 18,020 38% Russia 4,300 10%
EU-25 21,648 15% EU-25 14,361 10% EU-25 6,028 13% EU-25 2,549 6%
India 14,210 10% China 10,950 8% Australia 4,447 9% India 2,135 5%
China 9,826 7% Brazil 9,750 7% Thailand 3,115 7% US 1,905 4%
US 7,146 5% US 8,955 6% UAE 1,980 4% UAE 1,750 4%
Mexico 6,149 4% Russia 6,400 5% Guatemala 1,497 3% S. Korea 1,652 4%
Australia 5,388 4% Mexico 5,232 4% Colombia 1,231 3% Malaysia 1,459 3%
Thailand 5,187 4% Pakistan 3,700 3% S. Africa 1,000 2% Indonesia 1,450 3%
Pakistan 2,937 2% Indonesia 3,400 2% Cuba 900 2% China 1,360 3%
Colombia 2,713 2% Egypt 2,381 2% Mauritius 577 1% Japan 1,328 3%
World 140,676 100% World 138,931 100% World 47,751 100% World 45,157 100%
Source: USDA (metric tons)
Global Markets Research 59

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Sugar turnover by exchange Figure 3: Sugar price since 1957
14 Annual turnover in 2005 (Futures only, million lots) 60 Sugar price (US cents/lb)
12
50
10
40
8
30
6
4 20
2 10
0
Sugar #11 (NYBOT) White sugar (EURONEXT) Raw sugar (TGE) 0
1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005
Source: NYBOT, EURONEXT, TGE Source: DB Global Markets Research, IMF (monthly data)
Price conventions
The sugar price is quoted in US cents per pound. The International Sugar
Organization currently has 74 members which constitute 82% of world sugar
production and 90% of world exports. The Bloomberg ticker for the one month
generic futures sugar contract is SB1 <CMDTY>.
60 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
Wheat
History & properties
Wheat is believed to have originated in the area known as the Fertile Crescent, an
area watered by the Nile, Jordan, Euphrates and Tigris rivers. The earliest
archaeological evidence for wheat cultivation comes from Syria and Turkey around
10,000 years ago. It was only introduced into the United States at the beginning of
th
the 17 Century.
Wheat is classified according to season, gluten content and grain colour. The
different growing seasons mean that there is either winter wheat or spring wheat.
Winter wheat in the United States is planted from September to December and
harvested in early July. In terms of gluten content, wheat can either be hard or soft.
Hard wheat has a high protein content while soft wheat has a high starch content.
Wheat is also classified according to grain colour such as red, white or amber. Wheat
planted in the spring is mostly red wheat while winter wheat is mostly white wheat.
Major producers & consumers
The United States is the fourth largest producer of wheat in the world, but, it is the
world’s largest exporter, representing 24% of global exports. The largest US wheat
producing states are Kansas, Oklahoma, Washington and Texas. The world’s largest
wheat producer is the European Union followed by China and India.
Major uses
Wheat is a staple food used to make flour for bread, cakes, pasta and noodles as well
as for fermentation to make alcohol. The husk of the grain, separated when milling
white flour, is bran. Wheat is also planted as a forage crop for livestock while straw is
also used for roofing thatch.
Exchange traded
Wheat futures and options are traded on the Chicago Board of Trade (CBOT), the
Kansas City Board of Trade (KCBT) and the Minneapolis Grain Exchange (MGE). In
China, the Zhengzhou Commodity Exchange trades the strong gluten wheat and the
hard winter wheat contracts. Wheat futures are traded, albeit with considerably
lower volumes, on the Mid America Commodity Exchange (MidAm), the Winnipeg
Commodity Exchange (WCE), the Mercado a Termino de Buenos Aires (MAT),
EURONEXT as well as the Budapest Commodity Exchange (BCE). The Chicago
Board of Trade’s wheat futures contract calls for the delivery of soft red wheat (No. 1
and 2), hard red winter wheat (No. 1 and 2) and dark northern spring wheat (No. 1 and
2).
Figure 1: The world’s top 10 wheat producers, consumers, exporters and importers in 2005
Tonnes % of Tonnes % of Tonnes % of Tonnes % of
Producers (000s) world Consumers (000s) world Exporters (000s) world Importers (000s) world
EU-25 122,590 20% EU-25 119,500 19% US 27,216 24% EU-25 7,500 7%
China 91,000 16% China 101,000 16% Australia 17,500 16% Egypt 7,500 7%
India 72,000 12% India 74,000 12% Canada 16,000 14% Brazil 6,200 6%
US 57,280 9% Russia 38,400 6% EU-25 14,500 13% Japan 5,700 5%
Russia 47,700 8% US 32,059 5% Russia 10,000 9% Algeria 5,500 5%
Canada 26,800 4% Pakistan 21,500 3% Argentina 7,500 7% Indonesia 4,600 4%
Australia 24,500 4% Turkey 16,400 3% Ukraine 5,500 5% Iraq 4,300 4%
Pakistan 21,600 3% Egypt 14,800 2% Kazakhstan 3,000 3% S. Korea 3,900 4%
Ukraine 18,700 3% Iran 14,800 2% Turkey 2,500 2% Nigeria 3,900 4%
Turkey 18,000 3% Ukraine 13,100 2% China 1,100 1% Mexico 3,600 3%
World 620,362 100% World 622,390 100% World 112,281 100% World 107,712 100%
Source: USDA (metric tons); To convert tonnes into bushels multiply by 36.7437
Global Markets Research 61

Deutsche Bank@ A User Guide To Commodities July 2006
Figure 2: Wheat turnover by exchange Figure 3: Wheat prices since 1972
12 Annual turnover in 2005 (Futures only, million lots) 700 1st nearby wheat futures price
(US cents/bushel)
10 600
8 500
6 400
4 300
200
2
100
0
1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Wheat (CBT) Wheat (KCBT) Wheat (ZCE) Wheat (MGE)
Source: CBT, KCBT, MGE, ZCE Source: DB Global Markets Research, IMF (monthly data)
62 Global Markets Research

July 2006 A User Guide To Commodities Deutsche Bank@
The Deutsche Bank Commodity Index Suite
The family of Deutsche Bank commodity indices incorporates the Deutsche Bank
Liquid Commodity Index (DBLCI) and the Deutsche Bank Liquid Commodity Index-
Mean Reversion (DBLCI-MR) both of which were launched in February 2003. In May
2006, the DBLCI-Optimum Yield was launched to address the dynamic nature of
commodity term structures. Instead of rolling futures contracts on a pre-defined
schedule, contracts are rolled into a futures contracts over the coming 13 month
period that either maximises the positive roll yield in backwardated term structures or
minimises the negative roll yield in contangoed markets.
All three commodity indices, the DBLCI, DBLCI-MR and DBLCI-OY have six
underlying commodities: sweet light crude oil (WTI), heating oil, gold, aluminium, corn
and wheat. These represent the most liquid contracts in their respective sectors.
The DBLCI and the DBLCI-OY have fixed weights: 35%, 20%, 10%, 12.5%, 11.25%
and 11.25% respectively. To exploit the tendency of commodity prices to mean
revert, the DBLCI-MR adjusts its weight in the six underlying commodities according
to whether an individual commodity is trading ‘cheap’ or ‘expensive’. This is
determined according to a pre-defined formula comparing the 1-year average price of
the commodity to its 5-year average.
Bloomberg Codes For The Suite Of Deutsche Bank’s Commodity Indices
Total Returns Excess Returns
Deutsche Bank Liquid Commodity Index DBLCMAVL <Index> DBLCMACL <Index>
DBLCI-Optimum Yield DBLCOYTR <Index> DBLCOYER <Index>
DBLCI-Mean Reversion DBLCMMVL <Index> DBLCMMCL <Index>
Components of the DBLCI
DB Crude Oil Index DBRCLTR <Index> DBRCL <Index>
DB Heating Oil Index DBRHOTR <Index> DBRHO <Index>
DB Aluminium Index DBRMALTR <Index> DBRMAL <Index>
DB Gold Index DBRGCTR <Index> DBRGC <Index>
DB Wheat Index DBRWTR <Index> DBRW <Index>
DB Corn Index DBRCTR <Index> DBRC <Index>
Components of the DBLCI-Optimum Yield
DB Crude Oil Index-Optimum Yield DBLCOCLT <Index> DBLCOCLE <Index>
DB Heating Oil Index-Optimum Yield DBLCOHOT <Index> DBLCOHOE <Index>
DB Aluminium Index-Optimum Yield DBLCOALT <Index> DBLCOALE <index>
DB Gold Index-Optimum Yield DBLCOGCT <Index> DBLCOGCE <Index>
DB Wheat Index-Optimum Yield DBLCOWTT <Index> DBLCOWTE <Index>
DB Corn Index-Optimum Yield DBLCOCNT <Index> DBLCOCNE <Index>
Source: DB Global Markets Research; Bloomberg page DBCM, DBC; Reuters page DBLCI
Figure 1: Commodity & equity returns compared Figure 2: The changing weights of the DBLCI-MR
1200 Total returns for: 1200 100%
December 1988 = 100
90%
DBLCI-Optimum Yield
1000 1000
80%
S&P500 70%
800 800
60%
GSCI
50%
600 600
40%
30%
400 400
20%
200 200 10%
0%
Feb-89 Feb-91 Feb-93 Feb-95 Feb-97 Feb-99 Feb-01 Feb-03 Feb-05
0 0
1988 1992 1996 2000 2004 Energy Industrial Metals Precious Metals Agricultural
Source: DB Global Markets Research, Bloomberg Source: DB Global Markets Research
Global Markets Research 63

Deutsche Bank@ A User Guide To Commodities July 2006
Commodity Exchanges
Commodity exchanges by type of contract listed
Commodity Exchange Abbreviation
New York Mercantile Exchange NYMEX
Intercontinental Exchange ICE
Shanghai Futures Exchange SFE
Energy
Central Japan Commodity Exchange CJCE
Tokyo Commodity Exchange TOCOM
Dalian Commodity Exchange DCE
London Metal Exchange LME
New York Mercantile Exchange COMEX
Metals
Shanghai Futures Exchange SHFE
Philadelphia Board of Trade PHLX
Osaka Mercantile Exchange OME
Tokyo Commodity Exchange TOCOM
New York Mercantile Exchange NYMEX
Electricity Nordic Power Exchange NORDPOOL
European Energy Exchange EEX
UK Power Exchange UKPX
Amsterdam Power Exchange APX
Paris Power Exchange POWERNEXT
Chicago Mercantile Exchange CME
Fibres New York Cotton Exchange NYCE
Zhengzhou Commodity Exchange YCE
Budapest Commodity Exchange BCE
Chicago Board of Trade CBT
Dalian Commodity Exchange DCE
EURONEXT EURONEXT
Fukuoka Futures Exchange FFE
Grains & Oilseeds Johannesburg Securities Exchange JSE
Kansas City Board of Trade KCBT
Malaysian Derivatives Exchange MDE
Mercado a Termino de Rosaio ROFEX
Minneapolis Grain Exchange MGE
Tokyo Grain Exchange TGE
Winnipeg Commodity Exchange WCE
New York Board of Trade NYBOT
Bolsa de Mercadorias & Futuros BM&F
Kansai Agricultural Commodities Exchange KANEX
Softs
Tokyo Grain Exchange TGE
EURONEXT EURONEXT
National Commodity & Derivatives Exchange NCDEX
Zhengzhou Commodity Exchange ZCE
Chicago Mercantile Exchange CME
Livestock Bolsa de Mercadorias & Futuros BM&F
EURONEXT EURONEXT
Source: CRB Yearbook 2005, DB Global Markets Research
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July 2006 A User Guide To Commodities Deutsche Bank@
Commodity Futures Turnover
The world’s top commodity futures contracts in 2005
Contract Exchange Turnover (million lots)
WTI Crude Oil New York Mercantile Exchange 59.65
No. 1 Soybeans Dalian Commodity Exchange 40.04
Soy Meal Dalian Commodity Exchange 36.74
Aluminium London Metal Exchange 30.43
Corn Chicago Board of Trade 27.97
Brent Crude Oil Intercontinental Exchange 27.41
Corn Dalian Commodity Exchange 21.86
Soybeans Chicago Board of Trade 20.22
Copper London Metal Exchange 19.23
Natural Gas New York Mercantile Exchange 19.14
Gold Tokyo Commodity Exchange 17.96
Gasoline Tokyo Commodity Exchange 17.45
Strong Gluten Wheat Zhengzhou Commodity Exchange 16.62
Gold New York Mercantile Exchange 15.89
Unleaded Gasoline New York Mercantile Exchange 13.17
Heating Oil No. 2 New York Mercantile Exchange 13.14
Sugar #11 New York Board of Trade 12.37
Copper Shanghai Futures Exchange 12.35
Gasoline Central Japan Commodity Exchange 11.97
Gas Oil Intercontinental Exchange 10.97
Non-GMO-Soybean Tokyo Grain Exchange 10.96
Cotton Zhengzhou Commodity Exchange 10.86
Zinc London Metal Exchange 10.62
Wheat Chicago Board of Trade 10.11
Fuel Oil Shanghai Futures Exchange 9.81
Kerosene Central Japan Commodity Exchange 9.79
Rubber Shanghai Futures Exchange 9.50
Platinum Tokyo Commodity Exchange 8.57
Soybean Meal Chicago Board of Trade 8.32
Soybean Oil Chicago Board of Trade 7.68
Kerosene Tokyo Commodity Exchange 7.30
Rubber Tokyo Commodity Exchange 7.16
Live Cattle Chicago Mercantile Exchange 5.83
Lean Hogs Chicago Mercantile Exchange 3.20
Coffee Arabica Tokyo Grain Exchange 5.59
Silver New York Mercantile Exchange 5.54
Corn Tokyo Grain Exchange 5.17
Lead London Metal Exchange 4.06
Coffee ‘C’ New York Board of Trade 3.99
Copper New York Mercantile Exchange 3.95
Cotton #2 New York Board of Trade 3.85
Wheat Kansas City Board of Trade 3.68
Nickel London Metal Exchange 3.48
Coffee Robusta EURONEXT 3.26
Cocoa #7 EURONEXT 2.69
Cocoa CC New York Board of Trade 2.58
Aluminium Shanghai Futures Exchange 2.13
American Soybeans Tokyo Grain Exchange 2.05
Source: NYMEX, ICE, TOCOM, SFE, CJCE, LME, OME, BM&F, DCE, CBT, NYBOT, ZCE, TGE, KCBT, EURONEXT
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Deutsche Bank@ A User Guide To Commodities July 2006
Continued: The world’s top commodity futures contracts by turnover
Contract Exchange Turnover (million lots)
Crude Oil Tokyo Commodity Exchange 1.98
Canola (Rapeseed) Winnipeg Commodity Exchange 1.66
White Sugar EURONEXT UK 1.50
Spring Wheat Minneapolis Grain Exchange 1.38
Crude Palm Oil Malaysia Derivatives Exchange 1.16
Tin London Metal Exchange 1.10
NASAAC London Metal Exchange 1.00
Feeder Cattle Chicago Mercantile Exchange 1.02
Brent Crude Oil New York Mercantile Exchange 0.99
White Maize Johannesburg Securities Exchange 0.91
Orange Juice (FCOJ) New York Board of Trade 0.90
Silver Tokyo Commodity Exchange 0.82
Corn Fukuoka Futures Exchange 0.77
Coffee Robusta Tokyo Grain Exchange 0.66
Red Beans Tokyo Grain Exchange 0.66
Gold Chicago Board of Trade 0.63
Rubber (RSS3) Osaka Mercantile Exchange 0.58
Frozen Shrimp Kansai Commodities Exchange 0.51
Aluminium Alloy London Metal Exchange 0.50
Mini Soybeans Chicago Board of Trade 0.50
Coffee Arabica Bolsa de Mercadorias & Futuros 0.49
Raw Sugar Tokyo Grain Exchange 0.47
Aluminium Osaka Mercantile Exchange 0.46
Natural Gas Intercontinental Exchange 0.44
Platinum New York Mercantile Exchange 0.38
Oats Chicago Board of Trade 0.35
Palladium Tokyo Commodity Exchange 0.32
Palladium New York Mercantile Exchange 0.32
Aluminium Tokyo Commodity Exchange 0.22
Rubber (TSR20) Osaka Mercantile Exchange 0.21
Class III Milk Chicago Mercantile Exchange 0.18
Pork Belly Chicago Mercantile Exchange 0.12
Non-GMO Soybeans Fukuoka Futures Exchange 0.06
Gas Oil Central Japan Commodity Exchange 0.04
Nickel Osaka Mercantile Exchange 0.03
Source: NYMEX, ICE, TOCOM, SFE, CJCE, LME, OME, DCE, CBT, NYBOT, ZCE, TGE, KCBT, EURONEXT
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Conversion Factors
Commonly Used Weights
The troy, avoirdupois and apothecaries’ grains are identical in the U.S. and British
weight systems, equal to 0.0648 gram in the metric system. One avoirdupois ounce
equals 437.5 grains. The troy and apothecaries’ ounces equal 480 grains, and their
pounds contain 12 ounces.
Troy Weight & Conversions:
100 kilograms = 1 quintal
24 grains = 1 pennyweight
20 pennyweights = 1 ounce
12 ounces = 1 pound
1 troy ounce = 31.103 grams
1 troy ounce = 0.0311033 kilogram
1 troy pound = 0.37224 kilogram
1 kilogram = 32.151 troy ounces
1 tonne = 32,151 troy ounces
Avoirdupois Weights & Conversions:
27 11/32 grains = 1 dram
16 drams = 1 ounce
16 ounces = 1 lb.
1 lb. = 7,000 grains
14 lbs. = 1 stone (U.K.)
100 lbs. = 1 hundredweight (U.S.)
112lbs. = 8 stone = 1 hundredweight (U.K.)
2,000 lbs. = 1 short ton (U.S. ton)
2,240 lbs. = 1 long ton (U.K. ton)
160 stone = 1 long ton
20 hundredwght = 1 ton
1 lb. = 0.4536 kilogram
1 hundredwght = 45.359 kilograms
1 short ton = 907.18 kilograms
1 long ton = 1,016.05 kilograms
Metric Weights & Conversions:
1,000 grams = 1 kilogram
1 tonne = 1,000 kilograms=10 quintals
1 kilogram = 2.204622 lbs.
1 quintal = 220.462 lbs.
1 tonne = 2204.6 lbs.
1 tonne = 1.102 short tons
1 tonne = 0.9842 long ton
U.S. Dry Volumes & Conversions
1 pint = 33.6 cubic inches = 0.5506 litre
2 pints = 1 quart = 1.1012 litres
8 quarts = 1 peck = 8.8098 litres
4 pecks = 1 bushel = 35.2391 litres
1 cubic foot = 28.3169 litres
U.S. Liquid Volumes & Conversions
1 ounce = 1.8047 cubic inches = 29.6 millilitres
1 cup = 8 ounces = 0.24 litre = 237 millilitres
1 pint = 16 ounces = 0.48 litre = 473 millilitres
1 quart = 2 pints = 0.946 litre = 946 millilitres
1 gallon = 4 quarts = 231 cubic inches = 3.785 litres
1 millilitre = 0.033815 fluid ounce
1 litre = 1.0567 quarts = 1,000 millilitres
1 litre = 33.815 fluid ounces
1 imperial gallon = 277.42 cubic inches = 1.2 U.S. gallons = 4.546 litres
Global Markets Research 67

Deutsche Bank@ A User Guide To Commodities July 2006
Agricultural Weights & Measurements
Bushel Weights
Wheat & soybeans = 60 lbs.
Corn, sorghum & rye = 56 lbs.
Barley grain = 48 lbs.
Oats = 38 lbs.
Barley malt = 34 lbs.
Bushels to Tonnes:
Wheat & soybeans = bushels x 0.0272155
Barley grain = bushels x 0.021772
Corn, sorghum & rye = bushels x 0.0254
Oats = bushels x 0.0172365
1 tonne (metric ton) equals:
2204.622 lbs.
1,000 kilograms
22.046 hundredweight
10 quintals
1 tonne (metric ton) equals:
36.7437 bushels of wheat & soybeans
39.3670 bushels of corn, sorghum or rye
45.9296 bushels of barley grain
68.8944 bushels of oats
4.5929 cotton bales (the statistical bale used by the USDA and ICAC contains a net
weight of 480 pounds of lint)
Area Measurements
1 acre = 43,560 square feet = 0.040694 hectares
1 hectare = 2.4710 acres = 10,000 square metres
640 acres = 1 square mile = 259 hectares
Energy
U.S Crude Oil (average gravity)
1 U.S. barrel = 42 U.S. gallons
1 short ton = 6.65 barrels
1 tonne = 7.33 barrels
Barrels per tonne for various origins
Abu Dhabi 7.624
Australia 7.775
Canada 7.428
Dubai 7.295
Indonesia 7.348
Iran 7.37
Kuwait 7.261
Libya 7.615
Mexico 6.825
Nigeria 7.41
Norway 7.41
Saudi Arabia 7.338
United Arab Emirates 7.522
United Kingdom 7.279
United States 7.418
Former Soviet Union 7.35
Venezuela 7.005
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July 2006 A User Guide To Commodities Deutsche Bank@
Barrels per tonne of refined products:
Aviation Gasoline 8.90
Motor Gasoline 8.50
Kerosene 7.75
Jet Fuel 8.00
Distillate, including diesel 7.46
Residual Fuel Oil 6.45
Lubricating Oil 7.00
Grease 6.30
White Spirits 8.50
Paraffin Oil 7.14
Paraffin Wax 7.87
Petrolatum 7.87
Asphalt & Road Oil 6.06
Petroleum Coke 5.50
Bitumen 6.06
Liquefied Petroleum Gas (LPG) 11.6
Approximate heat content of refined products:
(million Btu per barrel, 1 British thermal unit is the amount of heat required to raise
the temperature of 1 pound of water 1 degree Fahrenheit.)
Petroleum Product Heat content
Asphalt 6.636
Aviation Gasoline 5.048
Butane 4.326
Distillate Fuel Oil 5.825
Ethane 3.082
Isobutane 3.974
Jet Fuel, kerosene 5.67
Jet Fuel, naphtha 5.355
Kerosene 5.67
Lubricants 6.065
Motor Gasoline 5.253
Natural Gasoline 4.62
Pentanes Plus 4.62
Natural Gas Conversions
Although there are approximately 1,031 Btu in a cubic foot of gas, for most
applications, the following conversions are sufficient:
Cubic Feet MMBtu
1,000 = 1Mcf
1,000,000 = 1MMcf
10,000,000 = 10MMcf
1,000,000,000 = 1Bcf
1,000,000,000,000 = 1Tcf
Source:
CRB Commodity Yearbook 2005
US Department of Energy
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Deutsche Bank@ A User Guide To Commodities July 2006
Sources
Exchanges
Energy
Central Japan Commodity Exchange, http://www.c-com.or.jp
Intercontinental Exchange, http://www.theice.com
New York Mercantile Exchange, http://www.nymex.com
Shanghai Futures Exchange, http://www.shfe.com.cn
Tokyo Commodity Exchange, http://tocom.or.jp
Metals
London Metal Exchange, http://www.lme.co.uk
New York Mercantile Exchange, http://www.nymex.com
Osaka Mercantile Exchange, http://www.osamex.com
Shanghai Futures Exchange, http://www.shfe.com.cn
Tokyo Commodity Exchange, http://tocom.or.jp
Agriculture & Livestock
Chicago Board of Trade, http://www.cbot.com
Chicago Mercantile Exchange, http://www.cme.com
Dalian Commodity Exchange, http://www.dce.com.cn
EURONEXT, http://www.euronext.com
Kansas City Board of Trade, http://www.kcbt.com
New York Board of Trade, http://www.nybot.com
Shanghai Futures Exchange, http://www.shfe.com.cn
Tokyo Grain Exchange, http://www.tge.or.jp
Zhengzhou Commodity Exchange, http://www.czce.com
Government, Trade & Industry Associations
Energy
American Coalition for Ethanol, http://www.ethanol.org
CRB Commodity Yearbook 2005
International Energy Agency, http://www.iea.org
Petroleum Refining In Non Technical Language, William L. Leffler
Texas State Library & Archives Commission, http://www.tsl.state.tx.us
US Department of Energy, http://www.eia.doe.gov
Metals
Aluminum Association, http://www.aluminum.org
British Geological Survey, http://www.mineralsuk.com
Brook Hunt, http://www.brookhunt.com
Cobalt Development Institute. http://www.thecdi.com
CRB Commodity Yearbook 2005
GFMS Limited, http://www.gfms.co.uk
International Aluminium Institute, http://www.world-aluminium.org
International Copper Study Group, http://www.icsg.org
International Molybdenum Association, http://www.imoa.info
Johnson Matthey, http://www.matthey.com
U.S. Geological Survey Minerals Yearbook, http://minerals.er.usgs.gov
Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/wiki
World Gold Council, http://www.gold.org
International Platinum Association, http://www.platinuminfo.net
Uranium Information Centre Ltd, http://www.uic.com.au
Agriculture
International Coffee Organization, http://www.ico.org
International Cotton Association, http://www.lca-ltd.org
International Sugar Organization, http://www.sugaronline.com
US Department of Agriculture, http://www.fas.usda.gov
US Grains Council, http://www.grains.org
National Association of Wheat Growers, http://www.wheatworld.org
National Corn Growers Association, http://www.ncga.com
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July 2006 A User Guide To Commodities Deutsche Bank@
Certifications
The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s). In addition,
the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation
or view in this report. Michael Lewis
Contacts
Name Title Telephone Email Location
Michael Lewis Global Head of Commodities Research +44 20 7545 2166 michael.lewis@db.com London
Amanda Lee Strategist +44 20 7547 4682 amanda-ps.lee@db.com Hong Kong
Peter Richardson Chief Metals Economist +61 3 9270 4329 Peter.richardson@db.com, Melbourne
Joel Crane Strategist +61 3 9270 4319 joel.crane@db.com Melbourne
Adam Sieminski Chief Energy Economist +1 212 250 2928 adam.sieminski@db.com New York
Gary Pearson PGM Strategist +27 11 775 7247 gary.pearson-sa@db.com Johannesburg
Global Markets Research 71

Deutsche Bank Global Research
David Folkerts-Landau
Managing Director
Global Head of Research
London Tel: (44) 20 7545 5502
Stuart Parkinson Fergus Lynch
Chief Operating Officer Research Relationship Management
London Tel: (44) 20 7545 7303 London Tel: (44) 20 7545 8765
Company Research Europe Company Research Americas Company Research GEMs Company Research Japan
Guy Ashton David Manlowe Dave Murray Greg Jones / Fumiaki Sato
London Tel: (44) 20 7547 2867 New York Tel: (1) 212 250 8782 Hong Kong Tel: (852) 2203 6128 Tokyo Tel: (813) 5156 6718
Tokyo Tel: (813) 5156 6703
Economics, Rates, EM, FX Securitisation Quantitative Credit CROCI
& Commodities
Marcel Cassard Karen Weaver Jean-Paul Calamaro Pascal Costantini
London Tel: (44) 20 7545 5507 New York Tel: (1) 212 250 3125 London Tel: (44) 20 7545 1555 London Tel: (44) 20 7545 1576
Credit Strategy Asia Macro & Strategy Equity Strategy Japan
Gary Jenkins Michael Spencer Ryoji Musha
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