Commodities Outlook

Landesbank Baden-Wrttemberg Dr. Frank Schallenberger Head of Commodity Research

December 2012 - Commodities - Page 1 Landesbank Baden-Wrttemberg

LBBW Commodities Funds Overview.

Commodities exposure: 1,2 Billion EUR

Physical Funds:

18.09.2002 - GOLD Aureus Fund (480 Million EUR) 23.05.2011 - SILVER - Argentum Fund (80 Million EUR)

Future based Funds:

19.05.2008 LBBW Rohstoffe 1 Long Only (320 Million EUR) 19.02.2010 LBBW Rohstoffe 2 Long/Short (350 Million EUR) UCITS IV - Live Funds Trackrecord 4 Y and 2 Y EUR, CHF, USD German Investmentfunds / Distribution in D - A - CH Model based Inst. Investores - Banks / Savings Banks / Insurance Companies Pension Funds / Asset Manager

Basics: Currencies: Framework: Management: Investors:

December 2012 - Commodities - Page 2 Landesbank Baden-Wrttemberg

BRICs should be more dynamic in 2013.

Growth in % (Source: IMF)

12 10 8 6
4,3 9,2 7,2 6,8 6,0 4,9 3,7 2,7 1,5 3,8 4,0 8,2

4 2 0
2011

2012e

2013e

China

India

Russia

Brazil

December 2012 - Commodities - Page 3 Landesbank Baden-Wrttemberg

China: Monetary Policy still with Options.

22 20 18 16 14 12 10 8 6 4 5.50 6.50 7.00 7.50

6.00

CH RESERVE REQUIREMENT RATIO - BIG BANKS CH PRIME LENDING RATE (EP)(RECHTE SKALA) Source: Thomson Reuters Datastream

2003

2004

2005

2006

2007

2008

2009

2010 2011 2012

5.00

December 2012 - Commodities - Page 4 Landesbank Baden-Wrttemberg

Gap between Brent and WTI still high.

130 130

120

120

110

110

100

100

90

90

80

80

70

Brent in USD WTI in USD

F M

A M

S O N

F M A M

S O N

70

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 5 Landesbank Baden-Wrttemberg

Chinese Oil Imports reach Record Levels!

New Import Record (6 mbpd) in May 2012
10 9 8 1.000.000 Barrel per Day 7 6 5 4 3 2 1 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Chinese O il Production Chinese Oil C onsumption

December 2012 - Commodities - Page 6 Landesbank Baden-Wrttemberg

China: 1,3 Million new Cars every Month!

000'S 1600
1400 1200 1000 800 600 400 200

000'S 1600
1400 1200 1000 800 600 400 200

China Car Sales (in 1000 per Month)

2005

2006

2007

2008

2009

2010

2011

2012

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 7 Landesbank Baden-Wrttemberg

Natural Gas with bad Performance.

8 7 6 5 4 3 2 1 8 7 6 5 4 3 2 1

Natural Gas-Henry Hub $/MMBTU

2010

2011

2012

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 8 Landesbank Baden-Wrttemberg

Natural Gas: Infrastructure with bright Future?

45 40 35 30 25 20 15 10 5 0 45 40 35 30 25 20 15 10 5

Cheniere Energy in USD

00

01

02

03

04

05

06

07

08

09

10

11

12

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 9 Landesbank Baden-Wrttemberg

Base Metals: Since 2011 Prices go down.

1.1.2011 = 100
120 120

110

110

100

100

90

90

80

80

70

70

60

Aluminium Zinc Lead

F M

A M

S O N

Copper Nickel Source: Thomson Reuters Datastream

F M

A M

O N

60

December 2012 - Commodities - Page 10 Landesbank Baden-Wrttemberg

China remains main Price Driver for Base Metals.

Chinas percentage Share of worldwide Consumption

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Copper 2010 2005 2000 Aluminium 1995 Zinc Lead Nickel

Source: Study Groups, IAI, WBMS, CRU, LBBW Commodity Research

December 2012 - Commodities - Page 11 Landesbank Baden-Wrttemberg

Precious Metals: Heterogeneous Development since 2011.

1.1.2011 = 100
160 150 140 130 120 110 100 90 80 70 60 160 150 140 130 120 110 100 90 80 70

Gold Silver Platinum

F M

A M

S O N

Palladium

F M

A M

O N

60

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 12 Landesbank Baden-Wrttemberg

Gold: Mine Production with new Record.

Output of Goldmines in Tons p.a.

3.000 2.900 2.800 2.700 2.600 2.500 2.400 2.300 2.200 2.100 2.000 1990 1995 2000 2005 2010

3.000 2.900 2.800 2.700 2.600 2.500 2.400 2.300 2.200 2.100 2.000

Quelle: LBBW Research, World Gold Council, GFMS

December 2012 - Commodities - Page 13 Landesbank Baden-Wrttemberg

Gold Demand in India is weakening.

in Tons per Quarter

350 300 250 200 150 100 50 0 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 China Indien

Quellen: WGC, GFMS, LBBW Commodity Research

350 300 250 200 150 100 50 0

December 2012 - Commodities - Page 14 Landesbank Baden-Wrttemberg

Central Banks changed their Mind about Gold.

Central Banks Selling (-) and Buying (+) Gold in Tons per Year
600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -200 -400 -600 -800 Quellen: LBBW Commodity Research, Notenbanken, WGC 2012e 600 400 200 0 -200 -400 -600 -800

December 2012 - Commodities - Page 15 Landesbank Baden-Wrttemberg

Agriculture: Corn, Wheat & Co. rallied this Summer.

1.1.2011 = 100
140 130 120 110 100 90 80 70 60 50 140 130 120 110 100 90 80 70 60

Corn Coffee Soybeans

F M

A M

S O N

Cocoa Wheat Sugar

F M

A M

O N

50

December 2012 - Commodities - Page 16 Landesbank Baden-Wrttemberg

In the long Run: Oil since 1970.

140 120 100 80 60 40 20 0 140 120 100 80 60 40 20 0

Brent in USD

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 17 Landesbank Baden-Wrttemberg

In the long Run: Oil, Gold and Wheat since 1970.

1.1.1970 = 100
7000 6000 5000 4000 3000 2000 1000 0 7000 6000 5000 4000 3000 2000 1000 0

Gold in USD Brent in USD Wheat in USD

70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 18 Landesbank Baden-Wrttemberg

Commodities are not Commodities Stocks!

Exxon and Oil; 1.1.2009 = 100
400 350 300 250 200 150 100 50 400 350 300 250 200 150 100 50

EXXON MOBIL Crude Oil-Brent Cur. Month FOB U$/BBL Source: Thomson Reuters Datastream
December 2012 - Commodities - Page 19 Landesbank Baden-Wrttemberg

2009

2010

2011

2012

Important for Investors: Beware of Contango!

Roll Losses in the DJUBS Index since 2006: Almost 100 Percentage Points !!!
220 200 180 160 140 120 100 80 60 40 220 200 180 160 140 120 100 80 60

DJ UBS- Commodity Ind ER - EXCESS RETURN DJ UBS-Spot Commodity Index - PRICE INDEX Source: Thomson Reuters Datastream

2006

2007

2008

2009

2010

2011

2012

40

December 2012 - Commodities - Page 20 Landesbank Baden-Wrttemberg

LBBW Top Ten with Outperformance since 2009.

Excess Return Indices; 1.1.2009 = 100
240 220 200 180 160 140 120 100 80 60 240 220 200 180 160 140 120 100 80

LBBW Top 10 Index in USD RICI-Index in USD TR/JCRB-Index in USD

December 2012 - Commodities - Page 21 Landesbank Baden-Wrttemberg

2009

2010

DJ/UBS Index in USD GSCI-Index in USD Source: Thomson Reuters Datastream

2011

2012

60

LBBW Long/Short: The Index started in August 2009.

Performance since August 2009: ca. 32 %
140 135 130 125 120 115 110 105 100 95 140 135 130 125 120 115 110 105 100

LBBW Long/Short Index

2009

2010

2011

2012

95

Source: Thomson Reuters Datastream

December 2012 - Commodities - Page 22 Landesbank Baden-Wrttemberg

LBBW Rohstoffe 1+2 Technical Data.

LBBW Rohstoffe 1 (Long Only): Institutional: DE000A0MU8J9, Retail: DE000A0NAUG6 UCITS-IV Sales and Distribution in Germany, Austria, Switzerland Launch Date: 19.5.2008 Volume: 320 Mio. Currencies: EUR, USD, SFR LBBW Rohstoffe 2 (Long/Short): Institutional: DE000A0X97E0, Retail: DE000A1H7276 UCITS-IV Sales and Distribution in Germany, Austria, Switzerland Launch Date: 19.2.2010 Volume: 350 Mio. Currencies: EUR, USD, SFR

December 2012 - Commodities - Page 23 Landesbank Baden-Wrttemberg

Thank you very much for your Attention!

December 2012 - Commodities - Page 24 Landesbank Baden-Wrttemberg

Please note:
This document does not take account of an investors personal circumstances, does not contain any offer that is binding under civil law and does not constitute investment advice. Your personal contact will provide you with more detailed information. LBBW does not accept any liability for the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or the result obtained from the use of such information. The information in this document has been obtained from sources believed to be reliable. LBBW can not verify such information, however, and because of the possibility of human or mechanical error by the sources, LBBW or others, no representation is made that the information contained in this document is accurate in all material respects or complete. Only the conclusion of a trade, which normally takes place by telephone, is legally relevant for a purchase. To the extent that the product is subject to prospectus requirements under the Securities Prospectus Act (Wertpapierprospektgesetz ) or the Investment Act (Investmentgesetz), you will receive the relevant prospectuses from your personal contact. If the products are from third parties, we draw attention to the fact that LBBW may receive brokerage fees and/or sales commission for distributing these products. Prior to any investment decision investors should consult with their personal financial and tax advisor. To the extent that this document refers to tax effects, we draw attention to the fact that the concrete tax repercussions depend on the personal circumstances of the corresponding investor and may change in the future. Investors should note that the products are only available to persons in certain jurisdictions. Any Investor is responsible for satisfying himself that he is subject to no legal restrictions under any relevant laws. This document is protected by copyright. It is not permitted to pass it on to third parties without the prior written consent of LBBW.

Editor:

Landesbank Baden-Wrttemberg 4113 Commodity Research Am Hauptbahnhof 2 70173 Stuttgart/Germany

Sources: Thomson Reuters Datastream, Bloomberg, LBBW Research Finished: 30.11.2012

December 2012 - Commodities - Page 25 Landesbank Baden-Wrttemberg