e Agriculture Preference: neutral : Current (24 Oct) (last month): Soybeans, USD 15.17/bu (16.12); Corn, USD 7.54/bu (7.44); Recommendations Wheat, USD 8.84/bu (8.87) /actical UBS View 6-month target: Soybeans: USD 17.0/bu; Corn: USD 9.0/bu; Wheat: USD 9.5/bu *°~ Despite the recent setback in corn prices, ¢ Major US supply surprises on the grains side are rather unlikely in the near term as harvesting is in full risk-seeking investors should still hold on swing. However, we think that demand is unlikely to drop as quickly as the USDA expects. According to the to !ong positions in corn. Demand latest USDA grain stocks and WASDE reports, feed demand remained surprisingly resilient in 3Q12. To rationing is still required to limit the drag effectively ration demand, especially on the feed side, in an environment of critically low US corn and ON inventories. The expected return soybean stocks, higher prices are still required. For wheat, global production estimates were further target for a long position in corn stands lowered due to production losses in Australia, EU, Russia for 2012/13, which likely keeps prices supported in at 15%. the near term. We expect corn and soybean prices to appreciate by 15% in the coming months. Strategic * On the other side, the softs are likely to remain well supplied, which should keep prices under pressure. ° Our expected return outlook for grains Improved export activity of coffee and strong stock selling from Vietnam in 4Q12 should weigh on coffee Stands at around -10% over the next 12 prices in the short-term. For sugar, higher production from Brazil and other producers should continue to Tonths. With grain prices not far below burden prices in the near term, but also offer buying opportunities on a 12-month perspective. historical highs, the supply side is highly e Aggregating the above points, the risk/reward for being long across the entire sector is not a given. We likely to expand meaningfully in 2053/14 therefore reiterate our n