World Real GDP Growth

World Real GDP Growth

05 06 07 08 09 10 11 12 13 14-1%

0%

1%

2%

3%

4%

5%

6%Actual Estimate

IMF, January 2013

NCC Acreage Survey

• Distributed on Dec 18• Responses collected through Jan 23• Asked for acres of upland cotton, ELS cotton,

corn, soybeans, wheat, Other crops in ‘12 and intentions for ’13; also asked price expectations

Pre-Planting Market Signals Cotton Corn Soybeans Cot/Corn Cot/Soy

2013 78.96¢ $5.92 $12.94 13.3 6.1

2012 92.08¢ $5.65 $12.59 16.3 7.3

2011 118.08¢ $5.88 $13.31 20.1 8.9

2010 73.70¢ $4.04 $9.37 18.3 7.9

2009 51.65¢ $4.17 $8.98 12.4 5.8

2008 80.72¢ $5.36 $12.73 15.0 6.3

U.S. Cotton Area & Prices

06 07 08 09 10 11 12 130

3

6

9

12

15

18

0

6

12

18

24Million Acres

Acres Cotton/Corn Cotton/Soy

Price Ratio

2013 Southeast Acreage2012 Actual

2013Intended

%Change

Alabama 380 320 -15.7Florida 108 103 -4.5Georgia 1,290 1,093 -15.3North Carolina 585 398 -32.0South Carolina 299 265 -11.4Virginia 86 62 -28.3Southeast 2,748 2,241 -18.5

Total may not add due to rounding.

2013 Mid-South Acreage2012 Actual

2013Intended

%Change

Arkansas 595 221 -62.9Louisiana 230 144 -37.3Mississippi 475 199 -58.1Missouri 350 239 -31.6Tennessee 380 199 -47.6Mid-South 2,030 1,003 -50.6

Total may not add due to rounding.

Arkansas Crop Returns

06 07 08 09 10 11 12 13-$100

$0

$100

$200

$300

$400Difference Between Corn and Cotton Returns

$ per Acre

2013 Southwest Acreage

2012 Actual

2013Intended

%Change

Kansas 56 50 -10.4Oklahoma 305 267 -12.3Texas 6,550 4,910 -25.0Southwest 6,911 5,228 -24.4

Total may not add due to rounding.

2013 West Acreage

2012 Actual

2013Intended

%Change

Arizona 200 193 -3.6California 142 112 -21.4New Mexico 46 36 -21.0West 388 341 -12.2

Total may not add due to rounding.

2013 ELS Acreage

2012 Actual

2013Intended

%Change

Arizona 3 3 -16.0California 225 190 -15.6New Mexico 2 2 -26.0Texas 8 8 3.9ALL ELS 238 203 -15.0

Total may not add due to rounding.

12/1812/21

12/2412/27

12/30 1/2 1/5 1/81/11

1/141/17

1/201/23

1/261/29 2/1 2/4 2/7

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%Cotton Corn Soybeans

% Changes in Futures Prices

U.S. Cotton Production

07 05 04 98 00 118

10

12

14

16

18Million Bales

13.30

12.86

U.S. Balance Sheet

10/11 11/12 12/13 13/14 Change

Production 18.10 15.57 17.01 12.86 -4.15

Mill Use 3.90 3.30 3.43

Exports 14.38 11.71 12.20

Stocks 2.60 3.35 4.77

Stocks/Use 14% 23% 31%

Million Bales

06 07 08 09 10 11 12 1330%

32%

34%

36%

38%

40%

42%

44%

46%

48%

50%

Cotton’s Share of U.S. NDC

06 07 08 09 10 11 12 131.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50Ratio of Cotton to MMF

Apparel Import Per-Unit Values

Net Domestic Fiber Consumption

03 04 05 06 07 08 09 10 11 120

5

10

15

20

25

30

35Million Bale Equivalents

Cotton Other

U.S. Balance Sheet

10/11 11/12 12/13 13/14 Change

Production 18.10 15.57 17.01 12.86 -4.15

Mill Use 3.90 3.30 3.43 3.48 0.05

Exports 14.38 11.71 12.20

Stocks 2.60 3.35 4.77

Stocks/Use 14% 23% 31%

Million Bales

Int’l Area (Excluding China)

03 04 05 06 07 08 09 10 11 12 1350

52

54

56

58

60

62

64

66

68

70

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80Million Acres

Acres A Index (t-1)

A Index ($/Lb)

Int’l Mill Use (Excluding China)

03 04 05 06 07 08 09 10 11 12 130

10

20

30

40

50

60

70

80

61.867.2

71.0

Million Bales

07 08 09 10 11 12 130

20

40

60

80

100

120

Pakistan India

Cents per Lb

Yarn Export Values – Cotton Price

08 09 10 11 12 130

50

100

150

200

250China Cotton Price

China Polyester

A Index

Cents per Lb

Fiber Prices

07 08 09 10 11 12 130

20

40

60

80

100

120

Pakistan India China

Cents per Lb

Yarn Export Values – Cotton Price

06 07 08 09 10 11 12 130

100

200

300

400

500

600

700

800Thousand Bales

China Cotton Yarn Imports

China Cotton Use

04 05 06 07 08 09 10 11 12 130

10

20

30

40

50

60

50.0

35.5 34.3

Million Bales

Mill Use Yarn Imports

China’s Reserves: The Big Unknown

12/13 13/14 ChangeMill Use 35.5 34.3 -1.2

Production 33.5 30.7 -2.8

Gov’t Purchases 28.5 26.1 -2.4

Gov’t Sales 16.1 21.0 4.9

Stocks 40.6 43.8 3.2

Gov’t Reserves 33.8 38.8 5.0

Imports 12.5 6.9 -5.6

Million Bales

World Cotton Trade

04 05 06 07 08 09 10 11 12 130

5

10

15

20

25

30

35

40

45

50

38.935.9

Million Bales

US Exports Imports

U.S. Balance Sheet

10/11 11/12 12/13 13/14 Change

Production 18.10 15.57 17.01 12.86 -4.15

Mill Use 3.90 3.30 3.43 3.48 0.05

Exports 14.38 11.71 12.20 10.61 -1.59

Stocks 2.60 3.35 4.77 3.55 -1.23

Stocks/Use 14% 23% 31% 25%

Million Bales

World Balance Sheet

11/12 12/13 13/14 Change

Production 124.1 118.8 110.1 -8.7

Mill Use 103.1 106.1 108.7 2.6

Trade 44.7 38.9 35.9 -3.0

Stocks 68.9 81.7 83.1 1.4

China Reserves 21.4 33.8 38.8 5.0

Other Stocks 47.5 47.9 44.3 -3.6

Million Bales

Cotton Trade Balance

Production less Use Outside China

China Imports Difference

2010/11 17.8 12.0 5.8

2011/12 25.9 24.5 1.4

2012/13 14.7 12.5 2.2

2013/14 4.9 6.9 -2.0

Buy & Sell 4.9 4.1 0.8

Buy & Hold 4.9 11.0 -6.1

Million Bales

Summary Points

• Resistance breaking out of recent price range– China reserves a key factor– Sustaining demand

• Smaller U.S. acreage & production in ‘13– Remember: $6 corn & $13 soybeans resulted from

severe drought; markets could change quickly– ‘14 could look much different

Questions Going Forward

Growth in China Fiber Mill Use?

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 170

50

100

150

200

250Million Bales

Cotton Manmade Fiber

China’s5-Year Plan

Shifts in Cotton Mill Use?

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 170

10

20

30

40

50

60

70

80

90

100Million Bales

China Rest of World

Markets for U.S. Cotton?

1998-02 2003-07 2008-12 2013-170%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

U.S. Mills

China

Others

Turkey

Mexico