U.S. and World Cotton Economic Outlook

March 2011

Prepared by:Economic Services

National Cotton Council

U.S. and World Cotton Economic Outlook

March 2011

Prepared by:Economic Services

National Cotton Council

Macroeconomic Environment

U.S. Real GDP Growth

Percent

-10

-8

-6

-4

-2

0

2

4

6

8

10

05 06 07 08 09 10

Dollars per Barrel

2030405060708090

100110120130140150160

Au

g-0

5

No

v-0

5

Fe

b-0

6

Ma

y-0

6

Ju

l-0

6

Oc

t-0

6

Ja

n-0

7

Ap

r-0

7

Ju

l-0

7

Oc

t-0

7

De

c-0

7

Ma

r-0

8

Ju

n-0

8

Se

p-0

8

De

c-0

8

Ma

r-0

9

Ju

n-0

9

Au

g-0

9

No

v-0

9

Fe

b-1

0

Ma

y-1

0

Au

g-1

0

No

v-1

0

Fe

b-1

1

U.S. Crude Oil Spot Price

Cents per Gallon

80110140170200230260290320350380410440

Jun

-06

Sep

-06

Dec

-06

Mar

-07

May

-07

Au

g-0

7

No

v-07

Feb

-08

May

-08

Au

g-0

8

Oct

-08

Jan

-09

Ap

r-09

Jul-

09

Oct

-09

Jan

-10

Ap

r-10

Jul-

10

Sep

-10

Dec

-10

U.S. #2 Diesel, Gulf Coast

Percent

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

99 00 01 02 03 04 05 06 07 08 09 10 11

Percent

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

99 00 01 02 03 04 05 06 07 08 09 10 11

Civilian Unemployment Rate

$ Billions

-1,800

-1,400

-1,000

-600

-200

200

10 11 12 13 14 15 16 17 18 19 20

10-Aug 11-Jan

U.S. Federal Budget Surplus(CBO Projection)

$ Billion

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Upland Cotton Other Commodity Programs Conservation

$ Billion

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Upland Cotton Other Commodity Programs Conservation

CBO Ag Baseline Spending

Percent

-4

-2

0

2

4

6

8

10

12

14

16W

orld US

Indi

a

Chi

na

2009 2010 2011 2012

Real GDP Growthin Selected Countries

0.55

0.65

0.75

0.85

0.95

1.05

1.15

1.25

Jan

-97

Jul

Jan

-98

Jul

Jan

-99

Jul

Jan

-00

Jul

Jan

-01

Jul

Jan

-02

Jul

Jan

-03

Jul

Jan

-04

Jul

Jan

-05

Jul

Jan

-06

Jul

Jan

-07

Jul

Jan

-08

July

Jan

-09

July

Jan

-10

July

Jan

-11

Euro(Currency per U.S. Dollar)

90

95

100

105

110

115

120

125

130

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Real Exchange Rate Index (Other Important Trade Partners, Source – Federal Reserve )

8090

100110120130140150160170180190200

Jan

-95

Jul

Jan

-96

Jul

Jan

-97

Jul

Jan

-98

Jul

Jan

-99

Jul

Jan

-00

Jul

Jan

-01

Jul

Jan

-02

Jul

Jan

-03

Jul

Jan

-04

Jul

Jan

-05

Jul

Jan

-06

Jul

Jan

-07

Jul

Jan

-08

Jul

Jan

-09

Jul

Jan

-10

Jul

Jan

-11

Crops Livestock

Ag Prices Received Index

$ Billion

0

10

20

30

40

50

60

70

80

90

100

99 00 01 02 03 04 05 06 07 08 09 10f 11f

Market Government Emergency

U.S. Net Farm Income

U.S. Cotton Supply

30405060708090

100110120130140150160

Au

g

Se

p

No

v

Jan

Ma

r

Ma

y

Ju

l

Se

p

No

v

Dec-11 Dec -10

30405060708090

100110120130140150160

Au

g

Se

p

No

v

Jan

Ma

r

Ma

y

Ju

l

Se

p

No

v

Dec-11 Dec -10

December Cotton FuturesCents per Pound

275

325

375

425

475

525

575

625

675

725

775

825

Au

g

Se

p

No

v

Ja

n

Ma

r

Ma

y

Ju

l

Se

p

No

v

Dec-11 Dec-10

December Corn FuturesCents per Bushel

580

680

780

880

980

1080

1180

1280

1380

1480

1580

1680

Au

g

Se

p

No

v

Ja

n

Ma

r

Ma

y

Ju

l

Se

p

No

v

Nov-11 Nov-10

November Soybean FuturesCents per Bushel

SoutheastSoutheast 2,597 2,597 2,930 2,930 12.812.8Mid-SouthMid-South 1,920 1,920 2,283 2,283 18.9 18.9 SouthwestSouthwest 5,886 5,886 6,585 6,585 11.9 11.9 WestWest 366 366 465 465 27.0 27.0

ALL UPLANDALL UPLAND 10,76910,769 12,26312,263 13.913.9

ALL ELSALL ELS 204 204 251 251 23.1 23.1

ALL COTTONALL COTTON 10,973 10,973 12,514 12,514 14.014.0

SoutheastSoutheast 2,597 2,597 2,930 2,930 12.812.8Mid-SouthMid-South 1,920 1,920 2,283 2,283 18.9 18.9 SouthwestSouthwest 5,886 5,886 6,585 6,585 11.9 11.9 WestWest 366 366 465 465 27.0 27.0

ALL UPLANDALL UPLAND 10,76910,769 12,26312,263 13.913.9

ALL ELSALL ELS 204 204 251 251 23.1 23.1

ALL COTTONALL COTTON 10,973 10,973 12,514 12,514 14.014.0

2011 U.S. Cotton Plantings

20102010 20112011 %% Actual Actual Intended* Intended* ChangeChange

20102010 20112011 %% Actual Actual Intended* Intended* ChangeChange

Thousand AcresThousand AcresThousand AcresThousand Acres

*2011 NCC Planting Intentions Survey*2011 NCC Planting Intentions Survey

SoutheastSoutheast 1,051 1,051 1,186 1,186 12.812.8Mid-SouthMid-South 777 777 924 924 18.9 18.9 SouthwestSouthwest 2,382 2,382 2,665 2,665 11.9 11.9 WestWest 148 148 188 188 27.0 27.0

ALL UPLANDALL UPLAND 4,3584,358 4,9634,963 13.913.9

ALL ELSALL ELS 83 83 102 102 23.1 23.1

ALL COTTONALL COTTON 4,441 4,441 5,064 5,064 14.014.0

SoutheastSoutheast 1,051 1,051 1,186 1,186 12.812.8Mid-SouthMid-South 777 777 924 924 18.9 18.9 SouthwestSouthwest 2,382 2,382 2,665 2,665 11.9 11.9 WestWest 148 148 188 188 27.0 27.0

ALL UPLANDALL UPLAND 4,3584,358 4,9634,963 13.913.9

ALL ELSALL ELS 83 83 102 102 23.1 23.1

ALL COTTONALL COTTON 4,441 4,441 5,064 5,064 14.014.0

2011 U.S. Cotton Plantings

20102010 20112011 %% Actual Actual Intended* Intended* ChangeChange

20102010 20112011 %% Actual Actual Intended* Intended* ChangeChange

Thousand HectaresThousand HectaresThousand HectaresThousand Hectares

*2011 NCC Planting Intentions Survey*2011 NCC Planting Intentions Survey

0

4

8

12

16

20

24

28

96 97 98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

1

2

3

4

5

6

Mill

ion

Me

tric

To

ns

U.S. Cotton Production

0

5

10

15

20

25

30

35

96 97 98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

1

2

3

4

5

6

7

Mill

ion

Me

tric

To

ns

Beg Stocks Imports Production

U.S. Cotton Supply

U.S. Cotton Demand

Fiber Equivalents

0

10

20

30

40

50

60

99 00 01 02 03 04 05 06 07 08 09 10 11f

Mill

ion

Bal

es

0

2

4

6

8

10

12

Mill

ion

Met

ric

To

ns

Cotton Other

Net Domestic Fiber Consumption

Percent

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

99 00 01 02 03 04 05 06 07 08 09 10

Cotton’s Share of Fiber Consumption

Fiber Equivalents

0

4

8

12

16

20

24

28

99 00 01 02 03 04 05 06 07 08 09 10 11f

Mill

ion

Ba

les

0

1

2

3

4

5

6

Mill

ion

Me

tric

To

ns

Retail Imported

Components of Retail Cotton Consumption

Fiber Equivalents

0

5

10

15

20

25

99 00 01 02 03 04 05 06 07 08 09 10 11f

Mill

ion

Ba

les

0

1

2

3

4

5

Mill

ion

Me

tric

To

ns

U.S. Cotton Textile Imports

U.S. Cotton Content in Textile ImportsFiber Equivalents

0

10

20

30

40

50

60

99 00 01 02 03 04 05 06 07 08 09 10 11f

Mill

ion

Bal

es

0

2

4

6

8

10

12

Mill

ion

Met

ric

To

ns

Cotton Other

U.S. Trade With Mexico

0

1

2

3

01 02 03 04 05 06 07 08 09 10

Mill

ion

Ba

les

0

0.2

0.4

0.6

0.8

Mill

ion

Me

tric

To

ns

Imports Exports

U.S. Trade with CBI

0

1

2

3

4

01 02 03 04 05 06 07 08 09 10

Mill

ion

Ba

les

0

0.2

0.4

0.6

0.8

Mill

ion

Me

tric

To

ns

Imports Exports

U.S. Imports from China

0

1

2

3

4

5

6

7

8

01 02 03 04 05 06 07 08 09 10

Mill

ion

Ba

les

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Mill

ion

Me

tric

To

ns

U.S. Cotton Mill Use(Calendar Year, Million Bales)

0

2

4

6

8

10

12

99 00 01 02 03 04 05 06 07 08 09 10 11f

Mill

ion

Ba

les

0.0

0.4

0.8

1.2

1.6

2.0

2.4

Mill

ion

Me

tric

To

ns

U.S. Cotton Mill Use(Crop Year, Million Bales)

0

2

4

6

8

10

12

98 99 00 01 02 03 04 05 06 07 08 09 10p

Mill

ion

Ba

les

0

0.4

0.8

1.2

1.6

2

2.4

Mill

ion

Me

tric

To

ns

0

5

10

15

20

25

30

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

1

2

3

4

5

6

Mill

ion

Me

tric

To

ns

Exports Mill Use Production

U.S. Cotton Production & Use

The World Market & U.S. Cotton Exports

-10

0

10

20

30

40

50

60

70

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

-2.2

-0.2

1.8

3.8

5.8

7.8

9.8

11.8

13.8

Mill

ion

Me

tric

To

ns

Net Imports Production Use Stocks

China Cotton Supply & Use

World Cotton Production

0

25

50

75

100

125

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

5

10

15

20

25

Mill

ion

Me

tric

To

ns

0

20

40

60

80

100

120

140

160

98 99 00 01 02 03 04 05 06 07 08 09e 10f

Mill

ion

Ba

les

0

5

10

15

20

25

30

Mill

ion

Me

tric

To

ns

Cotton Polyester

World Fiber Mill Use

*PCI

Cents per Pound

30

50

70

90

110

130

150

170

190

210

230

250

Ja

n-0

4

Ap

r-0

4

Au

g-0

4

No

v-0

4

Ma

r-0

5

Ju

n-0

5

Se

p-0

5

Ja

n-0

6

Ap

r-0

6

Au

g-0

6

No

v-0

6

Ma

r-0

7

Ju

n-0

7

Oc

t-0

7

Ja

n-0

8

Ma

y-0

8

Au

g-0

8

No

v-0

8

Ma

r-0

9

Ju

n-0

9

Oc

t-0

9

Ja

n-1

0

Ma

y-1

0

Au

g-1

0

De

c-1

0

Ma

r-1

1

"A" FE Index

Asian Polyester Staple

Fiber Prices

World Cotton Mill Use

0

20

40

60

80

100

120

140

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

5

10

15

20

25

30

Mill

ion

Me

tric

To

ns

30405060708090

100110120130140

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Bal

es

9

12

15

18

21

24

27

Mill

ion

Met

ric

To

ns

Stocks Production Use

Foreign Cotton Production & Use

U.S. Cotton Exports

0

2

4

6

8

10

12

14

16

18

20

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

1

2

3

4

Mill

ion

Me

tric

To

ns

World Cotton Ending Stocks

0

10

20

30

40

50

60

70

98 99 00 01 02 03 04 05 06 07 08 09e 10p

Mill

ion

Ba

les

0

2

4

6

8

10

12

14

Mill

ion

Me

tric

To

ns

U.S. ROW China

60

434139

4444

52

56

4242

585755

0

10

20

30

40

50

60

70

80

98 99 00 01 02 03 04 05 06 07 08 09 10

Percent

Cotton Stocks/Use (World less China)

U.S. Supply and DemandMillion Bales

Beginning StocksBeginning Stocks 6.346.34 2.952.95ProductionProduction 12.1912.19 18.3218.32ImportsImports 0.000.00 0.010.01

Total SupplyTotal Supply 18.5318.53 21.2721.27

Mill UseMill Use 3.463.46 3.603.60ExportsExports 12.0412.04 15.7515.75

Total OfftakeTotal Offtake 15.5015.50 19.3519.35

Ending StocksEnding Stocks 2.952.95 1.901.90Stocks-to-Use RatioStocks-to-Use Ratio 19.0%19.0% 9.8%9.8%

2009/10e 2010/11p

U.S. Supply and DemandMillion Metric Tons

Beginning StocksBeginning Stocks 1.381.38 0.640.64ProductionProduction 2.662.66 3.993.99ImportsImports 0.000.00 0.000.00

Total SupplyTotal Supply 4.044.04 4.634.63

Mill UseMill Use 0.750.75 0.780.78ExportsExports 2.622.62 3.433.43

Total OfftakeTotal Offtake 3.383.38 4.224.22

Ending StocksEnding Stocks 0.640.64 0.410.41Stocks-to-Use RatioStocks-to-Use Ratio 19.0%19.0% 9.8%9.8%

2009/10e 2010/11p

Beginning Stocks 60.52 43.84Production 101.34 114.95Imports 35.98 38.59

Mill Use 118.52 116.61Exports 35.55 38.58

Ending Stocks 43.84 42.33Stocks-to-Use Ratio 37.0% 36.3%

Beginning Stocks 60.52 43.84Production 101.34 114.95Imports 35.98 38.59

Mill Use 118.52 116.61Exports 35.55 38.58

Ending Stocks 43.84 42.33Stocks-to-Use Ratio 37.0% 36.3%

World Supply and DemandMillion Bales

2009/10e 2010/11p

Beginning Stocks 13.19 9.55Production 22.08 25.04Imports 7.84 8.41

Mill Use 25.82 25.41Exports 7.75 8.41

Ending Stocks 9.55 9.22Stocks-to-Use Ratio 37.0% 36.3%

Beginning Stocks 13.19 9.55Production 22.08 25.04Imports 7.84 8.41

Mill Use 25.82 25.41Exports 7.75 8.41

Ending Stocks 9.55 9.22Stocks-to-Use Ratio 37.0% 36.3%

World Supply and DemandMillion Metric Tons

2009/10e 2010/11p

MerchantsMerchantsGinnersGinners CottonseedCottonseed

ProducersProducers

CooperativesCooperatives

WarehousesWarehousesManufacturersManufacturers