2017 – Year in Review Cotton prices stronger relative to competing crops Large world production & ending stocks Growth in world GDP Increased demand for cotton

U.S. Balance Sheet 15/16 16/17 17/18 18/19 Change Production 12.89 Million Bales 15/16 16/17 17/18 18/19 Change Production 12.89 17.17 21.26 Mill Use 3.45 3.25 3.35 Exports 9.15 14.92 15.00 Stocks 3.80 2.75 5.50 Stocks/Use 30% 15%

NCC Acreage Survey Distributed on Dec 15 Responses collected through mid-January Asked for acres of upland cotton, ELS cotton, corn, soybeans, wheat, other crops in ‘17 and intentions for ’18 also asked about price expectations

Pre-Planting Market Signals Cotton Corn Soybeans Cot/Corn Cot/Soy 2018 74.12¢ $3.83 $9.79 19.4 7.6 2017 73.53¢ $3.91 $10.08 18.8 7.3 2016 59.68¢ $3.84 $8.92 15.5 6.7 2015 65.00¢ $4.13 $9.72 15.7 2014 78.57¢ $4.66 $11.44 16.9 6.9 2013 83.18¢ $5.70 $12.84 14.6 6.5 2012 92.08¢ $5.65 $12.59 16.3 2018: average Nov 18’/Dec 18’ futures 12/15/17 – 01/15/18, 2012-2017: average Jan-Mar Nov/Dec contract price

Pre-Planting Market Signals

2018 Southeast Acreage 2017 Actual 2018 Intended % Change Alabama 435 439 0.8% Florida 99 106 6.9% Georgia 1,280 1,287 0.6% North Carolina 375 406 8.2% South Carolina 250 258 3.4% Virginia 84 87 3.1% Southeast 2,523 2,582 2.3% Total may not add due to rounding.

2018 Mid-South Acreage 2017 Actual 2018 Intended % Change Arkansas 445 466 4.7% Louisiana 220 214 -2.6% Mississippi 630 596 -5.5% Missouri 305 317 3.8% Tennessee 345 350 1.5% Mid-South 1,945 1,943 -0.1% Total may not add due to rounding.

2018 Southwest Acreage 2017 Actual 2018 Intended % Change Kansas 93 144 55.3% Oklahoma 585 708 21.0% Texas 6,900 7,154 3.7% Southwest 7,578 8,007 5.7% Total may not add due to rounding.

2018 West Acreage 2017 Actual 2018 Intended % Change Arizona 160 138 -13.5% California 88 78 -10.8% New Mexico 66 76 14.6% West 314 293 -6.8% Total may not add due to rounding.

2018 ELS Acreage 2017 Actual 2018 Intended % Change Arizona 15 20 31.6% California 215 212 -1.3% New Mexico 8 4.8% Texas 14 2.9% ALL ELS 252 254 1.0% Total may not add due to rounding.

U.S. Cotton Production 16/17 17/18 18/19 Change Planted (Mil Ac) 10.07 12.62 13.08 0.46 % Un-harvested 5.6% 10.1% 15.4% 5.3% Harvested (Mil Ac) 9.51 11.35 11.07 -0.28 Yield 867 899 842 -57 Production (Mil Ba) 17.17 21.26 19.42 -1.84

U.S. Balance Sheet 15/16 16/17 17/18 18/19 Change Production 12.89 Million Bales 15/16 16/17 17/18 18/19 Change Production 12.89 17.17 21.26 19.42 -1.84 Mill Use 3.45 3.25 3.35 3.41 0.06 Exports 9.15 14.92 15.00 14.33 -0.67 Stocks 3.80 2.75 5.50 7.04 1.54 Stocks/Use 30% 15% 40%

China Balance Sheet 15/16 16/17 17/18 18/19 Change Production 22.0 Million Bales 15/16 16/17 17/18 18/19 Change Production 22.0 22.8 26.4 26.3 -0.1 Mill Use 35.0 37.5 40.0 41.8 1.8 Imports 4.4 5.0 5.5 0.5 Stocks 58.2 48.4 39.8 29.8 -10.0 Stocks/Use 166% 129% 99% 71%

China Ending Stocks Million Bales

China Cotton Balance Sheet Million Bales

World Balance Sheet 16/17 17/18 18/19 Change Production 106.6 121.0 Million Bales 16/17 17/18 18/19 Change Production 106.6 121.0 119.3 -1.7 Mill Use 114.8 120.8 124.8 4.0 Trade 37.2 38.4 39.0 0.6 Stocks 87.6 82.2 -5.4 China 48.4 39.8 29.8 -10.0 All Others 39.2 47.8 52.4 4.6

Ending Stocks Outside of China Million Bales

World Cotton Trade ‘12-16 Avg 17/18 18/19 World Trade 39.66 38.37 Million Bales ‘12-16 Avg 17/18 18/19 World Trade 39.66 38.37 39.00 U.S. Exports 11.77 15.00 14.33 Trade Share 29.7% 39.1% 36.7%

Cotton Prices

Final Thoughts U.S. export sales and shipments for ’17 marketing year Large ending stocks in key exporting countries China’s re-entry as a large importer at some point India’s price support policies Mill use in the current macroeconomic environment and competition from man-made fiber

Seed Cotton Program Reference Price = $0.367/lb Seed Cotton Price Weighted average of lint and cottonseed prices Payment Yield Update Option to update the upland cotton CCP lint yield based on 90% of the 2008-12 actual yield not counting years in which cotton was not grown Establish Base Acreage (1) Convert generic base to seed cotton base (higher of 80% of generic base or 09-12 planted cotton acres (not to exceed generic) (2) Reallocate all generic base to seed cotton & other commodity bases according to shares of ‘09-12 planted

NCC Education Program NCC will launch an education process beginning with webinars on Feb 19-20 More information will be provided next week