U.S. and World Cotton Economic Outlook June 2002 Prepared by: Economic Services National Cotton Council

U.S. Real GDP Growth

World Real GDP Growth

U.S. Net Farm Income

Agricultural Spending

FED’s Major Currencies Dollar Index

Indices: Exchange Rate & Cotton Futures

U.S Spot Price

U.S Spot Price and “A” Index

U.S. Supply and Demand Million Bales Beginning Stocks6.0 Production20.3 Imports.0 Total Supply26.3 Mill Use7.6 Exports11.0 Total Offtake18.6 Ending Stocks7.7 Stocks-to-Use Ratio41.4% Million Bales Beginning Stocks6.0 Production20.3 Imports.0 Total Supply26.3 Mill Use7.6 Exports11.0 Total Offtake18.6 Ending Stocks7.7 Stocks-to-Use Ratio41.4% 2001/022001/022002/032002/03

U.S. Cotton Mill Use

Average Daily Mill Use

Net Domestic Cotton Consumption

U.S. Cotton Textile & Apparel Exports

U.S. Cotton Textile & Apparel Imports

Price Relationships Since Aug. ‘01

U.S. Cotton Exports

Top Customers for U.S. Raw Cotton 1990 County(000 Bales) Japan1,538 China1,347 Korea1,185 Indonesia 552 Italy 424 Taiwan County(000 Bales) Japan1,538 China1,347 Korea1,185 Indonesia 552 Italy 424 Taiwan YTD Country(000 Bales) Mexico2,393 Turkey 1,541 India 1,057 Indonesia1,040 Taiwan 823 Thailand 736

U.S. Ending Cotton Stocks

Price Relationships Since Aug. ‘01

U.S. Supply and Demand Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use7.6 Exports11.0 Total Offtake18.6 Ending Stocks7.7 Stocks-to-Use Ratio41.4% Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use7.6 Exports11.0 Total Offtake18.6 Ending Stocks7.7 Stocks-to-Use Ratio41.4% 2001/022001/022002/032002/03

September Corn Futures

November Soybean Futures

December Cotton Futures

NYBOT Dec. Contracts since 8/1/00

Southeast3,610 3, Mid-South 4,595 4, Southwest6,312 6, West1, ALL UPLAND 15,527 14, ALL ELS ALL COTTON15,788 14, U.S. Planting Intentions % Actual Intended Change Actual Intended Change Thousand Acres

U.S. Supply and Demand Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use Exports Total Offtake Ending Stocks7.7 Stocks-to-Use Ratio41.4% Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use Exports Total Offtake Ending Stocks7.7 Stocks-to-Use Ratio41.4% 2001/022001/022002/032002/03

U.S. Cotton Mill Use

U.S. Cotton Exports

India and Pakistan Net Trade

Chinese Net Trade ? ?

Begin Stock12,500 11,590 Production 20,600 21,150 20,655 Imports1,800 2,000 1,375 Total Supply34,900 34,740 Mill Use 25,700 25,000 24,300 Exports End. Stocks8,900 9, /03 Chinese Estimates ICAC USDA Cotlook ICAC USDA Cotlook

U.S. Supply and Demand Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use Exports Total Offtake Ending Stocks Stocks-to-Use Ratio41.4%35.6% Million Bales Beginning Stocks Production Imports.0.0 Total Supply Mill Use Exports Total Offtake Ending Stocks Stocks-to-Use Ratio41.4%35.6% 2001/022001/022002/032002/03

World Supply and Demand Million Bales Beginning Stocks Production Total Supply Mill Use Ending Stocks Stocks-to-Use Ratio47.9%42.5% Million Bales Beginning Stocks Production Total Supply Mill Use Ending Stocks Stocks-to-Use Ratio47.9%42.5% 2001/022001/022002/032002/03

World Cotton Production

World Cotton Mill Use

World Cotton Exports

Foreign Cotton Stocks, Net China

Farm Bill Impacts DEMAND STIMULUSDEMAND STIMULUS –Elimination of Step 2 threshold of 1.25 cents –Adds ,000 bales PRODUCTION NEUTRALPRODUCTION NEUTRAL –Payments are decoupled from planting DEMAND STIMULUSDEMAND STIMULUS –Elimination of Step 2 threshold of 1.25 cents –Adds ,000 bales PRODUCTION NEUTRALPRODUCTION NEUTRAL –Payments are decoupled from planting

U.S. Upland Planted Area

Grower Receipts

Merchants Ginners Crushers Producers Cooperatives Warehouses Manufacturers