2. Situation for Crops
Chinese government purchasing 75 million bales into reserves at well above world price
Despite world production consistently exceeding use, prices traded in relatively narrow range, “A” Index averaging close to 90¢

3. China Absorbing Surplus
Production less Use Outside China
China’s Imports
2011/12
27.8
24.5
2012/13
17.7
20.3
2013/14
11.3
11.0
3-Yr Total
56.8
55.9

4. China Absorbing Surplus
Production less Use Outside China
China’s Imports
Change in China’s Stocks
Change in Stocks Outside China
2011/12
27.8
24.5
20.5
2.6
2012/13
17.7
20.3
19.3
-3.4
2013/14
11.3
11.0
8.0
0.5
3-Yr Total
56.8
55.9
47.8
-0.3

5. China Absorbing Surplus
Production less Use Outside China
China’s Imports
Change in China’s Stocks
Change in Stocks Outside China
2011/12
27.8
24.5
20.5
2.6
2012/13
17.7
20.3
19.3
-3.4
2013/14
11.3
11.0
8.0
0.5
3-Yr Total
56.8
55.9
47.8
-0.3
2014/15

6. Production Outside China

7. NCC Acreage Survey Distributed on Dec 18
Responses collected through Jan 17
Asked for acres of upland cotton, ELS cotton, corn, soybeans, wheat, other crops in ‘13 and intentions for ’14; also asked price expectations

8. Pre-Planting Market Signals
Cotton
Corn
Soybeans
Cot/Corn
Cot/Soy
2014
78.20¢
$4.53
$11.31
17.3
6.9
2013
83.18¢
$5.70
$12.84
14.6
6.5
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

9. U.S. Cotton Area

10. U.S. Cotton Area

11. 2014 Southeast Acreage 2013 Actual 2014 Intended % Change Alabama 365
376
2.9
Florida
131
117
-10.9
Georgia
1,370
1,372
0.1
North Carolina
465
440
-5.3
South Carolina
258
248
-3.7
Virginia 78 81
4.1
Southeast
2,667
2,634
-1.2
Total may not add due to rounding.

12. 2014 Mid-South Acreage 2013 Actual 2014 Intended % Change Arkansas 310
296
-4.6
Louisiana
130
157
20.7
Mississippi
290
390
34.6
Missouri
255
257
0.8
Tennessee
250
289
15.4
Mid-South
1,235
1,389
12.5
Total may not add due to rounding.

13. 2014 Southwest Acreage 2013 Actual 2014 Intended % Change Kansas 27 31
13.9
Oklahoma
185
201
8.4
Texas
5,800
6,508
12.2
Southwest
6,012
6,739
12.1
Total may not add due to rounding.

14. 2014 West Acreage 2013 Actual 2014 Intended % Change Arizona 160 165
3.2
California 93 68
-26.9
New Mexico 39 42
7.4
West
292
275
-5.8
Total may not add due to rounding.

15. 2014 ELS Acreage 2013 Actual 2014 Intended % Change Arizona 1.5 3.6
137.2
California
187
205
9.6
New Mexico
3.5
4.0
13.4
Texas 9
12.2
35.2
ALL ELS
201
225
11.8
Total may not add due to rounding.

16. U.S. Cotton Production

17. International Area Outside China

18. Cotton Production Outside China

19. Mill Use Outside China

20. U.S. Mill Use ‘14 Farm Bill continues EAAP at 3 c/lb
Several new investments underway

21. Cotton Mill Use Outside China

22. China Absorbing Surplus
Production less Use Outside China
China’s Imports
Change in China’s Stocks
Change in Stocks Outside China
2011/12
27.8
24.5
20.5
2.6
2012/13
17.7
20.3
19.3
-3.4
2013/14
11.3
11.0
8.0
0.5
3-Yr Total
56.8
55.9
47.8
-0.3
2014/15
11.5

23. China Supply & Demand

24. Key Assumptions Accumulating reserves ends with the ‘13 crop
Target price program planned for Xinjiang
Level speculated at 18,300 RMB/ton
Current reserve price at 20,400 RMB/ton
TRQ of approximately 4.1 million bales
Some additional quota for processing trade

25. China Balance Sheet 11/12 12/13 13/14 14/15 Change Production 34.0
Million Bales
11/12
12/13
13/14
14/15
Change
Production
34.0
35.0
33.0
30.1
-2.9
Mill Use
38.0
36.0
36.4
0.4
Imports
24.5
20.3
11.0
6.4
-4.6
Stocks
31.1
50.4
58.3
0.0
Stocks/Use
82%
140%
162%
160%

26. China Absorbing Surplus?
Production less Use Outside China
China’s Imports
Change in China’s Stocks
Change in Stocks Outside China
2011/12
27.8
24.5
20.5
2.6
2012/13
17.7
20.3
19.3
-3.4
2013/14
11.3
11.0
8.0
0.5
3-Yr Total
56.8
55.9
47.8
-0.3
2014/15
11.5
6.4

27. Cotton Trade

28. U.S. Cotton Exports

29. Competitive Export Markets
World trade mb in ‘14, down from 38.5 mb in ‘13
U.S. market share at 28%, up from 27% in ’13 (34% share in ‘08-12)
For ‘14, U.S. exports at 59% of exportable supplies
Exports normally at 70-75% of exportable supplies
For ‘14, approximately 20% of U.S. exports to China
China accounts for 38% of U.S. exports on average
For ‘14, U.S. cotton accounts for 31% of China’s imports
Average market share has been 37%

30. U.S. Balance Sheet 11/12 12/13 13/14 14/15 Change Production 15.57
Million Bales
11/12
12/13
13/14
14/15
Change
Production
15.57
17.32
13.19
16.37
3.19
Mill Use
3.30
3.50
3.60
3.73
0.13
Exports
11.71
13.03
10.50
9.98
-0.52
Stocks
3.35
3.90
3.00
5.68
2.68
Stocks/Use
22%
24%
21%
41%

31. World Balance Sheet 12/13 13/14 14/15 Change Production 123.1 117.8
Million Bales
12/13
13/14
14/15
Change
Production
123.1
117.8
118.0
0.2
Mill Use
106.4
109.5
112.8
3.3
Trade
46.0
38.5
35.8
-2.6
Stocks
89.2
97.6
103.0
5.4
China
50.4
58.3
0.0
All Others
38.8
39.3
44.6
5.3

32. China Absorbing Surplus?
Production less Use Outside China
China’s Imports
Change in China’s Stocks
Change in Stocks Outside China
2011/12
27.8
24.5
20.5
2.6
2012/13
17.7
20.3
19.3
-3.4
2013/14
11.3
11.0
8.0
0.5
3-Yr Total
56.8
55.9
47.8
-0.3
2014/15
11.5
6.4
0.0
5.3

33. Summary Points Production continues to exceed use
Wildcards: weather and China’s area
Growth in demand not enough to prevent increase in stocks
Exportable supplies chasing smaller Chinese imports

34. Cotton Prices