Situation for 2011-2013 Crops

Situation for 2011-2013 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¢

China Absorbing SurplusProduction

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



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



China’s Imports


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

Production Outside China

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

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 7.32011 118.08¢ $5.88 $13.31 20.1 8.92010 73.70¢ $4.04 $9.37 18.3 7.92009 51.65¢ $4.17 $8.98 12.4 5.8

U.S. Cotton Area

06 07 08 09 10 11 12 13 140

3

6

9

12

15

1815.27

10.839.47 9.15

10.97

14.74

12.3110.41

Million Acres

20% 34% -16% -15%

U.S. Cotton Area

06 07 08 09 10 11 12 13 140

3

6

9

12

15

1815.27

10.839.47 9.15

10.97

14.74

12.3110.41 11.26

Million Acres

20% 34% 8%-16% -15%

2014 Southeast Acreage2013 Actual

2014Intended

%Change

Alabama 365 376 2.9Florida 131 117 -10.9Georgia 1,370 1,372 0.1North Carolina 465 440 -5.3South Carolina 258 248 -3.7Virginia 78 81 4.1Southeast 2,667 2,634 -1.2

Total may not add due to rounding.

2014 Mid-South Acreage2013 Actual

2014Intended

%Change

Arkansas 310 296 -4.6Louisiana 130 157 20.7Mississippi 290 390 34.6Missouri 255 257 0.8Tennessee 250 289 15.4Mid-South 1,235 1,389 12.5


2014 Southwest Acreage2013 Actual

2014Intended

%Change

Kansas 27 31 13.9Oklahoma 185 201 8.4Texas 5,800 6,508 12.2Southwest 6,012 6,739 12.1


2014 West Acreage2013 Actual

2014Intended

%Change

Arizona 160 165 3.2California 93 68 -26.9New Mexico 39 42 7.4West 292 275 -5.8


2014 ELS Acreage2013 Actual

2014Intended

%Change

Arizona 1.5 3.6 137.2California 187 205 9.6New Mexico 3.5 4.0 13.4Texas 9 12.2 35.2ALL ELS 201 225 11.8


U.S. Cotton Production

03 04 05 06 07 08 09 10 11 12 13 140

5

10

15

20

25

30

17.3

13.216.4

Million Bales

International Area Outside China

03 04 05 06 07 08 09 10 11 12 13 145052545658606264666870

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

62.4 61.4 62.1

Million Acres

Acres A Index (t-1)

A Index ($/Lb)

Cotton Production Outside China

03 04 05 06 07 08 09 10 11 12 13 1460

65

70

75

80

85

90

95

88.184.8

87.9

Million Bales

Mill Use Outside China

U.S. Mill Use

• ‘14 Farm Bill continues EAAP at 3 c/lb

• Several new investments underway

08 09 10 11 12 13 143.0

3.2

3.4

3.6

3.8

4.0

3.3

3.53.6

3.7

Mill

ion

Bale

s

Cotton Mill Use Outside China

03 04 05 06 07 08 09 10 11 12 13 140

102030405060708090

74.0 70.4 73.5 76.4

Million Bales



China’s Imports


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

China Supply & Demand

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

China Balance Sheet

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 36.0 36.4 0.4

Imports 24.5 20.3 11.0 6.4 -4.6

Stocks 31.1 50.4 58.3 58.3 0.0

Stocks/Use 82% 140% 162% 160%

Million Bales

China Absorbing Surplus?Production


China’s Imports


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

Cotton Trade

U.S. Cotton Exports

03 04 05 06 07 08 09 10 11 12 13 1402468

101214161820

13.0

10.5 10.0

Million Bales

Competitive Export Markets• World trade- 35.8 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%

U.S. Balance Sheet

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%

Million Bales

World Balance Sheet12/13 13/14 14/15 Change

Production 123.1 117.8 118.0 0.2Mill Use 106.4 109.5 112.8 3.3Trade 46.0 38.5 35.8 -2.6Stocks 89.2 97.6 103.0 5.4

China 50.4 58.3 58.3 0.0

All Others 38.8 39.3 44.6 5.3

Million Bales

China Absorbing Surplus?Production


China’s Imports


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

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

Cotton Prices

08 09 10 11 12 13 140

50

100

150

200

250

Nearby NY A Index

Cents per Lb

Situation for 2011-2013 Crops

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