Macroeconomic Environment

U.S. and World Cotton Economic Outlook

November 2013

Prepared by:Economic Services

National Cotton Council

MacroeconomicEnvironment

U.S. Real GDP Growth

05 06 07 08 09 10 11 12 13-9

-7

-5

-3

-1

1

3

5

7

9 Percent

U.S. Crude Oil Spot Price

2030405060708090

100110120130140150160 Dollars per Barrel

U.S. #2 Diesel, Gulf Coast

80110140170200230260290320350380410440 Cents per Gallon

Civilian Unemployment Rate

03 04 05 06 07 08 09 10 11 12 133.5

4.5

5.5

6.5

7.5

8.5

9.5

10.5Percent

U.S. Federal Budget Surplus(CBO Projection)

12 13 14 15 16 17 18 19 20-1800

-1500

-1200

-900

-600

-300

0

300$ Billions

12-Aug 13-May

CBO Ag Baseline Spending

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 20230

2

4

6

8

10

12

14

16

18$ Billions

Upland Cotton Other Commodity Programs Conservation

Real GDP Growthin Selected Countries

World US India China-6

-4

-2

0

2

4

6

8

10

12

14

16Percent

2011 2012 2013 2014

Euro(Currency per U.S. Dollar)

Jan-97Mar May Jul Sep NovJan-04Mar May Jul Sep NovJan-11Mar May0.55

0.65

0.75

0.85

0.95

1.05

1.15

1.25

Real Exchange Rate Index(Other Important Trade Partners)

Jan-

01 Jun

Nov Ap

rSe

pFe

b Jul

Dec

May Oct

Mar

Aug

Jan-

06 Jun

Nov Ap

rSe

pFe

b Jul

Dec

May Oct

Mar

Aug

Jan-

11 Jun

Nov Ap

rSe

pFe

b Jul90

95

100

105

110

115

120

125

130

Federal Reserve

Ag Prices Received Index

Jan-95Apr Jul OctJan-00Apr Jul OctJan-05Apr Jul OctJan-10Apr Jul Oct80

100

120

140

160

180

200

220

240

260

Crops Livestock

U.S. Net Farm Income

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13f0

20

40

60

80

100

120

140 $ BillionsMarket Government Emergency

U.S. Cotton Supply

December Cotton FuturesAu

g

Sep

Oct

Nov De

c

Jan

Feb

Mar

Apr

May Jun Jul

Aug

Sep

Oct

Nov De

c30405060708090

100110120130140150160

Cents/Pound

December Corn FuturesAu

g

Sep

Oct

Nov De

c

Jan

Feb

Mar

Apr

May Jun Jul

Aug

Sep

Oct

Nov De

c275325375425475525575625675725775825875

Cents/BushelDec-12

November Soybean FuturesAu

g

Sep

Oct

Nov De

c

Jan

Feb

Mar

Apr

May Jun Jul

Aug

Sep

Oct

Nov

580680780880980

1,0801,1801,2801,3801,4801,5801,6801,7801,880

Cents/BushelNov-12

2013 U.S. Cotton AreaThousand Acres

2012 Actual*

2013 Estimated* % Change

Southeast 2,748 2,653 -3.5Mid-South 2,030 1,235 -39.2Southwest 6,911 5,962 -13.7West 387 286 -26.1ALL UPLAND 12,076 10,136 -16.1ALL ELS 238 201 -15.5ALL COTTON 12,314 10,337 -16.1

* USDA

2013 U.S. Cotton AreaThousand Hectares

2012 Actual*

2013 Estimated* % Change

Southeast 1,112 1,074 -3.5Mid-South 822 500 -39.2Southwest 2,797 2,413 -13.7West 157 116 -26.1ALL UPLAND 4,887 4,102 -16.1ALL ELS 96 81 -15.5ALL COTTON 4,983 4,183 -16.1

* USDA

U.S. Cotton Production

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

4

8

12

16

20

24

28

0.0

0.9

1.7

2.6

3.5

4.4

5.2

6.1

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Supply

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

5

10

15

20

25

30

35

0.0

1.1

2.2

3.3

4.4

5.4

6.5

7.6Beg Stocks Imports Production

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Demand

Net Domestic Fiber Consumption

01 02 03 04 05 06 07 08 09 10 11 12 13f0

10

20

30

40

50

60

0.0

2.2

4.4

6.5

8.7

10.9

13.1Million Bale Equivalents

Cotton Other

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

Cotton’s Share of Fiber Consumption

00 01 02 03 04 05 06 07 08 09 10 11 1235

36

37

38

39

40

41

42

43

44

45

Percent

U.S. Cotton Retail Consumption

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

2

4

6

8

10

12

14

16

18

20

Million 480 Lb Bale Equivalents

2013

2012

Components of Retail Fiber Consumption

01 02 03 04 05 06 07 08 09 10 11 12 13f0

4

8

12

16

20

24

28

0.0

0.9

1.7

2.6

3.5

4.4

5.2

6.1Fiber Equivalents

Retail Imported

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Textile Imports

01 02 03 04 05 06 07 08 09 10 11 12 13f0

5

10

15

20

25

0.0

1.1

2.2

3.3

4.4

5.4Fiber Equivalents

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Content in Textile Imports

01 02 03 04 05 06 07 08 09 10 11 120

3

6

9

12

15

18

21

24

0.0

0.7

1.3

2.0

2.6

3.3

3.9

4.6

5.2Fiber EquivalentsNon-U.S. Cotton ROW NAFTA CBI

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Product Trade with Mexico

04 05 06 07 08 09 10 11 120

1

2

3

0.0

0.2

0.4

0.7Imports Exports

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Product Trade with CBI

04 05 06 07 08 09 10 11 120

1

2

3

4

0.0

0.2

0.4

0.7

0.9Imports Exports

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Product Imports from China

04 05 06 07 08 09 10 11 120

1

2

3

4

5

6

7

8

0.0

0.2

0.4

0.7

0.9

1.1

1.3

1.5

1.7

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Mill Use(Calendar Year)

01 02 03 04 05 06 07 08 09 10 11 12 13f0

2

4

6

8

10

12

0.0

0.4

0.9

1.3

1.7

2.2

2.6

Met

ric B

ales

Mill

ion

Met

ric T

ons

U.S. Cotton Mill Use(Marketing Year)

01 02 03 04 05 06 07 08 09 10 11 12e 13f0

2

4

6

8

10

12

0.0

0.4

0.9

1.3

1.7

2.2

2.6

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Production & Use

01 02 03 04 05 06 07 08 09 10 11 12e 13f0

5

10

15

20

25

30

0.0

1.1

2.2

3.3

4.4

5.4

6.5Exports Mill Use Production

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

The World Market& U.S. Cotton Exports

China Cotton Supply & Use

99 00 01 02 03 04 05 06 07 08 09 10 11 12e 13f-10

0

10

20

30

40

50

60

70

-2.2

0.0

2.2

4.4

6.5

8.7

10.9

13.1

15.3Net Imports Production Use Stocks

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

World Cotton Production

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

25

50

75

100

125

150

0.0

5.4

10.9

16.3

21.8

27.2

32.7

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

World Fiber Mill Use

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

20

40

60

80

100

120

140

160

180

200

220

0.0

4.4

8.7

13.1

17.4

21.8

26.1

30.5

34.9

39.2

43.6

47.9Cotton Polyester

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

*PCI

Fiber Prices

30507090

110130150170190210230250 Cents per Pound

A FE Index Asian Polyester Staple

World Cotton Mill Use

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

20

40

60

80

100

120

140

0.0

4.4

8.7

13.1

17.4

21.8

26.1

30.5

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

Foreign Cotton Production & Use

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f30

40

50

60

70

80

90

100

110

120

130

140

6.5

8.7

10.9

13.1

15.3

17.4

19.6

21.8

24.0

26.1

28.3

30.5Stocks Production Use

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

U.S. Cotton Exports

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

2

4

6

8

10

12

14

16

18

20

0.0

0.4

0.9

1.3

1.7

2.2

2.6

3.1

3.5

3.9

4.4

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

World Cotton Ending Stocks

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

10

20

30

40

50

60

70

80

90

100

0.0

2.2

4.4

6.5

8.7

10.9

13.1

15.3

17.4

19.6

21.8U.S. ROW China

Mill

ion

Bale

s

Mill

ion

Met

ric T

ons

Cotton Stocks/Use(World less China)

00 01 02 03 04 05 06 07 08 09 10 11 12e 13f0

10

20

30

40

50

60

70

80

43

52

44 44

6055

57 5761

48

5864

53 51

Percent

U.S. Supply and DemandMillion Bales

Beginning Stocks 3.35 3.90Production 17.32 13.11Imports 0.01 0.01

Total Supply 20.68 17.02Mill Use 3.50 3.60Exports 13.03 10.40

Total Offtake 16.53 14.00Ending Stocks 3.90 3.00Stocks-to-Use Ratio 23.6% 21.4%

2012/13e 2013/14p

U.S. Supply and DemandMillion Metric Tons

Beginning Stocks 0.73 0.85Production 3.77 2.86Imports 0.00 0.00

Total Supply 4.51 3.71Mill Use 0.76 0.78Exports 2.84 2.27

Total Offtake 3.60 3.05Ending Stocks 0.85 0.65Stocks-to-Use Ratio 23.6% 21.4%

2012/13e 2013/14p

World Supply and DemandMillion Bales

Beginning Stocks 72.89 88.06Production 123.09 117.22Imports 46.10 38.95

Mill Use 107.12 109.63Exports 46.73 38.95

Ending Stocks 88.06 95.71Stocks-to-Use Ratio 82.2% 87.3%

2012/13e 2013/14p

World Supply and DemandMillion Metric Tons

Beginning Stocks 15.88 19.19Production 26.82 25.54Imports 10.04 8.49

Mill Use 23.34 23.88Exports 10.18 8.49

Ending Stocks 19.19 20.85Stocks-to-Use Ratio 82.2% 87.3%

2012/13e 2013/14p

MerchantsGinners Cottonseed

Producers

Cooperatives

WarehousesManufacturers