1. ICF Conference, Coimbatore Presented by: Sandeep Hota
World Cotton Scenario
ICF Conference, Coimbatore
August 19, 2016
Presented by: Sandeep Hota

2. Global Cotton Scenario Where do we go from here….
Overview
Global Cotton Scenario
What to Look Out For!
Where do we go from here….

3. World Cotton Production
Better yields expected to increase 16/17 crop by 5%
Source: USDA World Agricultural Supply and Demand Estimates

4. World Cotton Mill Use
Mill use pressured by both weak global demand and polyester
Source: USDA World Agricultural Supply and Demand Estimates

5. World Cotton Stocks
Stocks fall for the second year as flat mill use exceeds the crop
Source: USDA World Agricultural Supply and Demand Estimates

6. World Major Cotton Importers
Bangladesh becomes the largest importer, China drops to third
Source: USDA World Agricultural Supply and Demand Estimates

7. India Cotton Balance Sheet
16/17 mill use expected to weaken due to lower China yarn demand
Source: USDA World Agricultural Supply and Demand Estimates

8. USA Cotton Balance Sheet
Crop on the rise and larger than export gain
Source: USDA World Agricultural Supply and Demand Estimates

9. World Major Origin Stocks
China accounts for 62% of global stocks, followed by India
Source: USDA World Agricultural Supply and Demand Estimates

10. Competing crop prices Cotton farmers had a good chance to hedge
Corn prices remain under pressure

11. China Historical Stock Policy
Strategic reserve stock expected to come down to 7.4 million tons
Million Tons
Reserve Beginning Stocks
Reserve Domestic Purchase
Reserve Import Purchase
Release Local Cotton
Release Import Cotton
Reserve
Ending Stocks
Total China Stocks
Target Price
08/09
1.20
2.80
0.00
0.68
0.53
2.78
4.65 NA
09/10
0.94
0.18
1.66
3.10
10/11
1.04
0.62
2.31
11/12
3.14
0.80
0.26
0.08
4.22
6.77
$1.40
12/13
6.84
0.75
3.26
0.96
7.53
10.96
$1.45
13/14
6.58
0.13
2.22
0.15
11.88
13.65
14/15
0.31
0.07
11.50
14.79
11 to 14
16.56
1.69
6.05
1.26
10.93
$1.40+
15/16
1.75
0.30
9.45
13.13
$0.975
16/17
?.??
2.05
7.40
11.04
$1.04?
Announced intent to support farmers at 19,800 yuan/ton ($1.35 to $1.40 per lb)
Increases support price to 20,400 yuan/ton ($1.40 per lb.)
Held support at 20,400 yuan/ton
Change of strategy to direct farm subsidies, Target Price for Xinjiang at 19,800
- Other provinces, direct support at 2,000 yuan/ton ($0.15 cents/lb)
2015 – Reserve fall auctions failed, Spring auctions surged with target over 1.63 million tons.
2016 – 1.8 million tons sold since auction started in May. When will the reserve start restocking?
Source: USDA World Agricultural Supply and Demand Estimates

12. World Free Stocks
Most stock indicators are flat except for China is declining
Source: USDA World Agricultural Supply and Demand Estimates

13. World Fiber Prices Cotton demand impacted by Polyester prices
Source: Emerging Textiles

14. World Fiber Consumption
Growth in fiber consumption is mainly coming from synthetics
Source: International Cotton Advisory Committee, Commonwealth Secretariat, Wool Secretariat, Fiber Economics Bureau,
Fiber & Biopolymer Research Institute

15. World Polyester Capacity
China’s polyester capacity approaches 50 million tons
ROW Increased from 9.1 to 20.5 million tons
China Increased
from 1.3 to 49.8 million tons
Source: PCI Fibers, Fiber & Biopolymer Research Institute

16. World Polyester Utilization
Unutilized capacity roughly same as global cotton crop
Increased from 1.7 to 21.4 million tons
Increased from
8.7 to 50.1 million tons
China Increased
from 1.3 to 49.6 mil. tons
Source: PCI Fibers, Fiber & Biopolymer Research Institute

17. Real GDP for Selected Countries
IMF points to expansion for the World led by emerging markets
2017 shows India is flat and China declines further….
Historically finished goods consumption is flat when GDP is less than 2.5%
Source: International Monetary Fund

18. World Supply & Demand 2016/17 20.03 22.48 24.47 21.59 -11.8% 26.21
Ending stocks to decline for second consecutive season
Million
Metric Tons
13/14
USDA
14/15
15/16
16/17
Change
‘15 to ’16
Beginning Stocks
20.03
22.48
24.47
21.59
-11.8%
Crop
26.21
25.93
21.10
22.12
+4.8%
Imports
8.98
7.78
7.60
7.41
Use
23.90
23.98
23.99
24.23
+1.0%
Exports
8.91
7.71
7.61
Loss
-0.08
0.03
-0.01
-0.02
Ending Stocks
19.51
-9.6%
Stocks to Use
94.1%
102.0%
90.0%
80.5%
-9.5 %pts
Stocks as Month’s of use
11.3
12.2
10.8
9.66
-7.1%
Crop less Use
9.7%
8.1%
-12.0%
-8.7%
Source: USDA World Agricultural Supply and Demand Estimates, & USDA February Outlook (*)

19. Cotton prices trend for 2016/17 Crop
In first month, A-Index down from to & ICE Dec ‘16 from 78 to 69 c ?

20. Thank You