2010 Outlook in Brief

‡ A Year for Recovery
± Economic growth projected to continue ± Cotton demand improving ± US acres and production reverse 3 years of decline ± Further tightening in the balance sheet

Key Assumptions
‡ Farm & Trade Policy
± Generally assume current policies remain in place during the timeframe of the outlook
‡ For US, the µ08 farm bill ‡ India MSP and China import policy unchanged

‡ General Economy
± International Monetary Fund released projections in January

Economic Growth in 2010
14 12 10 8 6 4 2 0 -2 -4 00 01
-0.8

Percent Change
10.0 9.7

8.7

3.9

4.3

2.7 2.4

World

US

China

-2.5

02

03

04

05

06

07

08

09

10

11

Low Con um
Con um

Conf d nc
n m n nd x

6 4

5

6

7

9

nemployment Remains High
Per ent nemployment

CBO¶s US Budget Deficit
Billion Dollars 1,600 1,200 800 400 0 -400 00 01 02 03 04 05 06 07 08 09 10 11
1,414 1,349 980

Cotton Demand
‡ Yarn Values Improving
± Cotlook Yarn Inde up 2 % from year-ago levels and % higher than Sep ¶08

‡ Te tile Trade Up in Recent Months
± After peaking at $ billion in Jul ¶08, world te tile e ports fell to $3 billion in May ¶0 ± Values in the low $ 0 billion¶s in recent months

World Mill Use Rebounding
% Change in Mill Use
12

6
1.2 2.5

4.2

0

-6

3% GDP

-12 00 01 02 03 04 05 06 07 08 09 10

World Mill Use Rebounding
% Change in Mill Use
12
11.1 7.0 6.0

6
-0.3

0

5% GDP
-6

3% GDP

-12 00 01 02 03 04 05 06 07 08 09 10

World Mill Use Rebounding
% Change in Mill Use
12

6

0

5% GDP
-6

-0.2 -10.0

3% GDP -1% GDP
00 01 02 03 04 05 06 07 08 09 10

-12

World Mill Use Rebounding
% Change in Mill Use
12

6

3.1

2.3

0

5% GDP
-6

4% GDP 3% GDP -1% GDP
00 01 02 03 04 05 06 07 08 09 10

-12

World Cotton Mill Use
Million Bales 140 120 100 80 60 40 20 0 00 01 02 03 04 05 06 07 08 09 10
114.6 117.3

Cotton Mill Use (Mil Bales)
0 /08 China India Pakistan Other Int¶l 1. 18. 12.0 3 .8 08/0 .0 1 . 11. 33.1 0 /10 .8 18.8 12.1 33. 10/11 8.0 1 .3 12. 3 .0

US Cotton Mill Use
Million Bales 10 8 6 4 2 0 00 01 02 03 04 05 06 07 08 09 10
3.4 3.4

Pi
9

En ou ging
Co on Fu u
9

C n

Lb

7 6 5 4 ug p No n F b p un u

US Acreage Intentions
200 Southeast Mid-South Southwest West All Upland ELS US Cotton 1,8 1 1, 2 ,2 3 2 ,008 1 2 ,1 2010 2,123 1, , 18 312 , 1 1 10,0 3 % Change 12.2 8. .1 2 . 10.1 2 . 10.3

US Cotton Production
Million Bales 30 25 20
15.5

15 10 5 0 00 01 02 03 04 05 06 07 08

12.4

09

10

US Cottonseed Production
Million Tons 10 8 6
4.2 5.2

4 2 0 00 01 02 03 04 05 06 07 08 09 10

Int¶l Cotton Area
Million Acres 35
04-07 08 09 10f

30 25 20 15 10 5 0 China

Int¶l Cotton Area
Million Acres 35
04-07 08 09 10f

30 25 20 15 10 5 0 China India

Int¶l Cotton Area
Million Acres 35
04-07 08 09 10f

30 25 20 15 10 5 0 China India Other N Hem

Int¶l Cotton Area
Million Acres 35
04-07 08 09 10f

30 25 20 15 10 5 0 China India Other N Hem S Hem

Increased World Production
Million Bales 140 120 100 80 60 40 20 0 00 01 02 03 04 05 06 07 08 09 10
113.9 102.7

Cotton Imports
Million Bales 30 25 20 15 10 5

All Others

China
0 00 01 02 03 04 05 06 07 08 09 10

Cotton Imports
Million Bales 30 25 20 15 10 5

All Others

China
0 00 01 02 03 04 05 06 07 08 09 10

Cotton Imports
Million Bales 30 25 20 15 10 5

All Others

China
0 00 01 02 03 04 05 06 07 08 09 10

Cotton E ports
Million Bales 30 25 20 15 10 5

All Others

US
0 00 01 02 03 04 05 06 07 08 09 10

Cotton E ports
Million Bales 30 25 20 15 10 5

All Others
11.6

US
0 00 01 02 03 04 05 06 07 08 09 10

Cotton E ports
Million Bales 30 25 20 15 10 5

All Others
12.1

US
0 00 01 02 03 04 05 06 07 08 09 10

World Balance Sheet*
08/0 Production Mill Use Trade 10 . 111.1 30.2 0 /10 102. 11 . 3 .2 10/11 113. 11 .3 3 . Change 11.2 2. 1.

Stocks

0.

1.

0.

-0.

* Unaccounted of -2.5 million bales

US Balance Sheet
08/0 Production Mill Use E ports 12.8 3. 13.3 0 /10 12. 3. 11. 10/11 1 . 3. 12.1 Change 3.1 0.0 0.

Stocks

.3

3.

3.

0.0

Stocks-to-Use Tightening
Percent 100 80 60
38.2

China

40

35.2

US
20 0 00 01 02 03 04 05 06 07 08 09 10
24.4 23.6

Cotton ³A´ Index
Cents/Lb
100 90 80 70 60 50 40 Aug-06 Jan-07 Jul-07 Jan-08 Jul-08 Dec-08 Jun-09 Nov-09

Stocks-to-Use vs Price
Percent & Cents/Lb
100 90 80 70 60 50 40
45% 43%

A Index

Stocks-to-Use
30 92 94 96 98 00 02 04 06 08 10

Issues to Watch
‡ US export pace and 0 /10 ending stocks ‡ China and India production ‡ Can consumer spending sustain recovery? ‡ US $ and commodity prices

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