4th DEDICATED DISCUSSION OF THE

RELEVANT TRADE-RELATED

DEVELOPMENTS ON COTTON

José Sette

International Cotton Advisory Committee

Geneva

27 November 2015

SUMMARY

1. Introduction

2. Production

3. Trade

4. Consumption

5. Prices

6. Direct Government Assistance

7. Stocks

8. Comparison 2003/04 to 2014/15

0

20

40

60

80

100

120

Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15

PRICE (Cotlook A Index)

US cents/lb

WORLD PRODUCTION & MILL USE million tons

Production

Mill Use

0

5

10

15

20

25

30

94/95 99/00 04/05 09/10 14/15

Accumulated surplus 2010/11-

2014/15: 13.4 million tons

12

16

20

24

28

80/81 90/91 00/01 10/11 20/21

WORLD PRODUCTION (million tons)

WORLD PRODUCTION

0

10

20

30

90%

million tons Southern Hemisphere

Northern Hemisphere

China 23%

India 27%

USA 13%

Pakistan 8%

Brazil 6%

Australia 2%

Uzbekistan 4%

Franc. Africa 5%

Turkey 3%

Other 9%

PRODUCTION BY COUNTRY 2015/16

23,1m tons

SHARE OF TRADE IN WORLD PRODUCTION

0%

20%

40%

60%

80%

100%

0

5

10

15

20

25

30

99/00 04/05 09/10 14/15

Exports Production Share

million tons share of exports

USA 32%

India 12%

Australia 7%

Brazil 11%

CFA Africa 11%

Uzbekistan 7%

ROW 20%

2014/15

COTTON EXPORTS BY COUNTRY

7.7 million tons

COTTON EXPORTS: 2013/14 TO 2015/16 Five Largest Exporters and Africa

million tons

0.0

0.5

1.0

1.5

2.0

2.5

US India Brazil Uzbekistan Australia Africa

AFRICA’S TOP EXPORTING COUNTRIES

0.0

0.1

0.2

0.3

0.4

0.5

0.6

BurkinaFaso

Mali Côted'Ivoire

Benin Cameroon Chad ROA

10/11 11/12 12/13 13/14 14/15 15/16

million tons

COTTON IMPORTS

4.4 5.8 6.1

5.3 1.8 1.2

-

2

4

6

8

10

12

05

/06

07

/08

09

/10

11

/12

13

/14

15/1

6

World less China Chinamillion tons

-22%

9.7

7.3

CHANGES IN COTTON IMPORTS

2015/16

7.3 million tons

1996/97

6.1 million tons

7 Countries: 34% 7 Countries: 63%

China 13%

Bangladesh 2%

Turkey 5%

Indonesia 7%

Vietnam 1%

Thailand 5%

Pakistan 1%

ROW 66%

China 14%

Bangladesh

12%

Turkey 8%

Indonesia 9%

Vietnam 14%

Thailand 3%

Pakistan 3%

ROW 37%

WORLD COTTON MILL USE

0

5

10

15

20

25

30

90/91 95/96 00/01 05/06 10/11 15/16 20/21

million tons

CHANGES IN COTTON MILL USE

2015/16

24.3 million tons

1996/97

19 million tons

7 Countries: 70% 9 Countries: 86%

China 23%

India 15%

Pakistan 8%

USA 13%

Turkey 6%

Brazil 4%

Indonesia 2%

ROW 29% China

30%

India 23%

Pakistan 9%

Turkey 6%

Bangladesh

4%

Vietnam 5%

USA 3%

Brazil 3%

Indonesia 3%

ROW 14%

CHINA CONSUMPTION AND WORLD SHARE

US cents/lb

0%

10%

20%

30%

40%

50%

0

2

4

6

8

10

12

90/91 95/96 00/01 05/06 10/11 15/16, for

Consumption Share

COTTON EXPORTS: 2015/16 to 2020/21 Five Largest Exporters and Africa

million tons

0.0

0.5

1.0

1.5

2.0

2.5

00/01 05/06 10/11 15/16 20/21

US India Brazil Uzbekistan Australia Africa

-50%

-25%

0%

25%

50%74

/75

79

/80

84

/85

89

/90

94

/95

99

/00

04

/05

09

/10

14

/15

Season highest value

Season lowest value

CHALLENGE: PRICE VOLATILITY Cotlook A Index: Difference with respect to season average

2015/16: August-October 2015

CHALLENGE: COMPETITIVE PRICING

0

20

40

60

80

100

120

140

Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15

Cotlook A Index

Source: Cotton Outlook Ltd.

US cents/lb

27 29

27 26 24

0

20

40

60

80

1960

1971

1982

1993

20

04

2015

0

10

20

30

40

million tons market share (%)

WORLD COTTON CONSUMPTION

AND MARKET SHARE OF COTTON

2020

2025

DIRECT ASSISTANCE TO

COTTON PRODUCTION

• Direct support to production

• Border protection

• Crop insurance subsidies

• Minimum support price mechanisms

• Input subsidies

• Transportation subsidies

DIRECT ASSISTANCE TO COTTON

AND PRICES

1.65

1.00

0.88

0.91

0.71

0.4

1.1

1.8

0

2

4

6

8

10

12

97/98 00/01 03/04 06/07 09/10 12/13

US$ billion A Index (US$/lb)

WORLD PRODUCTION UNDER

DIRECT ASSISTANCE

0

10

20

30

40

97/98 00/01 03/04 06/07 09/10 12/13

Without Assistance With Assistance

76%

million tons

Average With Assistance: 55%

83%

47%

CHINA NATIONAL RESERVE

Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-150

2

4

6

8

10

12

14

million tons

2015 CHINESE RESERVE SALES thousand tons

0

10

20

30

40

50

60

7/10 7/17 7/24 7/31 8/7 8/14 8/21

Offered Sold

WORLD ENDING STOCKS

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

0

5

10

15

20

25

World-less China China S/U

million tons

Stock-to-Use Ratio

GROWTH IN WORLD COTTON MILL USE

3.1%

-0.5%

-2.0%

6.0%

2.8% 2.0%

3.1%

1.1%

9.8%

5.9% 6.3%

0.3%

-11.0%

6.8%

-3.0%

-7.4%

3.4%

1.4% 1.5% 0.7%

-12.0%

-7.0%

-2.0%

3.0%

8.0%

1.5%

COMPARISON 2002/03 – 2014/15

2002/03 2014/15 % CHANGE

Production (m tons) 19.6 26.2 +34

Yield (kg/ha) 651 785 +20

Exports (m tons) 6.6 7.7 +17

Mill Use (m tons) 21.3 24.2 +14

Ending Stocks (m tons) 9.5 21.9 +131

Stock/Use Ratio (%) 0.45 0.90 +102

Fiber Market Share (%) 39.9 28.1 -30

Direct Assistance (US$ billion) 4.2 10.4 +148

Price (US cts/lb) 55.4 71.0 +28

Thank you

sette@icac.org www.icac.org