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YnFx CottonPriceForecastJuly2013 ISIEmergingMarketsPDF ro-kpmg6 from 62.217.241.204

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WorldCottonFibrePriceForecast
Product/Specs NewYorkFutures NewYork Cotlook'A' A AsiaCFR KarachiCottonAsso. Spot EastTexascolor41,leaf4,staple Spot AmericanPIMAcolor2,leaf3stSpot ChinaCottonIndex Spot BengalDeshiAssamComilla Spot Shankar6 Spot Market Jun13 Actual UScents/lb 86.00 UScents/lb 93.31 93 31 PakRs/Maund 6,518 UScents/lb 81.94 UScents/lb 138.00 Yaun/ton 19,316 Rs/candy 38,350 Rs/candy 40,225 Jul13 Sep13 Dec13 %YoY %YoY %YoY Forecast Mostlikely Tentative 86.15 20.8 87.26 17.9 88.94 18.7 93.48 93 48 11 7 11.7 94 78 94.78 13 5 96.73 13.5 96 73 15 9 15.9 6,556 9.2 6,677 18.1 6,860 13.2 82.11 30.9 83.27 23.4 85.01 22.9 138.09 27.9 139.34 26.1 141.22 26.5 19,371 6.2 19,583 5.0 19,901 4.2 38,626 8.6 39,286 1.4 40,276 14.1 40,431 10.6 41,031 17.7 41,931 25.9

250 USCottonFutures 200 150 100 50

UScents/lb

250 Cotlook'A' 200 150 100 50

UScents/lb

J FMAM J J A S ON D J FMAM J J A S ON D J FMAM J J 2011 2012 2013

NYLONCHAININEUROPE&USA

J FMAM J J A S OND J FMAM J J A S OND J FMAM J J 2011 2012 2013

14000 12000 10000 8000 6000 4000

PakRs/maund d

70000 KCASpotRate 60000 50000 40000 30000 20000 10000

INR/candy

Shankar6

2000 0 J FMAM J J A S OND J FMAM J J A S OND J FMAM J J 2011 2012 2013

J FMAM J J A S OND J FMAM J J A S OND J FMAM J J 2011 2012 2013

YnFx CottonPriceForecastJuly2013 ISIEmergingMarketsPDF ro-kpmg6 from 62.217.241.204

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GLOBALCOTTONMARKETS
ForecastforJuly2013 The cotton markets will continue to remain under the influence of macroeconomic trends that affect all other fibres. While the pp g of recovery, y, the European p p US textile and apparel markets will show some signs demand will remain depressed. The latest World Bank forecast has downgraded GDP growth in some key emerging economies. While MMF continues to remain a major pricecompetitorforcotton,polyesterandviscoseinparticular,especiallyinChina,remainsatverycompetitivelevels.

The Cotlook A Index was on a roller coaster descending from Us cents 95 on 10 May to US cents 89 by in the first week of June. InJulyitislikelytoinchupbutlesserthantheUScent1gainsseeninJune. To key markets to watch in July will be US and India, the largest exporters. Currently, US have a little exportable cotton left from 201213 season and is well committed in terms of 201314. The crop for 201314 is likely to be lower than expected, since drought persists in Texas despite some rains in early June to mid June. In India, in contrast, the 201314 crop has been revised upwards because of early monsoon. However, unlike US, Indias exports have a much smaller share in total production, around 27percentasagainst78percentoftheUS. Meanwhile, Chinese cotton reserve policy remains unchanged and the government is determined to maintain the floor price for qualifying cotton in 201314. The only change seen is in the allocation in import quota to eligible mills that purchase cotton fromtheChinesereserveona3:1basis,i.e.3unitsofreservecottonto1unitofimportedcotton.

TrendsinJune Cotton prices tumbled in China and Pakistan in June as weak Chinese manufacturing data and a decline in US exports of the fiber raised concerns about demand. Meanwhile, rain in droughtstricken Texas boosted the outlook for supplies, and the US dollar's gains against other currencies curbed buying interest in the market. Cotton for July delivery on the ICE Futures US exchangeroseUScents2 2.31 31toaverageUScents86 86.00 00apound pound.Itwasatathreemonthhigh. high

In Pakistan, with stoppage of the premonsoon rains in Sindh, new cotton crop (August 2013 July 2014) started arriving in increased volumes and making its debut in the market. It has been reported that six factories are pressing new cotton crop in Sindh, while in the Punjab three ginning factories are said to be operative pressing the new cotton crop. The official Karachi CottonAssociationspotrateaveragedPakRs6,517permaundexKarachi,downPakRs47.50fromMaynumbers.

In India, cotton price improved on the back of falling supply and good demand of domestic mills. Moreover weak rupee position encouraged export demand for short term. The immediate supply concern and weak rupee supported domestic prices. Domestic supply position remained tight due to higher exports and strong local consumption. Gujarat Sankar6 cotton pricewasincreasedbyINR2,625percandywhilecoarsefibreBengalDeshiwentupINR4,150percandy.

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