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YnFx CottonPriceForecastJune2013 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,stapSpot AmericanPIMAcolor2,leaf3Spot ChinaCottonIndex Spot BengalDeshiAssamComilla Spot Shankar6 Spot Market May13 Actual UScents/lb 83.69 UScents/lb 92.30 92 30 PakRs/Maund 6,565 UScents/lb 77.95 UScents/lb 138.00 Yaun/ton 19,349 Rs/candy 34,200 Rs/candy 37,600 Jun13 Sep13 Dec13 %YoY %YoY %YoY Forecast Mostlikely Tentative 84.37 12.8 85.99 16.2 87.62 16.9 93.11 93 11 13 5 95.03 13.5 95 03 13 8 13.8 96 95 96.95 16 1 16.1 6,635 10.9 6,820 20.6 7,005 15.6 78.64 20.9 80.28 18.9 81.93 18.4 138.80 20.2 140.65 27.3 142.49 27.7 19,472 6.3 19,790 6.1 20,108 5.3 34,513 3.3 35,402 8.6 36,291 2.8 37,911 12.8 38,751 11.2 39,592 18.9

250 USCottonFutures 200 150 100 50

UScents/lb

250 Cotlook'A' 200 150 100 50

UScents/lb

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

NYLONCHAININEUROPE&USA

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

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

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GLOBALCOTTONMARKETS
ForecastforJune2013 Cotton prices are likely to move either side in June as there are a number of factors supporting the trend. Taking the bearish factors first, the world cotton balance sheet shows a further rise in stocks to record levels of 20.2 million tons in 201314 marketing season. Thus traders will be unwilling to follow prices up. Another bearish factor is the poor economic position both,inAsiaaswellintheWest. Considering the bullish factors, the weather patterns in the US are pointing at late plantings and therefore a late harvest that will make the 201314 crop susceptible to losses. Drought in Texas and wet conditions in the southern states will adversely impact yield. Since global production is expected to decline next season and the US current harvest is mostly committed,theconcernisthattherewillbelittlecottontotheautumnmonths. A second positive factor for cotton prices is the continuation of Chinas reserve policy which should see further increases in itsstocksasitwouldblockcottonawayfromtheinternationalmarkets,whichmaypushpricestohigherlevel.

Taking into consideration Chinas reserve price policy, the International Cotton Advisory Committee has projected Cotlook A IndexatUScents122forthenextseason,41percenthigherthanthecurrentseasonwhichaveragesUScents86untilnow.

In case such a price is achieved, the obvious consequences would be a further loss of competiveness by cotton relative to otherfibre, fibre asimilarscenariowitnessedin201011season. season

TrendsinMay Cotton prices declined in major markets this May. The ICE cotton sank for a ninth straight session, the longest slide in three years, to post the largest monthly drop since September, after long liquidation erased gains. The mostactive July cotton contract fell US cents 0.83 to average US cents 83.69 per pound. The December contract closed at US cents 82.06 per pound. The Cotlook A index also lost US cent 0.10 closing the month at an average of US cents 92.30. China Cotton Index was down 27Yuanat19 19,349 349Yuanaton. ton In Pakistan, modest trading was witnessed on the cotton market as mills were reluctant to make new deals in expectations of fall in prices due to early arrivals of Phutti. The official spot rate averaged PakRs 6,565 per maund exKarachi, down PakRs327 from April numbers. In India, prices movement was mixed with most varieties losing during the month. Prices of mostspecslost4percentwhileafewgained1percentoverthemonth.

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