NCC Projects Slight Increase In US Cotton Production

At its 2003 annual meeting held in February in Tampa, Fla., the National Cotton Council (NCC)
announced its projections for US cotton production for the 2003/04 crop year, and warned of
continuing challenges for the US raw cotton demand base.

In presenting NCC’s 2003 Economic Outlook, Gary Adams, Ph.D., vice president of economics and
policy analysis for the Memphis, Tenn.-based organization, said shifts in global supply and demand
will have significant effects on the US raw cotton sector. This sector has become increasingly
dependent on export markets, as domestic demand has declined in the face of increased textile
imports. At the same time, Adams said, maintaining US mill use is important to preserving the
demand base for US cotton.

According to a NCC survey, US cotton growers will plant 14.05 million acres of cotton this
spring, up 0.6 percent from 2002. Adams said the projected acreage reflects economic factors.
“While prices have improved over the previous year,” he said, “there is increased competition from
corn because of better corn prices.”

The projected 2003/04 harvest will generate 17.10 million bales, compared with an estimated
17.14 bales in 2002. Of this total, domestic mills will use 7.3 million bales, while exports could
reach as high as 10.7 million bales, depending on Chinese demand. “China remains the wild card in
world markets due to the sheer size of their market and unpredictability of their net trade
position,” Adams said. “Lower production and increased consumption have led to a draw down in their
stocks as well as increased imports during the current marketing year.” He added that these imports
do not reflect changes in Chinas willingness to comply with World Trade Organization (WTO)
accession agreements.

NCC projects 2003/04 world cotton production at 94 million bales, up from 87.4 million in
2002. Most of the increase will come from China and Australia.

April 2003