In recent months, the Rupp Report regularly has informed its readers about developments in the
cotton industry. Changing markets and rising domestic needs, mainly in Asian countries, have
culminated virtually in a cotton rally.

During the International Textile Manufacturers Federation (ITMF) conference in São Paulo,
Brazil, in October, cotton was the big issue. Not only its sustainability, but also price
developments were in the center of attention. Experts representing producers, traders and also
federal organizations expressed their concerns about the development of the cotton industry in
general and cotton trade in particular.

Not A Major Crop

According to many sources, cotton plays an important role as leading crop. However, experts
estimate that cotton only has a global share of only 2.3 percent as a seed. Wheat, with a
15.2-percent share; maize, 11.23 percent; rice, 11 percent; as well as fruit and vegetables, 7.6
percent, play much more important roles than cotton.

However, in the past 18 to 24 months, raw material crops such as cotton and others have
raised also growing interest among speculators. According to some information given in São Paulo,
the world cotton market is some 3 million bales short of satisfying the current market demand. On
top of that, in consideration of ongoing export restrictions and the growing demand for cotton,
prices are skyrocketing.

Highest Peak Since 1870

According to the latest information from United Kingdom-based Plexus Cotton Ltd., New York
futures had another price explosion, with December closing at 121.68 cents — a gain of 597 points,
while March rose an incredible 859 points to 118.80 cents.

As Plexus reported on October 28, “Cotton futures reached their highest peak since trading
began on the New York Cotton Exchange in 1870, with the December contract posting an intra-day high
of 130.50 cents and a closing high of 129.59 cents on Tuesday [October  26]. Only during the
Civil War (1861-1865), when a blockade imposed by the North prevented cotton from being shipped to
Europe’s textile mills, were cotton prices higher at 189 cents.

“But the NY futures market wasn’t alone with its record-breaking performance as the A-index
posted an all-time high of 147.00 cents on Wednesday and the Chinese spot futures contract closed
at a mindboggling 204.67 cents today. As we have stated before, it is the physical market, led by
an out-of-control Chinese market, which has been the driving force behind this rally. … [S]ince
July 21, the A-index has now gained an incredible 64.30 cents, while December futures have barely
been able to keep pace, rallying ‘just’ 48.67 cents.

“We still believe that we need to look at the physical market for clues as to where the
futures market might be headed — not vice versa. As of today, mills are still willing to pay
140-142 cents for prompt high grades landed the Far East, while prices for first quarter shipments
were in the 132-136 cents range and Brazilian/Australian high grades for summer 2011 shipments are
currently in the 124-130 US cents range.

“Therefore, if we look at 135 cents for Feb/March shipment, December futures make sense at
121-122 cents. Earlier this week, when the December contract briefly rose to 130 US cents, it was
clearly overvalued in terms of what mills were willing to pay for Feb/March shipment at that time.”

Perhaps sarcastically, Plexus refers to the old saying that “the best cure for high prices is
high prices.” Another factor is — and that was widely confirmed at the ITMF conference in São
Paulo — that the global markets, and therefore the spinners, are looking for better quality and
consequently fine count ring-spun yarns. On the other hand, open-end (OE) spinners are in trouble,
mainly because the raw material cost accounts for a higher portion of the total production cost.
According to Plexus, there are rumors of an OE mill stopping production and selling only its
current yarn stocks at a very high profit.

Too Much Money

Another focus of attention in São Paulo was the weak US dollar as another element to boost
cotton prices. Many experts articulated their concerns, and Plexus also cites the behavior of the
Federal Reserve and its “quantitative easing.” To make a long story short, too much money is on the
markets to buy treasury bonds in order to keep interest rates low. The US gross public debt is said
to be close to $14 trillion and continues to grow by some $2 trillion a year.

As Plexus states: “There is a limit as to how much longer investors and foreign Central Banks
are able and/or willing to keep this game going. … Imagine what will happen to the US dollar if
the Fed had to monetize several trillion dollars of debt over the coming years?” At the end of the
day, the value of the US dollar would be further weakened and that would lead to even higher
nominal commodity prices.

A Look Into The Crystal Ball

According to Plexus: “Based on where physical prices are trading right now the December
contract is more or less fairly valued. Forward pricing currently suggests that physical prices
will gradually weaken as we head into the first and second quarter, but this would only make sense
if demand destruction were to erase the seasonal production gap over the coming months. However,
should demand prove to be more resilient than anticipated, or if the Chinese Reserve came in to
absorb a million tons or two into its stock, then the third quarter might turn into a rather
explosive affair.”

We’ll see.

November 2, 2010

Lansing, Mich.-based Kraig Biocraft Laboratories Inc. recently announced it has succeeded in
producing genetically engineered spider silk in a scalable and cost-effective platform. Working
together, researchers from the University of Notre Dame and the University of Wyoming, and Kraig
Biocraft have genetically engineered (recombinant) transgenic silkworms capable of producing
artificial spider silk. The fiber has the desired properties of natural spider silk including high
tensile strength, elasticity and flexibility, making it suitable for a variety of biomedical and
technical textiles end-uses such as fine suture materials, wound-healing bandages, bulletproof
vests and automobile airbags.

“This research represents a breakthrough in the development of superior silk fibers for both
medical and non-medical applications,” said Malcolm J. Fraser Jr., professor, Notre Dame. “The
generation of silk fibers having the properties of spider silks has been one of the important goals
in materials science.”

Fraser owns the patent for “piggyBac,” a unique genetic engineering tool comprised of a piece
of DNA called a transposon that can be inserted into the genetic machinery of a cell. Kraig
Biocraft worked with Fraser, University of Wyoming researcher Randy Lewis, and molecular geneticist
Don Jarvis to develop the transgenic silkworms.

The group reports that the silkworms offer a commercially viable large-scale production
platform for engineered protein fibers. “Using this entirely unique approach, we have confirmed
that transgenic silkworms can be a potentially viable commercial platform for production of
genetically engineered silk proteins having customizable properties of strength and elasticity,”
Fraser said. “We may even be able to genetically engineer fibers that exceed the remarkable
properties of native spider silk.”

 

Working with leading laboratories and researchers, Kraig Biocraft is now synthesizing DNA
sequences and genetic constructs for its second generation of advanced spider silk-based polymers.

“These new designer DNA sequences are being rolled out as a part of our plan to build on our
recent success by creating new materials and new products,” said Kim Thompson, CEO, Kraig Biocraft.
“These new genetic constructs are being created right now, for use in the production of a new class
of high-performance fibers. We are developing this next generation of genetically modified silk
fibers specifically to capture a share of the technical textiles market. This is the primary market
for high strength fibers and is currently estimated at $120 billion. We believe that these
revolutionary materials will have tremendous potential in the technical textiles marketplace for
high strength fibers.”

November 2, 2010

LAWRENCE, Mass. — October 29, 2010 — According to the most recent census statistics, one in seven
Americans is living below the poverty line and in U.S. households headed by single mothers, over 30
percent are impoverished. To help combat these disturbing numbers, Polartec has teamed up with Moms
and Jobs, Inc. (MoJo), a Boston-based social venture that provides sustainable employment
opportunities, childcare, and career development for single mothers in the apparel manufacturing
sector.

“Polartec has been very generous with its support of MoJo,” says co-founder Darr Alley. “
Polartec is providing us with its premium fabrics so our staff can make the highest quality
products. Polartec also uses recycled plastic bottles to make many of its fabrics, and MoJo is
thrilled to be able to simultaneously help single moms and be environmentally-friendly.”

Polartec provides discounted rates on its fabric for MoJo to use in its product line of
apparel and logo-wear. MoJo employs a full staff of single mothers and the proceeds from MoJo
product purchases are dedicated to providing free childcare, higher than average wages, healthcare,
and educational opportunities for MoJo employees.

“MoJo is creating jobs for an underserved demographic in a time when the US economy needs
help the most,” states Polartec president, Andy Vecchione. “We’re proud to lend our support.”

Posted on November 1, 2010

Source: Polartec LLC

NORCROSS, Ga. — October 27, 2010 — PIMA, the Management Division of TAPPI, has issued a call for
nominations for its 2011 awards. The recipients will be honored at the 2011 PaperCon on May 3,
2011, at the Northern Kentucky Convention Center. The deadline for nominations is November 30,
2010. Here are the awards and brief descriptions:

PIMA’S Executive of the Year –The Executive of the Year Award is the highest honor bestowed
by PIMA, traditionally presented to senior-level executives in the pulp, paper or converting
industries for excellence in management and outstanding contributions to the industry as a whole.

Mill Manager of the Year –The Mill Manager of the Year Award recognizes the mill manager who
has best demonstrated outstanding leadership, management and organizational skills leading to
improved results at the facility for which he or she is responsible. Nominees for this award are
judged on four criteria: skill in people development; application of best management practices;
effective use of external resources; and change management.

The Brookshire Moore Superintendent of the Year — Recognizes the mill superintendent who has
shown high personal standards and professional management qualities that contribute to the
betterment of those under their management and in their company.

Technologist of the Year — The Technologist of the Year Award recognizes a member of a
technology or IT team from a paper or paper converting company who has best demonstrated
outstanding leadership, management and organizational skills leading to improved results at the
facility or enterprise for which he or she is responsible. Nominees for this award are judged on
five criteria: effective application of technology, skill in people development; application of
best management practices; effective use of external resources; and change management. This award
is only available to employees of a paper company.

Ray H. Cross Community Service Award — This award pays tribute to pulp and paper industry
persons who have rendered outstanding service to their communities by involvement in the activities
of local business, educational, civic and philanthropic organizations.

Delano L. “Del” Boutin Local Section Service Award — The Del Boutin Division Service Award
is presented to pulp and paper or affiliate members for devoted service to a PIMA Local Section.
The award recognizes long-term dedication of PIMA members at the local division level.

Thomas F. Sheerin Sr. Service Award — The Thomas F. Sheerin Sr. Service Award is presented
to a supplier for outstanding contributions to the pulp and paper industry and/or the community.

IT Service Award — This award is presented to an IT affiliate/supplier for outstanding
contributions to the pulp and paper industry and/or the community.

Kenneth H. Phillips Specialist Group Award — The Kenneth G. Phillips Specialist Group Award
is presented to pulp and paper or affiliate members in recognition of outstanding service as a
member of one of PIMA’s Professional Specialist Group committees.

Student of the Year Award — This award recognizes and supports outstanding students enrolled
in paper science programs. Nomination forms may be downloaded, completed and e-mailed to
standards@tappi.org . There is also a downloadable PDF version that can be completed and mailed to
TAPPI, PIMA Nominations, 15 Technology Parkway, Norcross, GA 30092. It may also be faxed to
1-770-446-6947.

Posted on November 1, 2010

Source: TAPPI

Textile organizations in the United States, European Union (EU), Mexico and Turkey have sent a
joint letter to their respective governments urging immediate action to halt cotton trade
restrictions by the government of India. The organizations include the National Council of Textile
Organizations (NCTO), European Federation of Cotton and Allied Textiles Industries (Eurocoton),
Cámara Nacional de la Industria Textil (CANAINTEX), Istanbul Textile and Apparel Exporter
Associations (ITKIB) and Turkish Textile Employers Association (TTEA).

Together, the organizations represent more than 1 million textile workers, whose jobs could
be threatened by what the groups contend are discriminatory and illegal actions by India — the
world’s second-largest cotton exporter — to restrict or ban cotton exports in an effort to protect
its domestic textile industry. The groups note that the actions, imposed in April 2010, have caused
global cotton prices to surge from 62 cents per pound to $1.20 per pound, while India has
guaranteed low prices for cotton consumed by its own textile mills. They further note that
resulting price inequities are skewing competition in favor of not only Indian textile and apparel
producers — which are able to offer their products at subsidized prices — but also Chinese
state-owned textile mills — which are purchasing the remaining global supply at the high prices
demanded while also enjoying government subsidies that allow “enormous price flexibility.”

“For the first time in history, U.S. mills are worried about running out of cotton because
India’s actions have constricted the worldwide supply and have caused panic buying,” said NCTO
President Cass Johnson. “Large state-owned Chinese textile producers are now paying any price to
secure cotton. These actions are imperiling what had been a robust recovery for U.S. textile
mills.”

Hacoit Benoit, president of Eurocoton, stated: “India’s anti-trade actions on cotton have
caused turmoil in world markets. Under these circumstances, competition is seriously distorted. As
a result, our European textile customers are faced with difficult options. They are forced either
… to pay prohibitive prices for their cotton and suffer increased competition on processed
products imported into the EU at lower price, or they must reduce their own costs by relocating
their production facilities and jobs outside of Europe, or they must simply close their doors.”

The letter states: “If the current scenario of India curtailing and delaying export of its
cotton crop continues to play out, European, Mexican, U.S. and Turkish textile mills will face the
prospect of prolonged high prices for cotton or having no supply of cotton at all. Either way, our
mills cannot survive such a scenario for an extended period of time.” It further asks “that our
governments immediately send the strongest message to India that it must not restrict or delay
export of its cotton to world markets and must abide by international trade rules.”



October 26, 2010