Major Presentation Points

• World textile fiber market growing (population & economic growth)• Cotton had significant headwinds over past decade• Next 10 years should be better for cotton• Sustainability will continue to become more important—could be

advantage for cotton• Alternative crops (corn & soybeans) not likely to take acres from cotton• U.S. cotton acreage (except 2020) is likely to remain near current levels• Large crops will put significant downward pressure on cottonseed prices• Cottonseed research & promotion along with ULGCS critical to enhance

seed value for growers

U.S. Upland Cotton Acres

14.95

10.54

9.30 9.01

10.77

14.43

12.08

10.2110.85

8.42

9.88

12.36

13.8513.45

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Mill

ion

s

World Production & Use of Cotton

80

85

90

95

100

105

110

115

120

125

130

Mill

ion

48

0 L

b. B

ales

Production UseSource: USDA

World Per Capita Cotton Demand

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

Pou

nd

s p

er c

apit

a

Source: USDA

0.2% Growth per Year

Cotton’s Share of Market – Major Apparel Categories

45%

50%

55%

60%

65%

70%

Source: Cotton Incorporated’s Retail MonitorTM

Percent, Seasonally Adjusted

Cotton’s Recent Headwinds

• Financial Crisis• Price Spike & Price Volatility• Cheap Synthetic Fiber Prices• Denim Market Weakness• Fabric Weight Reductions• Athletic Apparel Emergence• Polyester Fashion Trend• Sustainability Concerns

KEY FACTORS FOR COTTON TO IMPROVE COMPETITIVENESS

Maintain Positive Brand, Retailer &

Consumer Perceptions

Improved Sustainability &

Sustainability Communications

Ability to Supply the Market in Volume &

Quality

Continued Fiber, Fabric & Product

Innovations

PERFORMANCE FEATURESConsumers want their clothing to do more, so they can do less

EasyCare

82%

StainResistance

77%

TemperatureControl

78%

MoistureManagement

75%WrinkleResistance

76%

FadeResistance

80%

Percent saying the following features are appealing:

Source: CCI & Cotton Incorporated’s 2018 Global Lifestyle Monitor

2018 Cotton Incorporated Technologies

TOUGH COTTON™ Technology Moisture Management + Antimicrobial SWEAT-HIDING Technology

2

94

189

239257

300

354 362

418432 437

461

495

540555

568

Cotton LEADS™ Partners—Still Expanding

COTTON USA

U.S. Cotton Trust Protocol

Creatures in the deepest trenches of the sea are eating plastic

In six of the ocean’s deepest crevasses, scientists found tiny shrimp-like creatures chomping on tiny bits of plastic.

By: Sarah Gibbens. Published February 28, 2019

Synthetic Fibers & Plastics

Increasing Concerns

MICROPLASTICS ISSUEMicroplastics pollution is widespread

Source: Adventurers and Scientists for Conservation Microplastic Study

MICROPLASTICS RESEARCHNorth Carolina State University research on microfiber degradation

Aquatic Biodegradation – Results0

10

20

30

40

50

60

70

80

90

% B

IOD

EGR

AD

ATIO

N

0

Cotton76%

Polyester4%

DAYS

25020015010050

Index of Textile Aquatic Microplastics(Assumes 5.5%/yr. degradation rate & 3%/yr. future world production of synthetic fibers)

Index: 2018 = 100

100

150

212

292

0

50

100

150

200

250

300

2018 2028 2038 2048

3x More Textile Microplastics Possible by 2048

TOP ENVIRONMENTAL CONCERNSIssues vary across the globe

U.S. Rest of World• Water Quality (81%)

• Air Quality (77%)

• Depletion of Natural Resources (76%)

• Air Quality (89%)

• Water Quality (87%)

• Climate Change (86%)

Source: CCI & Cotton Incorporated’s 2017 Global Environment Survey

CONSUMER AWARENESS AND CONCERNMicrofiber waste is a top concern for those aware of fiber production issues

25%

Average awareof issues

84%

Concerned with microfiber waste

Source: CCI & Cotton Incorporated’s 2017 Global Environment Survey

SUSTAINABLE FABRICSCotton is considered most sustainable

Percent saying the following fibers are safe for the environment:

CottonNylonRayon Polyester

90% 53% 45% 46%

Source: CCI & Cotton Incorporated’s 2018 Global Lifestyle Monitor

Wool &Silk

86%

FIBER LABEL CHECKING INCREASES IN THE U.S.

Source: Cotton Incorporated’s Lifestyle Monitor™ Survey

PERCENT ALWAYS/USUALLY CHECK FIBER CONTENT LABELS

56% of Boomers

check fiber labels

96 01 06 11 16 17

46% of Gen Xers

check fiber labels

96 01 06 11 16 17

38% of Millennials

check fiber labels

1795 00 05 10 15 18* 95 00 05 10 15 18 00 05 10 15 18

*Partial year data, through June 2018

Stable Increasing

World Per Capita Cotton Demand

2.3

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

Kilo

gram

s p

er c

apit

a

Pou

nd

s p

er

cap

ita

Source: USDA for history. Cotton Incorporated World Fiber Demand & Supply Models for Projections

World Cotton Demand

0102030405060708090

100110120130140150160

Mill

ion

48

0 L

b. B

ales

Source: USDA and Cotton Incorporated

Cotton Area: Responsiveness to World Cotton Price

Highly Responsive

• U.S.A.• Australia• Brazil• Turkey

Moderately Responsive

• China• India• Rest of World

Least Responsive

• Pakistan• Uzbekistan

U.S. Corn Price Received

0

1

2

3

4

5

6

7

8

Do

llars

pe

r B

ush

el

Actual Projected Linear (Actual)

Source: USDA & Cotton Incorporated

U.S. Soybean Price Received

0

2

4

6

8

10

12

14

16

Do

llars

pe

r B

ush

el

Actual Projected Linear (Actual)

Source: USDA & Cotton Incorporated

U.S. Upland Cotton Price Received

0

10

20

30

40

50

60

70

80

90

100

Cen

ts p

er

Pou

nd

Actual Projected Linear (Actual)

Source: USDA & Cotton Incorporated

Cotton/Corn Price Ratio(Average Price Received Basis)

0

5

10

15

20

25

30

35

40

Rat

io

Actual Projected

Source: USDA & Cotton Incorporated

Cotton/Corn Futures Price Ratio at Planting Timevs. Upland Cotton Acres

6

8

10

12

14

16

18

10

15

20

25

30

35

Mill

ion

Acr

es

Pri

ce R

atio

(C

ott

on

vs.

Co

rn)

Cotton Acres (right) Price Ratio (left)

Source: USDA, CME Group, NCC.

U.S. Upland Cotton Acres

6

8

10

12

14

16

18

Mill

ion

Acr

es

Actual Projected Linear (Actual)

Source: USDA & Cotton Incorporated

Total U.S. Cotton Production

0

5

10

15

20

25

Mill

ion

48

0 L

b. B

ales

Source: USDA & Cotton Incorporated

U.S. Exportsvs. Non-U.S. Mill Demand

0

2

4

6

8

10

12

14

16

18

20

40

50

60

70

80

90

100

110

120

130

Mill

ion

Bal

es

Mill

ion

Bal

es

US Exports Foreign Mill UseSource: USDA

Cottonseed Prices

0

50

100

150

200

250

300D

olla

rs p

er

Sho

rt T

on

U.S. Avg.

Source: USDA

Cottonseed Prices vs. Soybean Price

$0

$2

$4

$6

$8

$10

$12

$14

$16

$0

$50

$100

$150

$200

$250

$300

$ p

er

Bu

she

l

$ p

er

Sho

rt T

on

Cotseed (Left) Soy (Right)

Cottonseed Total Crush

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,0000

00

Sh

ort

To

ns

U.S. Avg.

Source: USDA

Cottonseed Price vs. Milk Price

$5

$7

$9

$11

$13

$15

$17

$19

$21

$23

$0

$50

$100

$150

$200

$250

$300

$ p

er

Cw

t

$ p

er

Ton

Cotseed (Left) Milk (Right)

Source: USDA

Cottonseed Total U.S. Production Less Crush

0

1,000

2,000

3,000

4,000

5,000

6,0000

00

To

ns

U.S. Avg.

Source: USDA

Cottonseed Price vs. Cottonseed Production - Crush

0

1

2

3

4

5

6$0

$50

$100

$150

$200

$250

$300

Mill

ion

Sh

ort

To

ns

(In

vert

ed

Sca

le)

$ p

er

Sho

rt T

on

Cotseed Price CS Prod.

Source: USDA

WHOLESEED MARKETING

COTTONSEED OIL MARKETING

World Per Capita Total Fiber Demand

2

4

6

8

10

12

14

5

10

15

20

25

30

35

Kilo

gram

s p

er

cap

ita

Pou

nd

s p

er

cap

ita

Source: USDA, Fiber Organon, PCI Fibers

1.9% Growth per Year