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June 2014 Cotton Leader

June 24th, 2014

THE COTTON BOARD CONFIRMS $80 MILLION FOR RESEARCH AND PROMOTION IN 2015

The Cotton Incorporated Board of Directors recently gathered for their June Meeting in Dallas, Texas, and began discussions about its 2015 budget. The Cotton Board’s Executive Committee was also in attendance and confirmed funding for the 2015 Research and Promotion Program at a level of $80 million, despite an expected decrease in total collections. Cotton Board Chairman, Gary Ross, an Importer from Yardley, PA, stated "The Cotton Board is drawing from our reserves in order to maintain funding at $80 million because we believe it is important to maintain the program at this level given the challenges cotton is facing." In his address to the Cotton Incorporated board, Chairman Ross underlined the challenges cotton is facing and the need for industry unity. "We need the power of one. It is a critical time for the Cotton Research and Promotion Program," said Ross. "Cotton demand is not where we need it to be and there is no quick or easy path that guarantees a quick turn-around. Now, more than ever, we need our boards to question, reflect, and encourage each other to find better ideas and better solutions than we had yesterday." Ross encouraged the organizations to act boldly. "We need to continue to create an environment where we can discuss positive and not-so-positive returns. Sometimes, home run hitters strike out. We need our team to go to the plate and swing as hard as they can - to swing for the fences. Our industry cannot afford to take a pitch or walk. Tough times do not last forever, but tough people do. I am proud of the cooperative spirit between The Cotton Board and Cotton Incorporated." The two boards will meet in August to finalize the 2015 budget before The Cotton Board sends its recommendation for budget approval to the Secretary of Agriculture.

COTTON INCORPORATED 2013 ANNUAL REPORT

Cotton Incorporated’s 2013 Annual Report is now available online. To view the report, log on to http://annualreport.cottoninc.com. "The theme of the 2013 Annual Report is ‘The Case for Cotton’. It showcases the many ways Cotton Incorporated’s eight divisions have worked to develop a clear, consistent message to brands, retailers and consumers on behalf of the entire cotton industry about the positive benefits of cotton and the wide-ranging uses of the cotton plant beyond just being an apparel fiber," says Emily Thompson, Associate Director of Editorials for Cotton Incorporated. The report also offers letters from Dr. Jay Hardwick, Chairman of Cotton Incorporated’s 2013 Board of Directors, and J. Berrye Worsham, Cotton Incorporated’s President and CEO, as well as a listing of Cotton Incorporated’s Board Officers, Directors and Alternates. If you would prefer to receive a copy of the report in paper or DVD format, please contact Emily Thompson at ethompson [at] cottoninc [dot] com, or 212.413.8316.

HAYDEN PANETTIERE CONTINUES WITH COTTON

Each quarter, Cotton Incorporated conducts a consumer-directed poll to determine how their current television advertisement is resonating with consumers. Their current commercial, featuring Hayden Panettiere, continues to perform exceptionally well and its recognition is now at an all time high. Spot recognition is highest among women ages 18-34, which is Cotton Incorporated’s target demographic for the commercial. Hayden Panettiere, star of ABC’s primetime TV show Nashville, began her role as cotton spokesperson in 2013 with the launch of her "The Fabric of My Life" commercial where she is wearing beautiful cotton clothing and singing her version of the "The Touch, The Feel, Of Cotton" anthem. Her hit show Nashville has been renewed for the 2015 broadcast season, so Hayden will continue to be the face of cotton on television through the first quarter of next year. To view the commercial and get behind-the-scenes interviews, extras and more with Hayden, visit: www.fabricofourlives.com.

DROKE PROMOTED TO SENIOR VP

The Cotton Board recently announced the promotion of Lisa N. Droke, MBA, CPA, to Senior Vice President of Finance & Administration. Droke is The Cotton Board’s first ever Senior Vice President. "Lisa is a proven results-oriented senior financial executive with vast experience and a broad skill set," stated William A. Gillon, President & CEO of The Cotton Board. Since joining The Cotton Board in 2009, Droke has successfully implemented new investment strategies that have significantly strengthened funding for the Research & Promotion Program. "Not only has Lisa been an asset to The Cotton Board in regards to financial administration, she has made considerable contributions to the overall health of the cotton industry. She makes it a priority to visit cotton producers on their farms and has a genuine desire to learn as much as she can about their operations," said Gillon.

POTENTIAL FOR ULTRA-LOW GOSSYPOL COTTONSEED

After many years of Cotton Incorporated-funded research, gossypol production in cottonseed can be blocked by using modern biotechnology techniques. This has the potential to provide significant quantities of high quality protein for direct human consumption. Ultra-low Gossypol Cottonseed (ULGCS) maintains normal gossypol levels in all of the non-seed plant tissues, where it acts as a defense mechanism against pests and pathogens, but since the seed contains no gossypol, it opens up the possibility of utilizing this massive and valuable resource for use as food and/or feed. This major scientific breakthrough has the potential to turn cottonseed into a food source for millions of people. In developing countries, where protein malnutrition is a widespread problem, many hungry people could benefit greatly from this largely underutilized protein resource. Researchers have been testing ways to use cottonseed protein for human consumption for several decades and some success stories included making a flour for baking from the ULGCS and simply salting and roasting the cottonseed and serving it as a standalone snack. Cotton Incorporated continues to place importance on expanding the range of food products from the cotton plant and will continue to seek ways to incorporate ULGCS into food products.

economic update

Both New York futures and the A Index moved lower last month. Chinese prices were stable. The nearby July New York futures contract lost about 8 cents/lb over the last month, generally dropping from 93 cents/lb to 85 cents/lb. The level of open interest for the New York December contract surpassed that for the July contract early this week. Over the last month, prices for December futures fell about the same amount as the July contract, dropping from 84 to 77 cents/lb. The A Index decreased five cents/lb, declining from 94 cents/lb to 89 cents/lb and reaching its lowest levels since January. After declining rather steeply in April, the Chinese cotton prices (CC Index) stabilized last month. In international terms, the CC Index held to values near 126 cents/lb. In their June report, the USDA increased world production and consumption estimates for both 2013/14 and 2014/15. Virtually all of the increase to the 2014/15 world production estimate was a result of improved growing conditions in the U.S., with the projection for the U.S. 2014/15 crop rising 500,000 bales (from 14.5 to 15.0 million) and was a result of sorely needed rains that arrived in West Texas in late May. Nonetheless, West Texas remains dry and uncertainty regarding the potential for additional rainfall as the crop develops remains an important issue for the world price outlook.

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