Availability of Better Cotton @ ECOM today
• Pakistan: About 360 MT (+/- 3%) / Pakistan BCI Raw Cotton 2011/12 crop / Type 1503 /
1.3/32″ G5 28 GPT / CIF Jakarta FF / Prompt shipment / Payment L/C Sight / NLWF by
international controller / ICA R/A
For enquiries please contact John Pestell, [email protected]

• Brazil: BCI recently licensed 58 large farms and 48 small farms in the states of Mato
Grosso, Mato Grosso do Sul, Goais, Minas Gerais and Bahia. ECOM expects to have
plentiful availabilities of BCI cotton this coming crop.
For enquiries please contact Richard Pollard, [email protected]

ECOM views on world cotton markets
In our previous newsletter in early May, we had explained how on the one hand,
unprecedented high prices during the 2010/11 season had resulted in higher planted
acreages, higher production and therefore lower prices during the current 2011/12 season,
while on the other hand, Chinese and Indian Government policies combined with the
drought in the USA had helped maintain prices still relatively high compared to what would
have been expected based on pure supply and demand fundamentals.

In broad terms we are still in the same situation now with prices being supported by China’s
uninterrupted stock-building policy as well as the Indian government announcing an increase
of 28.5% in the Minimum Support Price for seed cotton for the 2012/13 season. Many
uncertainties continue to surround the Chinese Government cotton policy, especially
regarding how they will handle their huge stock position. This combined with unstable global
macroeconomic factors should keep the market volatility fairly high.

The market did fall to new market lows in early June which can be partly explained by a
continuing drop in mill consumption, economic woes in the Euro zone, the lifting of the
Indian government export ban and by good rains in the USA which are positive for new crop
2012/13 production and overall supply. However, the market has subsequently rebounded
from the lows and has rallied by about 14 cents in 8 days. A succession of short lived lows
and peaks characterize highly volatile markets which are looking for a trend and which can
react violently to any signals.

Despite the current uncertainties we still anticipate a possible further decline in prices longer
term for two main reasons:
– Supply and Demand fundamentals: according to the latest USDA report, the
carryover stock for the current 2011/12 season is expected to increase to
approximately 66 million bales with a further increase in carryover for 2012/13
season to 74 million bales which would be an unprecedented level. However, China’s
Government stock could represent anywhere between 35% and 45% of the world
carryover. Chinese Government policy will therefore remain a very strong influence
on the entire market dynamics.
– Global macroeconomic situation: although the Euro zone has breathed a slight sigh of
relief due to the recent election result in Greece, the implementation of any
fundamental economic reforms throughout the entire region still represents a long
term challenge which should not be overlooked. It is also concerning that fast
growing economies such as India are starting to show signs of stalling for the first
time in several years. The economic situation will also have to be monitored closely
in China and the USA.

Based on the above factors, we currently envisage a short term trading range of 60 cts to 75
cts basis Z12, which now has the largest open interest. From August onwards, we could
experience a broader range of possible prices, 55 cts to 85 cts, as the 2012/13 northern
hemisphere crop production situation becomes better defined, with the confirmation of
large crops putting pressure on prices, whereas crop failures being supportive to prices.
You’ll find another market analysis at the end of this newsletter.
BCI Traceability system

In 2011-2012, BCI undertook a strategic review of the BCI objectives and strategy. The
resulting 2013-2015 strategic plan encompasses an update of the current traceability system
which will integrate the farmers, the merchants, the spinners and the retailers and will
improve and simplify the current system.

Until this new system is in place, the UBICs (Unique Bale Identification Codes) that we as
merchants receive from the ginners can be assigned to any BCI bale as long as the physical
bales and the list of UBICs come from the same gin. Basically, if we receive 400MT from gin X
in Brazil and associated 1800 UBICs, but we sell only 200MT, we are allowed to allocate any
900 UBICs to these bales as long as they correspond to that same gin X in Brazil.
There are 3 important guidelines to respect
– The UBICs and the BCI bales must come from the same gin.
– We cannot send more UBICs than BCI bales to a client
– We cannot assign UBICs twice

This being said, when feasible, we’ll match the UBICs we send to our clients with the UBICs
present on the bales. Ruchira Joshi, Supply Chain Manager at BCI, is available for further
information: [email protected]

ECOM farmer support activities in Tajikistan
We are very happy to share a few pictures from a recent Training of Trainers session that was
organized by ECOM Tajikistan in partnership with the Dutch NGO Solidaridad and the International
Finance Corporation (IFC). A senior BCI trainer from Solidaridad-India together with 3 IFC consultants
held a training session on May 22-25 at our gin facility in Yavan. The purpose of this first session was
to familiarize 5 ECOM agronomists with the BCI system and help them further develop their
facilitation skills. A follow up session is planned for this summer.