SEMINAR TOPICS

A. THE COTTON MARKET

PART I

• World Raw Cotton Trade
• The Leading Cotton Merchants of the World
• Functions of a Cotton Merchant

PART II

• U.S./World Supply and Demand
• NYBOT and Commodity Exchanges in General
  • Functions
  • Participants
  • Activity of Speculators, Index Funds and Option Traders
  • Effect of Speculators on Prices
  • Hedging of Purchases and Sales
  • What is the "Basis?"
  • 3 Types of Margins
• NYBOT Weekly, Monthly, and Yearly Price Charts
• Cotlook A Index and its Importance for U.S. Cotton
• New York Futures vs. Cotlook A Index
• Factors Influencing Cotton Prices

PART III

• Technical Aspects of the NYBOT No. 2 Contract
  • Contract Specifications
  • Daily Trading Limit
  • The Synthetic Close for Futures
  • Open Interest in Futures and Options
  • Delivery Rules, including "Delayed Certification"
  • Certificated Stock
  • Premiums/Discounts
  • Age Penalties
  • Weight Penalties
  • Year-of-Crop Penalties

PART IV

• Analysis of Historic Price/Crop Size Relationships
• Price Outlook for Upland Cotton
• Factors that Affect Cotton Prices
  • Bullish Factors
  • Bearish Factors
• "Basis" Levels for Different Qualities/Origins
• Competing Crops/Competing Fibers

PART V

• The 2002 Farm Bill (FSRI Act)
• Loan and Marketing Loan, Adjusted World Price (AWP)
• "Windows of Opportunity" (the difference between AWP and Futures)
• Competitiveness Formulas
  • Step-1
  • Step-3
• Budget Restraints, Payment Limitations
• WTO Raw Cotton Issues
• Effects of Farm Bill on Cotton Prices
  • Current Year
  • Beyond
• The Future of U.S. Farm Bills after 2007/08

PART VI

• China
• Textiles in NAFTA, Consumption Trends
• Labor Cost Comparison
• U.S. Textile Trade
• U.S. Textile Consumption at Retail Level
• Trade Issues
• Shifts in Worldwide Buying Patterns
• Quota-free Textile World since January 2005
• Outlook for the Textile Industry

B. RISK MANAGEMENT AND OPTION STRATEGIES

PART I

• "On Call" Purchases
  • Advantages
  • Risks

PART II

• Options in General
• Two Types of Options
• The Differences between Buying and Selling of Options
• The Strike Price, Exercising Options and Expiry
• The Four Factors affecting the Price of an Option
• Who should Buy and Who should Sell Options?

PART III

• Cotton Options as a Risk Management Tool for Textile Mills

PART IV

• Five Strategies Depending on a Mill's Individual Price Outlook
• The Convenience/Advantages of having your own Brokerage Account

PART V

• Options as "Price Insurance"

C. COTTON CLASSING AND COTTON CONTRACTS

PART I

• Different Ways of specifying the Quality
  • USDA "Green Card" (USDA GC final)
  • Description
  • On type
  • Re-caps
  • Actual Samples

PART II

• Classing
  • Traditional Method
  • USDA HVI "Green Card"
    • Who
    • Where
    • Different Quality Characteristics
      • Fiber Length
      • Uniformity
      • Strength
      • Micronaire
      • Color, including "b+" and "rd" readings
      • Leaf
      • Trash
      • Extraneous Matters and Remarks ("Reductions")
    • Characteristics not analyzed by the USDA
      • Sugar
      • Short Fiber Content
      • "Neps"
      • Maturity
    • Information available on USDA classing
      • Weekly AMS Report
      • Bale by Bale
      • Form-R
• The Importance of a Constant Mix

D. COTTON CONTRACT

PART I

• Different ways of Buying
  • Fixed Price vs. "on call"
  • "Forward" vs. "Spot"
• Rights and Obligations of the Parties as per ICA Rules

• Settlement of Disputes
  • Quality
  • Technical Aspects

• Default Lists

PART II

• Points to Watch when Purchasing Cotton

PART III

• Common Problems and Solutions
• Importance of the Cotton Controller
• PBI (Permanent Bale Identification)

PART IV

• What Matters Most when Buying Cotton
  • Know your Supplier and Treat him like a "Partner"
  • Make sure Seller Hedges his Risks
  • The Timing of the Purchase/Fixation
  • NYK Price Fixation is more important than the "Basis"
  • Price is not the only Factor to Decide
  • Common Sense when finding Solutions to Problems
  • Service, Information and Flexibility given by Seller
  • Integrity of both Parties