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OCTOBER 15, 1996
COTTON1.AGR
This report provides the text and analysis from the
current COTTON: WORLD MARKETS AND TRADE publication.
This report draws on information from USDA's global network
of agricultural attaches and counselors, official
statistics of foreign governments, other foreign source
materials, and results of office analysis. Estimates of U.S.
acreage, yield and production are from the USDA Agricultural
Statistics Board, except where noted. This report is based
on unrounded data; numbers may not add to totals because of
rounding. The report reflects official USDA estimates
released in the World Agricultural Supply Estimates
(WASDE number 319, October 11, 1996.)
The report was prepared by the Tobacco, Cotton and Seeds
Division, FAS, AGBOX 1051, 14th and Independence Ave.,
Washington, DC 20250-1000. Further information may be
obtained by writing to the division, or by calling (202)
720-9516, or by FAX (202) 690-1171.
The next issue of the Cotton circular will be available
electronically after 3:30 pm local time on November 12, 1996.
Further Information Contact:
U.S. Department of Agriculture
Foreign Agricultural Service
Tobacco, Cotton, and Seeds Division
Stop 1051
1400 Independence Ave. SW
Washington, D.C. 20250-1051
Telephone -- (202) 720-9516
Fax -- (202) 690-1171
Kenneth E. Howland, Director
Lana Bennett, Deputy Director
Abdullah Saleh, Group Leader, Cotton Analysis
Principal Contributors
Anita Regmi-- Cotton Analyst for Asia, Latin America, Africa & Oceania
Rozlyn M. Sikora--Cotton Analyst for FSU, Middle East &Europe
Deidre Winters--Electronic Word Processor
Ron Roberson--Chairperson for Foreign Area and Production, PECAD
The United States Department of Agriculture (USDA) prohibits
discrimination in its programs on the basis of race, color,
national origin, sex, religion, age, disability, political beliefs
and marital or familial status. (Not all prohibited bases apply
to all programs). Persons with disabilities who require
alternative means for communication of program information
(braille, large print, audiotape, etc.) should contact the USDA
Office of Communications at (202) 720-2791 (voice) or (202) 720-7808 (TDD).
To file a complaint, write the Secretary of Agriculture, U.S.
Department of Agriculture, Washington, D.C., 20250, or call (202)
720-7327 (voice) or (202) 720-1127 (TDD). USDA is an equal
employment opportunity employer.
Summary
World cotton production for crop year 1996/97 is forecast at 87.5
million bales, up 104,000 bales from last month's forecast. The
U.S. cotton production forecast is 18.2 million bales, up 289,000
bales from last month's forecast.
World cotton production for crop year 1995/96 is estimated at 91.5
million bales, unchanged from last month's estimate. U.S. cotton
production in 1995/96 totaled 17.9 million bales.
World cotton consumption for MY 1996/97 is forecast at 86.1
million bales, down 790,000 bales from last month's forecast.
U.S. consumption is forecast at 11 million bales, down 200,000
bales from last month's forecast.
World cotton consumption for MY 1995/96 is estimated at 84.6
million bales, down 376,000 bales from last month's estimate.
U.S. cotton consumption in 1995/96 totaled 10.6 million bales.
World cotton exports for MY 1996/97 are forecast at 26.5 million
bales, slightly up from last month's forecast. U.S. exports are
forecast at 5.8 million bales, down 400,000 bales from last
month's forecast.
World cotton exports for MY 1995/96 are estimated at 27.3 million
bales, down 305,000 bales from last month's estimate. U.S.
exports in 1995/96 totaled 7.7 million bales.
World cotton ending stocks for MY 1996/97 are forecast at 36.4
million bales, up 289,000 bales from last month's forecast. U.S.
ending stocks are forecast at 4.5 million bales, up 898,000 bales
from last month's forecast.
World cotton ending stocks for MY 1995/96 are estimated at 35.6
million bales, up 639,000 bales from last month's estimate. U.S.
ending stocks are estimated at 2.6 million bales, unchanged from
last month's estimate.World Situation
World cotton production for 1996/97 is forecast at 87.5 million
bales, up 104,000 bales from last month's estimate. Major
adjustments include the following:
þ The production forecast for India was increased by
700,000 bales due to increased yield as major cotton
producing states in Northern and Central Zones have
had excellent monsoon season with low insect and
disease infestations.
þ The production forecast for Pakistan was lowered by
600,000 bales due to severe white fly damages
throughout the main cotton growing area of the Punjab
Province.
þ The production forecast for China was lowered by
500,000 bales mainly due to a reduction in area
reflecting losses from heavy rains in August, and
lower yields resulting from less-than-favorable
pre-harvest weather conditions.
þ The production forecast for the United States was
increased by 289,000 bales due to higher yields in
California and Texas.
þ The production forecast for Egypt was increased by
100,000 bales due to increased yields.
þ The production forecast for Mexico was increased by
100,000 bales due to increased area and a slight
increase in yields.
World cotton production in 1995/96 is estimated at 91.5 million
bales, unchanged from last month's estimate.
World cotton consumption in 1996/97 is forecast at 86.1 million
bales, down 790,000 bales from last month's forecast. Decreases
in the consumption forecasts for China, Pakistan, the United
States and Russia more than offset increases in the consumption
forecasts for Mexico and other countries.
World cotton consumption in 1995/96 is estimated at 84.6 million
bales, down 376,000 bales from last month's estimate, mainly due
to reduced consumptions in China, Greece and Russia.
World cotton exports for MY 1996/97 are forecast at 26.5 million
bales, slightly up from last month's forecast. Increases in the
export forecasts for India, Uzbekistan, Egypt and Greece more than
offset the decreases in the export forecasts for the United
States, Pakistan and China.
World cotton exports for MY 1995/96 are estimated at 27.3 million
bales, 305,000 bales from last month's estimate. The decrease in
the export estimate was attributed to decreases in the export
estimates for Uzbekistan and Turkmenistan.
World cotton ending stocks for MY 1996/97 are forecast at 36.4
million bales, up 289,000 bales from last month's forecast. The
increase in ending stocks estimate is mainly due to increases in
the ending stocks estimates for the United States, India and
Greece.
World cotton ending stocks for MY 1995/96 are estimated at 35.6
million bales, up 639,000 bales from last month's estimate. The
increase in the ending stocks estimate was attributed to increases
in the ending stocks estimates for China, Greece, Russia,
Uzbekistan and Turkmenistan.
Cotton Prices
The 1996/97 Cotlook A-Index averaged 75.3 cents/lb. during
September, down from August's average of 76.33 cents/lb.
The A-Index began the month at 76.15 cents/lb. and ended on
September 30 at 75.5 cents/lb. The Central Asian quote was
the lowest in the Index, averaging 70.82 cents/lb. During September, the
California/Arizona and Memphis Territory quotes were above
the A-index by an average of 10 cents/lb. and 9.58 cents/lb.,
respectively. Amid fears about hurricane Fran, frequent rains in
most of the cotton growing areas, and cool temperatures in Texas,
futures prices on the New York Cotton Exchange remained steady.
The October contract began the month at 76.4 cents/lb. falling
initially, but moved up with USDA's bullish crop report. The
October contract closed the month at 75.5 cents/lb.
U.S. Highlights
The seasonally adjusted daily rate of U.S. cotton consumption in
August amounted to 41,162 bales (480-lb), below July's level of
41,567 bales. A total of 866,760 bales were consumed in August,
compared with 750,794 bales in July. The seasonally adjusted
annualized consumption rate for the month of August was 10.7
million bales, down from 10.9 million bales in July. Domestic mill
purchases, although slow early in the month, were more active by
mid-August. Mill buying increased as additional 1996-crop cotton
became available. Demand for prompt deliveries was strong, and
demand for nearby deliveries increased. Consumer interest in
cotton products continued steady. Demand for casual apparel and
denims was strong. Fleece, specialty fabrics and infant wear
sales continued fair. Production of fleece increased due to
preparation for the winter apparel season. Demand for housewares,
sales yarn and print cloth remained good, while industrial fabrics
and gray cloth was lackluster.
Cotton stocks on hand in consuming establishments during August
totaled 597,500 bales (480-lb), down from 613,506 bales in July.
Stocks held in public storage and at compresses totaled 1.3
million bales, down from 1.9 million in July. Active spindles in
place in August 1996 totaled 6.2 million, of which 2.6 million
were dedicated to 100-percent cotton, compared with 6.8 million
and 2.8 million during the same period in 1995. Cotton's share on
the cotton spindle system was 77 percent.
U.S. cotton exports for July totaled 183,000 bales, down 30
percent from 263,000 bales in June, and 39 percent below July 1995
exports, according to the U.S. Bureau of the Census. The leading
markets in July were Mexico, Japan, South Korea, and Canada.
Total U.S. cotton exports in MY 1995/96 amounted to 7,675,451
bales, down 18 percent from 9,402,000 bales during the same period
in MY 1994/95.
International Highlights
Cote d'Ivoire's Cotton Parastatal to Privatize
On September 26, 1996, the government of Cote d'Ivoire (GOCI), in
consultation with the World Bank, adopted a privatization plan for
its cotton parastatal, CIDT (Compagnie Ivoirienne pour le
Developpement des Textiles). The privatization plan will divide
CIDT's 10 gins into three companies, the Northeast company, the
Northwest company and the Center company. The Northeast and
Northwest companies, each consisting of 3 gins, will be sold to
private investors. The Center company, with 4 gins, will continue
to be owned by CIDT. The "privatized" companies' capital share
will be held 34 percent by GOCI, 30 percent by the French cotton
development parastatal, CFDT (la Compagnie Francaise pour le
Developpement des Fibres Textiles), 20 percent by farmers, 3
percent by employees and 13 percent by private investors.
Currently, CIDT provides free seeds, credit and extension services
to cotton farmers. It purchases seed cotton after harvest and
maintains a monopoly on ginning and marketing of cotton. For two
years, CIDT will continue its extension and credit activities and
will remain the sole purchasing agency for seed cotton. The seed
cotton price will be fixed by an independent committee which will
include representatives from the government, the private companies
and farmers. The three cotton companies will market their cotton
individually. However, they will be required to give priority to
the domestic mills. The private companies will be required to
participate in the development and expansion of cotton production
through the provision of extension services and credit facilities
to farmers.
Cote d'Ivoire when considered together with the other Franc Zone
African countries is the third largest cotton exporter in the
world. The World Bank seeks to privatize and restructure all
Franc Zone cotton parastatals. Privatization of cotton
parastatals is expected to enhance seed cotton prices received by
farmers, ultimately boosting cotton production in the region.
India
The government of India (GOI) granted an additional 100,000 bales
(170 kg-bales) of 1995/96 export quota to the Maharastra State
Cooperative Cotton Growers Marketing Federation. About half of
India's 1995/96 cotton export quota, now at 1.59 million 170 kg
bales, has thus far been shipped. To accommodate late season
shipments, the Textile Ministry has extended the shipment date
under the 1995/96 export quota to October 31, 1996.
India's total cotton export quota for the 1996/97 crop season is
currently set at 500,000 bales (170-kg bales). On September 25,
1996, the GOI announced an export quota of 150,000 bales of short
stapled Bengal Deshi cotton. An additional 5,000 bales quota has
been set for the non-spinnable variety, Assam Comilla, and a
345,000 bales quota for staple cotton. Most of the quota has been
allocated to the Cotton Council of India and the various state
government marketing federations. Bids from exporters will be
accepted by the Textile Commissioner's Office through October 31,
1996 for Bengal Deshi cotton and through November 4, 1996 for
staple cotton.
Pakistan's Cotton Sector
Pakistan's cotton production has once again suffered from a severe
white fly and leaf curl virus (LCV) infestation. With recurring
pest and disease problems, Pakistan has been unable to duplicate
its record 10 million bales crop produced during the 1991/92
season. Despite a 6 percent increase in area, this year's cotton
crop is estimated at 7.6 million bales, 500,000 bales lower than
1995/96's level. Due to damages from white fly and LCV, Punjab's
cotton yields are 10-33 percent lower than last year's. Unlike
its normal mid-September emergence, this year's white fly emerged
in August when the crop was at early developmental stages and more
vulnerable. This factor combined with increasing pest resistance
to chemical control has severely damaged Punjab's cotton crop.
With about 9 percent increase in area, Punjab was expected to
produce about 7 million bales of cotton. However, the current
estimate pegs Punjab's crop at 6.1 million bales. Pakistan's
remaining 1.5 million bales will be produced in Sindh, where
better seeds and better management are expected to lead to a good
crop. Cotton areas in Sindh have remained relatively free from
pests and diseases.
The textile industry is the largest industry in Pakistan and the
textile sector accounts for about 65 percent of the country's GDP.
The industry grew from 6,217 installed spindles in 1991/92 to
8,734 in 1995/96. Conversely, the weaving sector declined over
the same period from 15,000 to 14,000 looms. Despite the growth
in spinning capacity between 1991/92-1995/96, the percentage of
active spindles declined from 85 to 77 percent. The textile
sector is currently recovering from a combined shock of rising
input costs for electricity and cotton, and the high cost of
capital. Many textile firms are in financial trouble and are
failing to make principal and interest payments on existing loans;
while others have closed. There have been some speculation that
operating credit may be denied to some of the mills in major
financial trouble. Given the problems in the textile sector, and
continued closing of mills, Pakistan's cotton consumption for
1996/97 is estimated at 6.8 million bales, 200,000 bales below
1995/96's level.
Since January 1995, Pakistan has liberalized cotton trade. There
is no duty on raw cotton exports, however, cotton imports are
subject to a 5 percent duty and a 10 percent general sales tax.
Textile mills have complained that this policy has driven up
cotton prices in the domestic market. During the past few months,
domestic cotton prices have been much higher than international
prices. High domestic cotton prices have led to increased cotton
imports. Most upland imports have been sourced from Central Asia.
Pakistan's 30,000 bales of annual ELS cotton needs are met mainly
by imports from the United States and Egypt.
Raw and value-added cotton exports account for about 60 percent of
the value of Pakistan's total annual exports. Japan, Indonesia,
S. Korea and Thailand are the major destinations for Pakistan's
cotton and textile exports. Except in the years of major crop
failures (such as 1993/94 and 1994/95), Pakistan has been a major
exporter of raw cotton. Based on current estimates, Pakistan is
expected to export 1 million bales of cotton during the 1996/97
season. Cotton yarn exports, whose value exceeded U.S.$ 1.5
billion during MY 1994/95, account for the largest share of
Pakistan's total exports. During the seven month period July 1995
through January 1996, yarn exports have totaled U.S.$ 742 million.
Due to the financial problems in the textile sector, Pakistan's
yarn exports are believed to have slowed down during the third
quarter of 1996. Given the problems facing the textile industry,
Pakistan's 1996/97 textile exports are expected to remain flat or
decline slightly.
The long-term outlook indicates that Pakistan will continue to be
a major producer and exporter of raw cotton. Pest and disease
problems experienced this year should diminish with extensive use
of the two new LCV resistant varieties, CIM 1100 and CIM 448,
recently released by the Central Cotton Research Institute in
Multan. As the textile sector currently is going through a much
needed adjustment, the short-run outlook indicates a slight
decline in mill use of cotton. Industry experts believe that many
firms are currently operating inefficiently and that a large
sector of the industry suffers from gross overcapacity. The
government's reform oriented policies which have forced the
industry to face higher raw cotton prices are seen as necessary
for Pakistan to develop a more competitive industry capable of
operating in a liberalized trade environment. This policy in the
short-run may flatten or lower textile exports. However, given
the large domestically grown cotton base in Pakistan, the
Pakistani textile industry should recover.
SPECIAL SECTION
U.S. COTTON EXPORTS BY CUSTOMS DISTRICT
Cotton shipment activity in U.S. ports of departure in marketing
year 1995/96 was down 18 percent, reflecting decreased U.S. cotton
export demand from the previous year. Total exports from all
ports were 7.7 million bales, valued at $3.1 billion, compared to
9.4 million bales, valued at $3.5 billion in MY 1994/95.
Recent Bureau of the Census reports show that West Coast ports
continue to dominate export movement of U.S. cotton. During
1995/96, West Coast ports accounted for 5.3 million bales, 69
percent of all cotton exports. West Coast shipments in MY 1995/96
registered a 24 percent decrease over MY 1994/95 with the largest
share of movement through Los Angeles and San Francisco. The
majority of the West Coast shipments are destined for Asian
markets.
Exports from Gulf ports represented the second largest volume of
U.S. cotton shipments, accounting for 1.5 million bales or 20
percent of total exports in MY 1995/96. Exports from the Gulf
decreased 15 percent from the previous year with increases from
all but two ports. Compared with MY 1994/95, shipments were up 28
percent from Mobile, Alabama and 11 percent from Laredo, Texas.
East Coast ports experienced a 45 percent increase in shipment
activity in MY 1195/96, while shipments from the Great Lakes ports
increased by 16 percent.
Leading individual ports were Los Angeles, 3.9 million bales; San
Francisco, 976,890 bales; Laredo, 604,309 bales; Houston-Galveston,
436,072 bales; and Seattle, 357,833 bales.
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