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 323, February 12, 1997.)
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 March 12, 1997.
Further Information Contact: U.S. Department of Agriculture Foreign Agricultural Service Cotton, Oilseeds, Tobacco, and Seeds Division Stop 1051 1400 Independence Ave. SW Washington, D.C. 20250-1051 Telephone -- (202) 720-9516 Fax -- (202) 690-1171 Lynn Abbott, Acting Director Lana Bennett, Deputy Director for Analysis Abdullah A. Saleh, Group Leader, Cotton, Tobacco, and Seeds Analysis Principal Contributors Anita Regmi Cotton Analyst for Asia, Latin America & Oceania Jon Ann Flemings Cotton Analyst for Africa, FSU, Middle East & Europe Ada Arrington 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 (1-800) 245-6340 (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 86.2 million bales, down 155,000 bales from last month's forecast. The U.S. cotton production forecast is 19.0 million bales, unchanged from last month's forecast. World cotton production for crop year 1995/96 is estimated at 92.0 million bales, up 196,000 bales 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 85.8 million bales, up 405,000 from last month's forecast. U.S. consumption is forecast at 11.0 million bales, unchanged from last month's forecast. World cotton consumption for MY 1995/96 is estimated at 84.5 million bales, up 184,000 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 26.9 million bales, basically unchanged from last month's forecast. U.S. exports are forecast at 6.5 million bales, up 200,000 bales from last month's forecast. World cotton exports for MY 1995/96 are estimated at 27.4 million bales, up 197,000 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 36.8 million bales, slightly down from last month's forecast. U.S. ending stocks are forecast at 4.5 million bales, down 250,000 bales from last month's forecast. World cotton ending stocks for MY 1995/96 are estimated at 36.3 million bales, up 162,000 bales from last month's estimate. U.S. ending stocks totaled 2.6 million bales.World Situation World cotton production for 1996/97 is forecast at 86.2 million bales, down 155,000 bales from last month's estimate. Major adjustments include the following: - Turkey's production forecast was increased by 150,000 bales due to an increase in harvested area. - Sudan's production forecast was decreased by 200,000 bales due to reductions in yield and area. World cotton production in 1995/96 is estimated at 92.0 million bales, increased 196,000 from last month's estimate, mainly due to a 130,000 bale increase in Argentina's production estimate. World cotton consumption in 1996/97 is forecast at 85.8 million bales, up 405,000 from last month's forecast, mainly due to increases in the consumption forecasts for China, Mexico, and Turkey. World cotton consumption in 1995/96 is estimated at 84.5 million bales, up 184,000 bales from last month's estimate, mainly due to 183,000 bale increase in Turkey's consumption estimate. World cotton exports for MY 1996/97 are forecast at 26.9 million bales, basically unchanged from last month's forecast. Export forecast decreases for Argentina, Sudan and Turkmenistan were offset by increases in the export forecasts the United States and Greece. World cotton exports for MY 1995/96 are estimated at 27.4 million bales, up 197,000 bales from last month's estimate, mainly due to 222,000 bales increase in the estimate for Argentina. World cotton ending stocks for MY 1996/97 are forecast at about 36.8 million bales, slightly down from last month's forecast. The increase in the ending stocks forecast for Turkey and Thailand were more than offset by decreases in the ending stocks forecasts for the United States and Argentina. World cotton ending stocks for MY 1995/96 are estimated at 36.3 million bales, up 162,000 from last month's estimate. Increased ending stocks estimate for Thailand and Turkey more than offset the decrease in Argentina's ending stocks. Cotton Prices The 1996/97 Cotlook A-Index averaged 79.88 cents/lb. during January, up from December's average of 79.06 cents/lb. The A-Index which began the month at 84.00 cents/lb. ended January 30 at 84.25 cents/lb. The Central Asian quote was the lowest in the Index, averaging 75.10 cents/lb. During January, the California/Arizona and Memphis Territory quotes were above the A-index by an average of 4.11 cents/lb. and 4.38 cents/lb., respectively. With the January 21 withdrawal of the Greek quote from the A-Index, the Memphis Territory quotes have been included in the A-Index along with the California/Arizona quotes which have remained since the withdrawal of the Mexican quotes in November. March 97 futures prices on the New York Cotton Exchange remained relatively range bound in January. The March contract began the month at 75.38 cents/lb. and fluctuated within a narrow range reaching its lowest point of 73.00 cents/lb. on January 21. However, large weekly export sales registration reports and uncertainty regarding the magnitude of southern hemisphere crop caused a price upswing and the March 97 futures closed January 31 at 75.26 cents/lb. U.S. Highlights The seasonally adjusted daily rate of U.S. cotton consumption in December amounted to 41,729 bales (480-lb), below November's level of 42,502 bales. A total of 877,463 bales were consumed during 5 weeks in December, compared with 843,413 bales in November (4 weeks). The seasonally adjusted annualized consumption rate for the month of December was 10.89 million bales, down from November's 11.09 million bales. Domestic mill purchases, light during the first half, were moderately active during the second half of December. Interest in cotton from the Delta and southeastern growth areas was good for prompt and nearby delivery. Mills continued to purchase a moderate volume of cotton for deliveries scheduled from second quarter 1997 through fourth quarter 1997. Consumer interest in cotton products continued steady. Demand for denims, housewares and apparel fabrics remained good. Interest in sales yarn was fair, while interest in gray cloth, fleece and industrial fabrics was lackluster. Many mills did not operate during the Christmas week. Cotton stocks on hand in consuming establishments during December totaled 583,350 bales (480-lb), up from 578,769 bales in November. Stocks held in public storage and at compresses totaled 11.2 million bales, up from 10.2 million in November. Active spindles in place in December 1996 totaled 5.9 million, of which 2.6 million were dedicated to 100-percent cotton, compared with 6.7 million and 2.7 million, respectively, during the same period in 1995. Cotton's share on the cotton spindle system was 78 percent. U.S. cotton exports for November totaled 573,000 bales, more than double the 277,000 bales in October, but 22 percent below November 1995 exports, according to the U.S. Bureau of the Census. The leading markets in November were China, Indonesia, Korea, Japan, and Mexico. U.S. cotton imports for November totaled 19,000 bales, down from 24,000 bales in October, according to the U.S. Bureau of the Census. The leading sources for U.S. cotton imports in November were Uzbekistan, Argentina, and Mexico. International Highlights African Franc Zone's Share of World Exports Increases as Production Continues to Climb Cotton exports from the Franc Zone African countries continue to increase as the level of cotton production in the region rises. Total Franc Zone cotton production increased by an estimated 48 percent between MY 1990/91 and MY 1996/97. Along with the overall increase in production, some changes have also occurred in the production levels of the individual countries. Within the last six years, Benin has more than tripled its cotton production and its share of total Franc Zone production jumped from 8.2 percent in 1990/91 to a projected 20.6 percent in 1996/97. During the same period, cotton production increased by 100 percent in Cameroon, 61.3 percent in Mali, and 27.7 percent in Chad. Growth in cotton production was spurred by the devaluation of the CFA franc in 1994, which has made exports from the region more competitive. Cotton crop area increased by an estimated 50 percent between MY 1990/91 and MY 1996/97. Improved varieties, higher cotton prices, and favorable weather conditions contributed to the increased production. Production is expected to continue increasing with the privatization of many parastatal cotton marketing companies. The Franc Zone cotton exports have increased 60 percent from 2.1 million in MY 1990/91 to a projected 3.3 million in MY 1996/97. Increased exports from the region have raised Franc Zone's share of total world exports from 6.9 percent in MY 1990/91 to an estimated high of 12.2 percent for MY 1996/97. Exports from the Franc Zone have met import demands in many countries where the market share of other traditional suppliers, especially Central Asian countries, has been declining. Exports from Uzbekistan, the second largest exporter, declined 20.7 percent during the last four years. Other exporting countries, such as India and Pakistan, are erratic exporters with export levels varying, based on their domestic supplies. However, exports from the Franc Zone African countries are on a consistent upward trend and compete directly with U.S. cotton exports to Western Europe and Asia. India The government of India (GOI) granted an additional export quota of 165,000 bales (170 kg-bales) for the 1996/97 season, of which the Cotton Corporation of India (CCI) has been authorized to export 100,000 bales and the Andhra Pradesh Cooperative Marketing Federation the remaining 65,000 bales. India's 1996/97 cotton export quota now totals 1.22 million 170-kg bales (940,000 480-lb bales). Including the 1995/96 quota spillover, India's 1996/97 cotton exports are expected to reach 1.2 million 480-lb bales, almost double last year's level. Turkmenistan In hopes of reviving the declining cotton sector, the government of Turkmenistan (GOT) has decided to reform its current centralized production system by privatizing state agricultural holdings. Under the plan, individual farmers will be given the option to receive temporary title to an estimated two hectares to grow cotton or ten hectares to grow wheat. All production from these plots will be under 100 percent state order at the previous year's procurement price. Farmers will receive 30-50 percent of the procurement price prior to planting and the remainder will be paid after harvest. It is expected that farmers will be allowed to retain 80 percent of the revenues, while the remainder will be paid to peasant organizations for infrastructure and inputs. After two years, productive farmers will be given permanent title to the land (which may be inherited but not sold). Officials expect the distribution of land to be complete by the start of cotton planting this April. Due to the lack of adequate incentives for farmers to plant, grow, and harvest cotton, Turkmenistan's cotton production declined from over 1.8 million bales in 1993/94 to an estimated 600,000 bales in 1996/97. The GOT, reportedly, was forced to resort to mass mobilization of population to harvest the 1996/97 crop, a significant portion of which is generally believed to have been left unharvested. It is believed that the provision of incentives to those who actually farm the land will revive the declining trend in Turkmenistan's cotton production.