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 324, March 11, 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 April 14, 1997.
World cotton production for MY 1996/97 is forecast at 86.3 million bales, up 125,000 bales from last month's forecast. U.S. cotton production is forecast 19.0 million bales, unchanged from last month's forecast.
World cotton production for MY 1995/96 is estimated at 92.2 million bales, up 156,000 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 86.2 million bales, up 465,000 bales 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 85.3 million bales, up 825,000 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 27.1 million bales, up 200,000 bales from last month's forecast. U.S. exports are forecast at 6.8 million bales, up 300,000 bales from last month's forecast.
World cotton exports for MY 1995/96 are estimated at 27.4 million bales, basically unchanged 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 36.0 million bales, down 745,000 from last month's forecast. U.S. ending stocks are forecast at 4.2 million bales, down 300,000 bales from last month's forecast.
World cotton ending stocks for MY 1995/96 are estimated at 35.6 million bales, down 710,000 bales from last month's estimate. U.S. ending stocks totaled 2.6 million bales.World Situation
World cotton production for MY 1996/97 is forecast at 86.3 million bales, up 125,000 bales from last month's estimate. Major adjustments include the following:
India's production forecast was increased by 200,000 bales due to increased area, and higher yields resulting from late seasonal rains in the central cotton region.
Australia's production forecast was decreased by 100,000 bales due to adverse weather persisting throughout the main cotton producing area during early February.
Pakistan's production forecast was increased by 200,000 bales due to increased yields.
Greece's production forecast was decreased by 130,000 bales based upon Hellenic Cotton Board numbers released this month.
World cotton production for MY 1995/96 is estimated at 92.2 million bales, up 156,000 bales from last month's estimate, mainly due to an increased Indian production estimate.
World cotton consumption for MY 1996/97 is forecast at 86.2 million bales, up 465,000 from last month's forecast. Increases in the consumption forecasts for China and India more than offset decreases in the consumption forecast for Hong Kong.
World cotton consumption for MY 1995/96 is estimated at 85.3 million bales, up 825,000 bales from last month's estimate, mainly due to a 882,000 bale increase in India's consumption estimate.
World cotton exports for MY 1996/97 are forecast at 27.1 million bales, up 200,000 bales from last month's forecast, mainly due to a 300,000 bale increase in the export forecast for the United States.
World cotton exports for MY 1995/96 are estimated at 27.4 million bales, basically unchanged from last month's estimate.
World cotton ending stocks for MY 1996/97 are forecast at about 36.0 million bales, down 745,000 bales from last month's forecast. The increase in the ending stocks forecast for China and Pakistan were more than offset by decreases in the ending stocks forecasts for India, the United States, and Australia.
World cotton ending stocks for MY 1995/96 are estimated at 35.6 million bales, down 710,000 from last month's estimate, mainly due to a 723,000 bale decrease in the ending stocks estimate for India.
The 1996/97 Cotlook A-Index averaged 80.4 cents/lb. during February, up from January's average of 79.88/lb. The A-Index which began the month at 80.5 cents/lb. ended February 27 at 81.15 cents/lb. The Central Asian quote was the lowest in the Index, averaging 75.44 cents/lb. During February, the California/Arizona and Memphis Territory quotes were above the A-index by an average of 3.38 cents/lb. and 2.14 cents/lb., respectively. March 97 futures prices on the New York Cotton Exchange declined in February. The March contract began the month at 75 cents/lb. and reached its lowest point of 71.65 cents/lb. on February 18. 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 February 28 at 73.87 cents/lb.
The seasonally adjusted daily rate of U.S. cotton consumption in January amounted to 42,387 bales (480-lb), above December's level of 41,729 bales. A total of 840,067 bales were consumed during 4 weeks in January, compared with 877,463 bales in December (5 weeks). The seasonally adjusted annualized consumption rate for the month of January was 11.06 million bales, up from December's 10.96 million bales. Domestic mill purchases were moderately active during January. Interest centered primarily around the Delta and southeastern growth areas. Purchases for nearby deliveries were light, while some mills purchased cotton with delivery dates scheduled from fourth quarter 1997 through second quarter 1998. Consumer interest in cotton products continued steady. Demand for denims, housewares and apparel fabrics remained good. Interest in sales yarn, gray cloth, and fleece was poor, and industrial fabrics was lackluster.
Cotton stocks on hand in consuming establishments during January totaled 657,879 bales (480-lb), up from 583,360 bales in December. Stocks held in public storage and at compresses totaled 10.5 million bales, down from 11.2 million in December. Active spindles in place in January 1997 totaled 5.7 million, of which 2.6 million were dedicated to 100-percent cotton, compared with 6.5 million and 2.8 million, respectively, during the same period in 1996. Cotton's share on the cotton spindle system was 78 percent.
U.S. cotton exports for December totaled 899,000 bales, 57 percent higher than the 573,000 bales in November, but 27 percent below December 1995 exports, according to the U.S. Bureau of the Census. The leading markets in December were China, Japan, Indonesia, Mexico, and Korea.
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.
The 1996/97 cotton production forecast for India was revised upwards by 200,000 bales to 12.5 million bales, due to increased market arrivals. Total market arrivals reached 10 million (170-Kg) bales as of mid-February compared with 8.3 million (170-Kg) bales a year ago. Unusual winter rains in central and southern India enabled farmers to increase the number of pickings.
With a large harvest and sluggish mill purchases, Indian cotton prices have declined in recent months. In order to stimulate the upward movement of cotton prices, farmers have requested the Government of India (GOI) to expand the current export quota. However, given the slow pace of exports under the announced 1996/97 quota of 1.22 million (170 Kg) bales, it is doubtful that additional quota announcements will help boost prices. Based on the data from the Textile Commissioner's Office, 790,145 bales (170-Kg) of cotton have so far been exported under the 1995/96 season's 1.59 million (170-Kg) bales export quota. To accommodate exporters, the GOI has extended the shipment period to February 28, 1997 for cotton shipments under the 1995/96 quota. Under the 1996/97 quota, cotton must be shipped by September 30, 1997. As of February 20, 1997, 584,139 bales (170-Kg) of cotton have been exported under the 1996/97 quota.
Note: As a result of the Government of India's revision of its cotton marketing year from September-August to October-September, the 1995/96 production estimate for India covers a 13 month period (September 1995 to September 1996). Similarly, the 1995/96 cotton consumption estimate for India has also been revised to 12.3 million bales to account for the 13 month period. For 1996/97, our cotton supply, and demand estimates for India will once again cover a 12 month period.
Yugoslavia (Serbia & Montenegro)
Yugoslavia's textile firms are generally vertically integrated, combining two or more stages of manufacturing and distribution. The textile industry employs approximately 150,000 people with about 70 percent working in the weaving and knitting mills. Except for a few, relatively small apparel manufacturers, all firms are state-owned. Though mostly state-owned, this sector receives little or no support from the Government due to budgetary constraints. Currently, Yugoslavia's textile industry is in a severe crisis resulting from reduced domestic sales, relatively weak exports, low productivity, and a major shortage of both investment and working capital. Although it is believed that massive inter-sectoral privatization will salvage the sector, no definite time table has yet been set to implement privatization of the textile industry.
Since Yugoslavia does not produce raw cotton, the Yugoslav textile industry relies entirely on imported supplies. Due to its dependence on imports and the resulting constant need for hard currency, textile exports represent a crucial part of the industry's performance. Because of export reliance, the textile industry was especially hard hit by the U.N. (United Nations) trade embargo against Yugoslavia which lasted from June 1992 through November 1995.
In 1996, cotton imports were valued at around $12 million, the majority of which was medium-staple cotton imported from Greece, Kazakhstan and Tajikistan. However, following the suspension of the U.N. sanctions, an increase is expected in raw cotton imports and exports of Yugoslav textile goods. Traditional suppliers (such as the former Soviet Republics) have lost their previous competitive advantage now that they are only accepting hard currency payments instead of conducting barter agreements. This leaves an enhanced marketing opportunity for the United States, especially given credit facilities such as the GSM-102 program. This is evidenced by former Yugoslavia's importation of $12.2 million and $7.8 million worth of U.S. cotton via the GSM-102 program in FY 1989 and 1990 respectively. Presently, however, Serbia does not appear to meet the credit worthiness requirements to be eligible for GSM-102.