U.S. Cotton Outlook

The U.S. outlook for 1998/99 remains unchanged from last month’s estimates. Domestic mill use remains at 10.4 million bales, and exports are forecast to total 4.2 million bales. Stocks are forecast to end the year at 3.4 million bales. U.S. production for 1998/99 is forecast at 13.796 million bales, while imports are forecast at 350,000 bales.

World Cotton Outlook

The 1998/99 world outlook this month features larger production, consumption, and ending stocks. Production was raised for China and Brazil with the increase for China based on the Chinese Government’s latest crop assessment. World consumption was raised 405,000 bales to 85.01 million bales, reflecting modest increases in mill use estimates for China, Indonesia, Korea, and Taiwan. World trade is relatively unchanged this month as reductions in Chinese exports offset increases for Turkey and Uzbekistan. World ending stocks are up 1.4 percent this month due mainly to higher stocks in China and reductions in 1991/92 and 1992/93 consumption data for Brazil.

Cotton Prices

The 1998/99 Cotlook A-Index averaged 56.16 cents per pound during February, a .38-cent increase from January’s 55.78 cents per pound average. On February 11^th, the A-Index was 56.47 cents per pound and by February 25^rd it decreased to 55.87 cents per pound. The Greek quote was the lowest in the Index over the four week period, averaging 54.25 cents per pound for the month, while the Australian quote averaged 65.10 cents per pound. U.S. cotton futures prices closed higher on March 11^th with the May ‘99 cotton contract closing at 62.50 cents per pound, and the December ‘99 contracts closing at 60.01 cents per pound.

U.S. Highlights

Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in January amounted to 40,078 bales (480-lb), compared with December’s level of 39,261 bales. A total of 1.008 million bales were consumed during five weeks in January, compared with 826,019 bales in December (4 weeks). The seasonally adjusted annualized consumption rate for the month of January was 10.42 million bales, up from December’s rate of 10.21 million bales. Domestic mill buying in January was light to moderate. Consumer sales of high fashion denim products were good. Mill sales of housewares were very good. Sales of upholstery and specialty yarns were light to moderate. Most mills operated on a four to five-day work week.

Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of January totaled 584,233 bales (480-lb), up from 572,123 bales in December. Stocks held in public storage and at compresses totaled 8.72 million bales, down from 9.03 million in December. Active spindles in place in January totaled 4.98 million, of which 2.62 million were dedicated to 100-percent cotton, compared with 5.02 million and 2.67 million, respectively, during the same period in 1997. Cotton's share on the cotton spindle system was nearly 80 percent in January.

Cotton Exports: For December 1998, U.S. cotton exports totaled 1.027 million 480-lb bales, above November’s 795,000 bales as well as December 1997 exports of 774,000 bales. The leading markets in December were Mexico, Japan, Hong Kong, and Taiwan.

Cotton Imports: U.S. cotton imports in December totaled 19,989 bales, up from last month when 2,606 bales were imported, and up from December 1997 when imports totaled 191 bales. The leading suppliers of U.S. cotton imports in December were Egypt, Greece, and Australia.

World Highlights

Brazil: USDA has revised historical data for Brazil based on updated information received from USDA’s Agricultural Attache in Brazil. The primary revisions were reduced 1991/92 and 1992/93 consumption levels, resulting in an increase of approximately 331,000 bales in ending stocks for marketing year 1998/99. For 1998/99, production is raised 100,000 bales to 1.9 million bales, thereby adding another 100,000 bales to ending stocks relative to last month’s estimates. Brazil’s cotton consumption for 1998/99 is forecast to reach 3.25 million bales, down 4 percent from last year due to high interest rates which has diminished consumer’s purchasing power. Brazil’s cotton imports are forecast at 1.450 million bales, down over 23 percent from last year due to an expected 9 percent increase in domestic cotton production and a decline in consumption.

Brazil
Cotton Production Supply and Distribution
1,000 480 Lb. Bales

Indonesia: Cotton imports and consumption were raised by 100,000 bales to 2.1 and 2.05 million bales, respectively, based on recent import data. Cotton imports surged in September 1998 to 230,090 bales, an increase of 29 percent from the previous month. Imports for July - Sept 98 reached 597,549 bales. Based on this trend, Indonesia's imports for the 1998/99 marketing year should recover to pre-crisis levels. The leading suppliers of cotton to Indonesia during this period were Australia (accounting for 53 percent of imports), and the United States (21 percent).

Korea: Korean cotton imports and consumption for 1998/99 were raised by 75,000 bales to 1.4 million bales based on trade data indicating a surge in imports in December of 124,865 bales and total imports in the last quarter of 1998 of 323,738 bales. The market share for this period (by volume) was highest for the United States (36 percent), followed by Uzbekistan (27 percent) and Australia (22 percent).

Taiwan: Taiwanese imports and consumption for 1998/99 were raised 150,000 and 100,000 bales, respectively, based on import trade data for calendar year 1998 of more than 1.4 million bales. The average monthly imports for August-December 1998 were more than 125,000 bales, leading to an increase in the 1998/99 marketing year import estimate to 1.45 million bales. Market share over this period was highest for the U.S. (26 percent), followed by Togo (12 percent), Cote d'Ivoire (11 percent) and Australia (10 percent).

Vietnam: In a recent meeting of Vietnam’s Government Office, officials disclosed a plan to develop Vietnam’s cotton industry in an effort to reduce the country’s dependance on cotton imports. Vietnam’s cotton production in marketing year 1998/99 is estimated at 30,000 bales on 20,000 hectares, while imports are estimated at 250,000 bales. Officials are hoping that area can be increased to nearly 100,000 hectares by 2010. Vietnam’s cotton production has shown considerable growth, increasing nearly 76 percent over the last three years. Experts attribute the increase in output to improved cultural practices and the planting of new high yielding cotton hybrids. Officials are hoping these efforts will continue to push production higher and enable the cotton industry to supply more of the textile industry’s needs. Vietnamese cotton current accounts for about 10 percent of the textile industry’s requirements.

Last modified: Sunday, March 17, 2013