U.S. Cotton Outlook
The 1998/99 U.S. outlook this month remains unchanged from last months forecast. U.S. cotton production for 1998/99 is forecast at 13.92 million bales. Domestic mill use is forecast at 10.5 million bales, exports remain at 4.1 million bales, and imports are forecast at 400,000 bales. Stocks are forecast to end the year at 3.6 million bales.
For 1999/2000, no changes were made in the U.S. forecast from last month. U.S. cotton production is forecast to total about 18 million bales in 1999/00. Imports are forecast to reach about 50,000 bales, while domestic mill use is expected to total 10.6 million bales. Exports are projected to total about 5.5 million bales, while ending stocks next year are expected to reach about 5.5 million bales.
World Cotton Outlook
The 1998/99 world outlook this month features lower beginning stocks, higher production and slightly lower trade and ending stocks, due to adjustments in the estimates for several countries. The world production forecast this month is slightly higher at 84.35 million bales. The production forecast was raised for China and Brazil, but reduced for Argentina, India and Turkey. World consumption is forecast slightly lower at 84.7 million bales as increases in India, Pakistan, Turkey and Uzbekistan are more than offset by reductions for Nigeria, the Philippines and others.
The 1999/00 world outlook this month includes slightly higher beginning and ending stocks due to changes for the current marketing year from last months forecast. No changes were made in the 1999/00 production, consumption and trade forecast from last month. World production for 1999/00 is forecast to increase from this year to about 87 million bales, while consumption is forecast to rise to about 86.5 million bales on improved economic conditions, especially in Asia and Brazil.
A Index: The A Index is a principle measure of international cotton prices and represents an average of the five lowest quotes of cotton for delivery to Northern European ports. Quotes currently included in the A-Index are Uzbekistan, African, Greek, Syrian, and Calif/Ariz. The 1998/99 Cotlook A-Index averaged 59.88 cents per pound during May, a 2.0-cent increase from Aprils 57.88 cents per pound average. On May 4th, the A-Index was 59.90 cents per pound and by May 28th it decreased to 59.80 cents per pound. The Uzbekistan quote was the lowest in the Index over the four week period, averaging 55.00 cents per pound for the month, while the Calif/Ariz quote, the highest in the Index, averaged 65.83 cents per pound.
Futures Prices: U.S. cotton futures prices represent the current price of U.S. cotton for delivery at a future date. U.S. cotton futures prices settled lower on Wednesday, June 9th with the July 99 cotton contract closing at 57.42 cents per pound, and the December 99 ending at 57.28 cents per pound. Fridays upcoming supply-demand report from the USDA has sparked little curiosity with preliminary estimates expecting little change in the numbers. The overall market remained weak, with little activity. Prices in recent weeks have been bearish due to sluggish export sales and to reports of good planting progress in the U.S. and around the world.
U.S. Cotton Highlights
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in April amounted to 39,490 bales (480-lb), compared with Marchs level of 39,782 bales. A total of 807,464 million bales were consumed during five weeks in April, compared with 1,021,487 bales in March (5 weeks). The seasonally adjusted annualized consumption rate for the month of April was 10.31 million bales, down from Marchs rate of 10.38 million bales. Domestic mills purchased a very light volume of cotton for prompt and nearby, and a light volume for fourth quarter 1999 through second quarter 2000 delivery. Mill production of sales yarns continued to increase and sales were moderate. Mill sales of specialty yarn were moderate to good; industrial fabrics and upholstery were light to moderate; gray cloth were light; and print cloth were very light. Most mills operated on a four-day work week.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of April totaled 596,306 bales (480-lb), up from 570,258 bales in March. Stocks held in public storage and at compresses in April totaled 5.84 million bales, down from 6.79 million in March. Active spindles in place in April totaled 4.79 million, of which 2.55 million were dedicated to 100-percent cotton, compared with 5.40 million and 2.6 million, respectively, during the same period in 1998. Cotton's share on the cotton spindle system exceeded 79 percent in April.
Cotton Exports: For March 1999, U.S. cotton exports totaled 221,000 480-lb bales, up 21 percent from the previous months exports of 182,000 bales, but over 300 percent lower than March 1998 exports of 888,000 bales. The leading markets in March were Mexico, Japan, Taiwan, Canada, the European Union, and South Korea.
Cotton Imports: U.S. cotton imports in March totaled 43,600 bales, up from last month when 12,180 bales were imported, and up from March 1998 when 0 bales were imported. The leading suppliers of U.S. cotton imports in March were Greece, Uzbekistan, Argentina, Mexico, and Turkmenistan.
World Cotton Highlights
Colombia: The USDA estimate of cotton production in 1998/99 is lowered to 168,000 bales, close to last years' production level, and considerably less than the 1991/92 record of 724,000 bales. The sharp decline in recent years resulted from poor fiber prices to the grower and mounting guerrilla activity in the countryside. According to reports from the U.S. Agricultural Attaché in Bogota, a significant amount of land previously planted to cotton is now idle due to the deteriorating security situation in Colombia's rural areas. Cotton producers, especially the larger ones, face extortion, kidnapping, and death threats if they do not meet the financial demands of the guerilla groups. As a result, many large commercial farmers have moved out of cotton, leaving most cotton production to relatively small producers. A decade ago, the average farm was 15 hectares, currently it is only 8 hectares.
Cote d'Ivoire: USDA's Agricultural Attaché in Cote d'Ivoire reports that the country is expected to experience record production of 780,000 bales in marketing year 1998/99, and that this trend may continue into next year. The combinations of well-distributed rainfall, expanded area, high yields, farmers' expertise, and timely inputs are considered driving factors for the successful production. Consumption is also expected to increase next year partly due to the government's ongoing efforts to restructure its textile industry. The government initiated the privatization of la Compagnie Ivoirienne pour le Developpment des Textiles (CIDT) in 1998, utilizing World Bank agricultural adjustment loan programs. This year Cote d'Ivoire's cotton exports are expected to reach nearly 600,000 bales. Cote d'Ivoire is the third largest cotton producer in West Africa.
France: After a sharp decline in imports between marketing years 1996/97 and 1997/98, French imports of cotton are expected to remain relatively stable in 1998/99. Current USDA estimates show French cotton imports reaching 540,000 bales this year, down slightly from 551,000 bales in 1997/98. Much of the decline in French cotton imports is due to large stock levels on account of a surge in imports in 1996/97. Imports that year rose by nearly 11 percent. The bulk of Frances cotton imports come from Uzbekistan and Tajikistan. Although the United States only accounts for a small percent of the French raw cotton market, French imports of U.S. cotton textile products reached nearly $93 million in 1997, and accounted for over 50 percent of the French cotton textile import market valued at $1.5 billion.
India: The U.S. Agricultural Attaché in India reports that for 1998/99, cotton area is forecast to reach a record 9.2 million hectares, up from 8.8 million hectares last year. Much of this increase is due to higher prices in 1997/98. However, late season rains in the north have led to heavy pest infestation and some crop damage. Rains also affected the quality of early pickings in most cotton growing areas. Production losses in the north were largely offset by increased plantings in Gujarat and Maharashtra. USDA currently estimates Indias crop size at 12.8 million bales for 1998/99. The Indian government is preparing to launch a "Cotton Technology Mission" aimed at raising cotton yields to world levels and enhancing cotton quality. Also, a "Technology Up Gradation Fund" to support modernization of the textile sector through subsidized credit has been established.
Korea: The U.S. Agricultural Attaché in Seoul reports that Koreas overall consumption of raw cotton is on the rebound as domestic and regional demand recovers from the decline caused by the regions economic downturn in 1998. USDA currently forecasts that Koreas consumption of raw cotton for marketing year 1998/99 will reach 1.37 million bales (480-lb.), up from 1.35 million bales last year. Much of the increase in consumption is due to the fashion industrys move toward products made with natural fibers which is partially offsetting the use of synthetics. The report indicates that this trend is likely to continue again next year. The United States is the principle supplier of raw cotton to Korea. In 1997/98, the U.S. accounted for a 59-percent share of Koreas cotton imports. Other key cotton suppliers to Korea include Uzbekistan and Australia.
Argentina: The domestic textile industry continues to go through difficult times. Fierce competition from less expensive textile and clothing imports have caused the local textile industry to cut back. Significant investments were made in the industry in recent years designed to improve domestic textile quality, increase volume and make the industry more efficient. However, the Argentine economic recession suffered since the mid-80's continues to have a depressing effect on the local textile sector. The Argentine textile market is estimated to be valued at $8 billion, with jeans accounting for nearly 20 percent of these sales. Approximately 50 percent of Argentine textile sales are made in stores and boutiques, while 33 percent are made in outlets.
Germany: Total sales of textiles rose 1.4 percent in 1998 to $18.24 billion. Textile orders increased by nearly 1 percent, pushing textile production up by a corresponding 1 percent relative to 1997. Producer prices rose slightly in 1998. Domestic sales of textiles increased only slightly to $12.56 billion, while export sales rose by 4.0 percent to $5.68 billion. Growth in Germanys textile industry depends mainly on growth in export markets. Most of Germanys textile exports are to other EU member nations. Employment in the textile industry declined by 2.0 percent in 1998 to 128,987. Economic indicators for January/February show a downsizing of activities, for 1999. In the first two months, orders decreased by 11.5 percent compared to the same period in 1998, and total sales are 8.0 percent lower.
Thailand: The textile industry depends on cotton imports to meet their cotton needs. USDAs attaché report in Bangkok forecasts that the countrys production for cotton yarn and fabric will increase by 2-3 percent in 1999 due mainly to an improved economic environment. Consumption of cotton products is also forecast to rebound slightly this year although a trend in replacing value-added cotton products with less expensive man-made products still exists. Cotton yarn exports in 1998 dropped by 19 percent, despite a relatively weakened local currency (Baht) compared to 1997. Exports of cotton fabric also dropped by one percent from 1997 to 31,808 tons. The United States, Germany and Hong Kong were major buyers of Thai value-added cotton in 1997 and 1998.
United States: Cotton textile and apparel imports so far in 1999 (Jan-Mar) were 3.20 billion square meters (m2), up 12 percent from one year ago, and representing 48 percent of all textile and apparel imports. By comparison, man-made textile and apparel imports were nearly identical at 3.19 billion m2, up 8 percent from one year ago, also representing 48 percent of all imports.
The major regional source for U.S. cotton textile and apparel imports was CBI countries, which comprised 17 percent of imports, up 15 percent from one year ago. The principal country sources continue to be Mexico (12 percent of total imports), Pakistan (9 percent), India (8 percent) and China (7 percent). The greatest change occurred with Mexico, in which cotton product imports increased 32 percent from a comparable period one year ago. In contrast, imports from Pakistan decreased by 8 percent from a comparable period one year ago.
Department of Commerce, Office of Textiles and Apparel data indicates that cottons share of total fiber imports has grown from 42 percent in 1990 to 46 percent in 1998. During this time, man-mades share of total fiber imports dropped by 2 percent to 50 percent in 1998.
U.S. Textile and Apparel Imports
(Million Square Meters)
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