U.S. Cotton Outlook
The 1998/99 season is unchanged from last months estimate.
The 1999/2000 U.S. outlook features an increase in exports of 100,000 bales and a decrease in consumption of 100,000 bales from last months estimates. Imports are up 25,000 bales.
World Cotton Outlook
The 1998/1999 season is unchanged from last month.
The 1999/2000 world outlook features increases in consumption and trade and decreases in ending stocks and production. The decrease in production was the result of downward revisions in India and Turkmenistan more than offsetting increases in Brazil and Syria. Consumption increases in Turkey, Russia, Germany, and Italy were partially offset by decreases in Taiwan and the United States. Exports for the United States, Australia, and Syria were increased. Imports for Brazil were decreased by 200,000 bales. Imports for Turkey were increased 300,000 bales and for Russia by 200,000 bales. Ending stocks decreased 335,000 bales, resulting in a world stocks-to-consumption ratio of 44.9 percent.
Cotlook A Index: The A-Index, a principal measure of international cotton prices, is an average of the five lowest quotes of cotton for delivery to Northern Europe ports. During February, quotes of Pakistani, Syrian, Chinese, Uzbekistan, and African Franc Zone cotton were included in the Index. The Index averaged 53.73 cents per pound during the period, a
6.12-cent increase from Januarys 47.61 cents per pound average. The Pakistani quote was the lowest in the Index over the four week period, averaging 51.95 cents per pound. On March 9th, the A-Index was 57.1 cents per pound. A tightening global supply situation strengthened prices.
Futures Prices: U.S. cotton futures prices represent the current price of U.S. cotton for delivery at a future date. Futures prices strengthened significantly in February encouraged by the rising A-Index and strong export sales. On Thursday March 2nd, the March 2000 contract settled at 58.65 cents per pound, and the May 2000 contract settled at 60.68 cents per pound.
U.S. Cotton Highlights
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in January amounted to 37,793 (480-lb.) bales, compared with Decembers level of 39,397 bales. A total of 756,088 bales were consumed during four weeks in January, compared with 830,088 bales in December (5 weeks). The seasonally adjusted annualized consumption rate for the month of January was 9.86 million bales, down from Decembers 10.28 million bales.
Domestic mills purchased a very light amount of cotton for second quarter 2000 through second quarter 2001 delivery. Demand was best for color 41 and better, leaf 4 and better, staple 35 and longer, mike 35-49. Demand was good for fine count yarns and was very light for coarse count yarns. Consumer sales of housewares were good; men's knitted outerwear, infant wear, women's casual apparel, teen apparel and hosiery were moderate; and denim were light. Mill sales of sales yarn, upholstery, and industrial fabrics were good; specialty yarns and greige cloth were moderate; print cloth were light to moderate; and domestic denim fabrics were light. Most mills operated 5 to 6 days a week.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of January totaled 508,390 bales (480-lb), down from 542,817 in December. Stocks held in public storage and compresses in January totaled 11.4 million bales, down from 12.2 million bales in December. Active spindles in January totaled 4.3 million, of which 2.3 million were dedicated to 100 percent cotton, compared with 4.9 million for the same month last year, during which 2.6 million were dedicated to 100 percent cotton. Cottons share on the cotton spindle system was 78 percent in January.
U.S. cotton exports in December 1999 totaled 654,000 (480-lb.) bales, 199,000 bales above November's exports of 455,000 bales and 373,000 bales below December 1998 exports of 1,027,000 bales, according to the U.S. Bureau of the Census. The leading markets in December 1999 were Mexico, Turkey, Indonesia, Taiwan, Japan, and Korea with modest exports to Thailand, Hong Kong, and Brazil.
U.S. cotton imports in December totaled 5,200 (480-lb.) bales, up 2,700 bales from November 1999 when 2,500 bales were imported and 14,800 bales less than December 1998 imports of 20,000 bales. The only major supplier in December was Egypt.
World Cotton Highlights
USDA Perspective On the Outlook for Cotton for 2000/2001
by Andrew Levin
An initial forecast of 2000/2001 worldwide cotton supply and demand was presented at the USDA Outlook Forum on February 25, 2000.
USDA's early projections show lower foreign, but higher U.S. production for 2000/2001. World consumption is likely to continue to rise and reach a record 89-91 million bales, and there is good potential for the United States to capture an increased share of the world export market. The 2000/2001 season will end with lower world stocks, but with U.S. stocks rising. China is forecast to revert to a net importer by a modest margin, following two years in which total exports reached a cumulative total of 1.8 million bales.
USDAs detailed forecast is available on-line at the homepage of USDAs World Agricultural Outlook Board at www.usda.gov/oce/waob/oc2000/speeches/levin.txt.
Why Have U.S. Stocks Risen Despite Increased Cotton Use?
By Andrew Levin and Pauline Simmons
In 1998, the United States imported the equivalent of 12.5 million bales of cotton in the form of textiles and apparel, compared to exports of 4.1 million bales. In 1998, cotton fiber exports totaled 7.6 million bales, compared to imports of just 71,000 bales. This resulted in net cotton imports overall of 870,000 bales.
In 1999, the United States imported the equivalent of 14 million bales of cotton in the form of textiles and apparel, compared to exports of 4.3 million bales. In 1999, cotton fiber exports totaled 3.49 million bales, compared to imports of 645,000 bales. This resulted in net cotton imports overall of 6.9 million bales.
U.S. ending stocks have increased 1.75 million bales or 66 percent in the past 5 years to an estimated 4.4 million bales in 1999/2000. Ending stocks are forecast to increase to 4.5-5.5 million bales in 2000/2001.
The U.S. is increasingly satisfying its demand for cotton products through imported cotton textile and apparel products. Therefore, domestic mill consumption (of U.S. cotton) is actually falling. U.S. mill consumption is expected to fall from 10.4 million bales in the 1998 marketing year to 10.1 million bales in 1999. USDA forecasts mill consumption at less than 10.5 million bales in 2000/2001.
While Mexico is the leading U.S. supplier of cotton textile and apparel imports (made mostly of U.S. cotton), the next largest sources are Pakistan, China, and India, which manufacture cotton textile and apparel products from domestically produced cotton.
U.S. stocks have risen because of stagnation in domestic mill consumption, increased imports of textiles and apparel, and because of the Asian economic crisis which slowed global demand but is now recovering.