U.S. Cotton Outlook
The 1998/99 season is unchanged from last months estimate.
The 1999/2000 season is unchanged from last months estimate.
World Cotton Outlook
The 1998/1999 world outlook includes no changes other than those due to revisions to consumption in China for 1998/1999 and earlier years. Consumption in China was decreased by 600,000 bales for 1998/1999. Revisions in China consumption for the periods 1990/1991 to 1997/98, increased China and world beginning stocks by 3.1 million bales in 1998/99. The result was an increase in ending stocks of 3.7 million bales.
The 1999/2000 world outlook features increases in consumption of 1.25 million bales. China's consumption for the current season is raised 1.0 million bales, mainly reflecting sharply higher yarn production in recent months. This revision, in combination with increases in the estimates for Russia and Italy, boosts 1999/2000 world consumption to 90.2 million bales, up 2.5 percent from the previous record in 1996/97 and 6.6 percent above the previous year. Imports were increased by 250,000 bales the majority in Russia. World production is raised slightly due to an increase for Greece. Coupled with the increase in beginning stock world ending stocks for 1999/2000 are up 2.7 million bales from last month, to 42.6 million bales.
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 March, quotes of Australian, Syrian, Chinese, Uzbekistan, and African Franc Zone cotton were included in the Index. The Index averaged 57.46 cents per pound during the period, a
3.73-cent increase from Februarys 53.73 cents per pound average. The Central Asian quote was the lowest in the Index over the four week period, averaging 55.0 cents per pound. On April 6th, the A-Index was 58.70 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 March, encouraged by the rising A-Index and strong export sales. On Thursday April 6th, the May 2000 contract settled at 56.29 cents per pound, and the July 2000 contract settled at 58.34 cents per pound.
U.S. Cotton Highlights
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in February amounted to 37,215 (480-lb.) bales, compared with Januarys level of 39,392 bales. A total of 797,875 bales were consumed during four weeks in February, compared with 761,531 bales in January (4 weeks). The seasonally adjusted annualized consumption rate for the month of February was 9.71 million bales, down from Januarys 10.28 million bales.
Domestic mills purchased a very light amount of cotton for third quarter 2000 through fourth quarter 2001 delivery. Most purchases were for 2000-crop cotton and were scheduled for delivery between October 2000 and September 2001. A few mills canceled or delayed some summer deliveries. Demand was moderate for fine count yarns and was very light for coarse count yarns. 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 very 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 February totaled 501,304 bales (480-lb), down from 512,783 in January. Stocks held in public storage and compresses in February totaled 9.7 million bales, down from 11.3 million bales in January. Active spindles in February totaled 4.39 million, of which 2.4 million were dedicated to 100 percent cotton, compared with 4.87 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 78.5 percent in February.
U.S. cotton exports in January 2000 totaled 658,000 (480-lb.) bales, 4,000 bales above December 1999 exports of 654,000 bales and 502,000 bales above January 1999 exports of 156,000 bales, according to the U.S. Bureau of the Census. The leading markets in January 2000 were Mexico, Turkey, Indonesia, Taiwan, Japan and Brazil, with modest exports to Hong Kong, Korea and Thailand.
U.S. cotton imports in January 2000 totaled 5,700 (480-lb.) bales, up 500 bales from December 1999 when 5,200 bales were imported and 600 bales more than January 1999 imports of 5,100 bales. The only major supplier in January 2000 was Egypt.
World Cotton Highlights
Explanation of Revisions to the China Cotton Estimates, 1991/92 through 1999/2000
by James Johnson and Carol Skelly
The attached table details revisions to USDAs supply/demand balance sheet for China cotton beginning in 1991/92. These changes consist mainly of adjustments to Chinas cotton consumption to reflect new information about the historical percentage share of cotton in Chinas yarn production.
USDAs consumption estimates for China account for both mill and non-mill use of cotton. The mill use category estimates are derived from monthly and annual yarn production data as reported by the National Statistics Bureau (NSB, formerly SSB). The non-mill use category includes wadding, military, medical and on-farm use of cotton, plus an allowance for processing waste.
From 1985-1991, USDA relied on data published in Chinas Textile Industry Yearbook to determine cottons share of yarn production. Beginning in 1992, this share data series was discontinued and USDA analysts estimated the share, assuming a downward trend. Recent evidence indicates that further reductions are needed in the cotton share series beginning in 1992/93. This evidence includes fiber share statistics presented at the September 1999 China International Cotton Conference in Xian, China by an official of the China Textile Industry Bureau. The Textile Bureaus data have since been corroborated by information received from other sources in China, some of which was included in a presentation at USDAs 2000 Agriculture Outlook Forum.
The non-mill use estimate has been raised to 600,000 tons for the years 1992/93 through 1999/2000, partially offsetting the reductions to the mill use category. USDA had assumed a fixed estimate of 450,000 tons since 1993/94, but reports from China indicate a range of 500,000 to more than 800,000 tons, and the revised estimates incorporate this information.
The cumulative effect of these changes is to raise 1999/2000 beginning stocks by 3.7 million bales to 21.1 million. This revision in stocks is supported by recent information from Chinese government officials. At the same time, sharply higher yarn production in recent months has resulted in an increase of 1.0 million bales in the consumption estimate for 1999/2000. With no other changes made to the 1999/2000 balance sheet, stocks at the end of this marketing year are estimated at 16.2 million bales, up 2.7 million from last month.
Russian Cotton Consumption Forecast To Reach Highest Level Since 1993/94
by Pauline Simmons
Russian cotton consumption is forecast to increase 200,000 bales to reach 1.4 million in 1999/2000. This will be the highest since the 1993/94 level of 2.2 million bales. This forecast is based on data indicating cotton fabric production which averaged 131.5 million square meters/month during the first six months (Aug-Jan) of the current season, up 125 percent from the same period last year.