U.S. Cotton Outlook
The 1998/99 season is unchanged from last months estimate.
The 1999/2000 forecast features higher exports, unchanged consumption and a modest change in production. Exports were increased by 100,000 bales to 6.6 million bales based on continued strong export sales in recent weeks. Ending stocks were decreased by 100,000 bales to reflect the higher export number.
The first forecast for the 2000/01 marketing year shows U.S. production at 19.0 million bales, up 12.1 percent from 1999/2000 and the largest crop since 1994. This forecast is based on the Prospective Planting survey and average yields and abandonment rates by state for the 1990-1999 period. Exports are forecast at 8.0 million bales, up 21.2 percent and the largest since 1994/95. This forecast is based on the increase in U.S. production, increased foreign consumption and lower foreign production. Consumption is forecast to increase slightly to 10.2 million bales based on strong retail demand and larger textile exports. The increase in disappearance will not offset the larger production, resulting in a 18.6-percent increase in the ending stocks forecast of 5.1 million bales.
World Cotton Outlook
The 1998/1999 world outlook includes a minor adjustment to production in Indonesia.
The 1999/2000 world outlook features increases in consumption of 325,000 bales. China's consumption for the current season is raised 200,000 bales. Increases in the estimates for Russia and Thailand of 100,000 bales, boosts 1999/2000 world consumption to 90.5 million bales. Imports are relatively unchanged as a 200,000-bale decrease in Mexico and a 100,000 bale decrease in Brazil offset increases in Russia and Thailand. World production is raised slightly due to increases for Australia and Brazil. Ending stocks for 1999/2000 are unchanged from last month at 42.6 million bales.
The first forecast for the 2000/01 marketing year shows lower production and sharply reduced ending stocks relative to the current marketing year. Total world production is forecast down 1.5 percent at 86.0 million bales. This reflects slightly lower foreign area and a return to more normal yields. Foreign production is forecast down 3.3 million bales more than offsetting the increase in U.S. production. Total world consumption is projected up 1.6 percent from this years record level at 92.0 million bales. This is due largely to continued favorable world economic conditions and the lagged effect of lower cotton prices this year. World ending stocks are forecast down 14 percent at 36.6 million bales, the lowest level in five years.
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 April, quotes of Australian, Syrian, Chinese, Uzbekistan, and African Franc Zone cotton were included n the Index. The Index averaged 58.72 cents per pound during the period, a
1.2-cent increase from Marchs 57.46 cents per pound average. The Pakistani quote was the lowest in the Index over the four-week period, averaging 57.0 cents per pound. On May 11, the A-Index was 60.40 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 April, encouraged by the rising A-Index, strong export sales, and dry weather conditions in Western Texas. On Thursday, May 11, the July 2000 contract settled at 60.80 cents per pound, and the October 2000 contract settled at 61.50 cents per pound.
U.S. Cotton Highlights
Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in March amounted to 39,156 (480-lb.) bales, compared with Februarys level of 38,762 bales. A total of 1 million bales were consumed during the five weeks in March, compared with 796,364 bales in February (4 weeks). The seasonally adjusted annualized consumption rate for the month of March was revised to 10.22 million bales, up from Februarys 10.12 million bales.
Domestic mills purchased a light to moderate volume of 2000-crop for delivery between October 2000 and September 2001. Interest was best for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-49, strength 26 and higher. Mill inquiries for 2000-crop cotton increased and purchasing levels are getting closer to normal levels for this time of year. Most mills are receiving cotton on schedule though a few mills are delaying some late summer deliveries. Some mills are switching to lower qualities at a discounted price. Interest in ring spun yarns was very good, while interest in open-end yarns was light to moderate. Demand for fine count yarns was moderate to good and was light to moderate 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 March totaled 501,320 bales (480-lb), up from 501,044 in February. Stocks held in public storage and compresses in March totaled 7.96 million bales, down from 9.73 million bales in February. Active spindles in March totaled 4.38 million, of which 2.38 million were dedicated to 100 percent cotton, compared with 4.78 million for the same month last year, during which 2.5 million were dedicated to 100 percent cotton. Cottons share on the cotton spindle system was 77.7 percent in March.
U.S. cotton exports in February 2000 totaled 736,000 (480-lb.) bales, 78,000 bales above January 2000 exports of 658,000 bales and 554,000 bales above February 1999 exports of 182,000 bales, according to the U.S. Bureau of the Census. The leading markets in February 2000 were Mexico, Turkey, Indonesia, Taiwan, Brazil and Japan with modest exports to Hong Kong, Canada and Thailand.
U.S. cotton imports in February 2000 totaled 8,900 (480-lb.) bales, up 3,200 bales from January 2000 when 5,700 bales were imported and 3,300 bales less than February 1999 imports of 12,200 bales. The major supplier in February 2000 was Egypt, with very modest imports from Mexico.