U.S. Cotton Outlook
The 1999/2000 season is unchanged from last months estimate.
The 2000/01 forecast features higher production, exports and ending stocks. Production is projected at 19.3 million bales, up 300,000 bales, due to lower expected abandonment based on improved conditions thus far this season, especially in Texas. Exports are raised 200,000 bales as a result of larger U.S. production and higher import demand. These changes raise ending stocks marginally to 5.0 million bales, or about 27 percent of use.
World Cotton Outlook
The 1999/2000 world outlook features a decline in beginning stocks of 412,000 bales and a decline in production of 562,000 bales. Beginning stocks are reduced due to prior-year revisions for Argentina and Brazil. Production is reduced mainly in India and Turkey.
The 2000/01 world forecast has slightly higher production, consumption, and trade, and lower beginning and ending stocks. A slight increase in total foreign production of 67,000 bales, coupled with the increase in the U.S. forecast increased world production to 87.37 million bales. This month's projections of foreign consumption and trade reflect additional country-specific information. Consumption is forecast up 268,000 bales at 92.27 million bales. With consumption far in excess of production, world ending stocks are projected at 4.7 million bales below the beginning level; nearly all of the decline is forecast to occur in China. On a month-to-month basis, ending stocks are reduced 0.94 million bales, due mainly to lower beginning stocks.
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 June, quotes of Australian, Syrian, Paraguayan, Uzbekistan, and African Franc Zone cotton were included in the Index. The Index averaged 59.54 cents per pound during the period, a 0.99-cent decrease from Mays 60.53 cents per pound average. The African "Franc Zone"quote was the lowest in the Index over the four-week period, averaging 57.98 cents per pound. On June 29, the A-Index was 58.35 per pound, a decrease of 1.70 cents from last months close of 60.35 cents per pound. The price decrease was caused in part by speculative sales and beneficial rains for planting in the U.S. south cotton belt and an anticipated increase in U.S. plantings.
Futures Prices: United States cotton futures prices represent the current price of U.S. cotton for delivery at a future date. Futures prices in June weakened in comparison to Mays prices due partly to speculative trading and beneficial rains in the south. On Thursday, June 29, the July 2000 contract settled at 52.30 cents per pound, a decrease of 5.89 cents from the previous months average. The October 2000 contract settled at 56.10 cents per pound, with a decrease of 4.63 cents from the previous month.
U.S. Cotton Highlights
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in May amounted to 38,224 (480-lb.) bales, compared with Aprils level of 38,878 bales. A total of 795,510 bales were consumed during the four weeks in May, compared with 800,312 bales in April (4 weeks). The seasonally adjusted annualized consumption rate for the month of May was 9.98 million bales, down from Aprils 10.15 million bales.
Domestic mills purchased a light to moderate volume of current-crop cotton for prompt and nearby delivery. Interest was best for color 42 and lower, staples 32 and 33, mike 35-49. A very light volume of 2000-crop cotton was scheduled for delivery in September 2000 through July 2001 delivery. Demand was good for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-47. Most mills have completed new crop purchasing and will reevaluate needs later this year. Interest was very good for ring-spun yarns and moderate for open-end yarns. Demand was very good for fine count yarns and good for coarse count yarns. Mill sales of sales yarn, upholstery and industrial fabrics were good; and sales of specialty yarn, greige cloth and print cloth were moderate. Most sales of domestic denim fabrics continued to improve. Most mills operated a six-day workweek.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of May totaled 486,617 bales (480-lb), down from 495,973 in April. Stocks held in public storage and compresses in May totaled 5.4 million bales, down from 6.7 million bales in April. Active spindles in May totaled 4.42 million, of which 2.44 million were dedicated to 100 percent cotton, compared with 4.67 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 76.9 percent in May.
U.S. cotton exports in April 2000 totaled 708,000 (480-lb.) bales, 270,000 bales below March 2000 exports of 978,000 bales and 539,000 bales above April 1999 exports of 169,000 bales, according to the U.S. Bureau of the Census. The leading markets in April were Turkey, Mexico, Taiwan, Indonesia, and Hong Kong, with modest exports to Brazil and Canada.
U.S. cotton imports in April 2000 totaled 8,200 (480-lb.) bales, down, 5,600 bales from March 2000 when 2,600 bales were imported, and 111,300 bales less than April 1999 imports of 119,500 bales. The major supplier in April 2000 was Egypt, with very modest imports from Mexico.
U.S. Cotton Exports to Western Hemisphere Grows; Increased Domestic Consumption in 2000/2001 Forecast.
By Andy Levin
U.S. cotton exports to the Western Hemisphere have exceeded 2.5 million bales, and with another month remaining in the 1999/2000 marketing year, are likely to exceed the previous record of 2.6 million bales set two years ago.
Export growth in the region has been particularly strong in Brazil, Columbia and Mexico; U.S. exports to these three countries are up approximately 500,000 bales or 25 percent, from two years ago.
Demand in the Western Hemisphere is forecast up about 500,000 bales in 2000/2001, with major increases in Brazil (+250,000), Mexico (+100,000) and the United States (+100,000).
Increased demand in Brazil has been fostered by devaluation of the Real, which increased the competitiveness of domestic textile companies and reduced textile imports. The value of the Real fell about 60 percent in the beginning of 1999. In 1999, cotton yarn exports increased 65 percent compared to 1998.
Note on Revised Table 3.
This month, Table 3, FY 2000 GSM-102 and Supplier Credit Programs, was revised to focus it more on cotton and cotton products. Complete details of the various USDA export programs, including GSM 102 Program and the Supplier Credit Guarantee Program can be found on the FAS website at
The first revision to Table 3 is that the only countries listed are those which are currently eligible for the Credit Guarantee programs and where the programs have been utilized for cotton or cotton products in any of the last three fiscal years. Second, the data for Cotton, Cotton Yarn and Cotton Fabric have been aggregated. At the current time there are no registrations for either Cotton Yarn or Cotton Fabric. If such activity were to occur it would be noted in the table. Third, the table has been revised to show the monthly activity for the last six months.
Internet Release of Tables 3. 7-A1, 7-A2, 7-B and 8.
Table 3 presents monthly summaries of activity under the GSM 102 and the Supplier Credit Guarantee Programs. In order to facilitate more timely distribution of this information, updated versions of Table 3 will be placed on the FAS website as soon as the data is available rather than waiting until the publication of this circular.
Tables 7-A1, 7-A2, 7-B present monthly summaries of U.S. imports and exports which are derived from U.S. Census data. In order to facilitate more timely distribution of this information, updated versions of these tables will also be placed on the FAS website as soon as the data is available rather than waiting until the publication of this circular. This months circular includes trade data for April 2000. The April 2000 data was released by U.S. Census on June 20th, too late for the June circular. Starting with the release of May 2000 data, on about July 20th Tables 7-A1, 7-A2, 7-B will be updated and made available on the FAS website prior to their publication in the August Circular.