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The 1999/2000 season sees an increase in consumption of 135,000 bales from last month’s estimate based on revised Bureau of Census consumption and ending stocks data. Based on this, and a slight change in loss, ending stocks are down 150,000 bales to 3.95 million bales, the lowest level in four years.
The 2000/01 season forecasts for production, exports, and ending stocks are down sharply from last month. Production is down 900,000 bales, at 18.3 million bales, due to the effects of the extreme heat and drought in the Delta and Southwest regions. No change was seen in consumption. Exports are down 300,000 bales due to tightening supply. This resulted in a decrease in ending stocks of 700,000 bales to 4.2 million bales.
The 1999/2000 world outlook features a decline in production from last month of 182,000 bales, due to a 50,000 bale decrease in Australia and small decreases in many Franc Zone African countries. Consumption was raised 290,000 bales to 91.5 million bales, based on a 150,000-bale increase in Thailand and larger consumption in the United States. Imports were increased 225,000 bales, primarily due to a 200,000-bale increase in Thailand. Exports decreased slightly as decreases in the Franc Zone countries were nearly offset by an 109,000-bale increase in Australia. These revisions resulted in ending stocks decreasing 226,000 bales to 39.9 million bales.
The 2000/01 world forecast this month shows revisions in production, beginning, and ending stocks. World production was revised down 560,000 bales at 86.75 million bales as the decrease in the U.S. production forecast more than offset a 285,000-bale increase in foreign production. Noteworthy foreign changes include increased production of 400,000 bales in Pakistan and 200,000 bales in Australia, which more than offset a decrease of 315,000 bales in Franc Zone Africa ( 175,000 bales in Cote d’Ivoire). Consumption increased by 100,000 bales, mostly in Thailand, bringing world consumption to 92.6 million bales.
Exports were reduced by 210,000 bales as increases in Australia, Pakistan, and others partially offset declines in Franc Zone Africa and the United States. World ending stocks are down 800,000 bales to 34.35 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 European ports. During August, quotes of Spanish, Greek, Tanzanian, Uzbekistani, and African ‘Franc Zone’ cotton were included in the Index. The Index averaged 60.86 cents per pound during the period, a
2.48-cent increase from July’s 58.38 cents per pound average. The Syrian quote was the lowest in the Index over the four-week period, averaging 58.75 cents per pound. On Thursday, September 7, the A-Index was 62.20 per pound, an increase of 1.30 cents from last month’s close of 60.90 cents per pound. The price increase followed New York futures prices, which rose due to hot weather and a lack of rain which withered production prospects for the dryland fields in Texas and the mid-South.
Futures Prices: Futures prices in August strengthened in comparison to July’s prices due to lack of rain in the U.S. cotton belt. On September 7, the October 2000 contract settled at 64.14 cents per pound, an increase 3.28 cents from the previous month’s average. The December 2000 contract settled at 65.94 cents per pound, an increase of 3.17 cents from the previous month.
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in July amounted to 38,101 (480-lb.) bales, compared with June’s level of 40,504 bales. A total of 690,442 bales were consumed during the four weeks in July, compared with 1.03 million bales in June (5 weeks). The seasonally adjusted annualized consumption rate for the month of July was 9.94 million bales, down from June’s 10.57 million bales.
Domestic mills purchased a very light volume of cotton for fourth quarter 2000 to second quarter 2001 delivery. Interest was best for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-47, and strength 26 and higher. Mill inquiries for 2000-crop cotton continued to be light. Interest in ring spun yarns was moderate to good while interest in open-end yarns was light. Mill sales of specialty yarn were light; sales of greige cloth were moderate; sales of domestic denim fabrics were moderate to good and continue to show improvement. Most mills operated a six-day work week. A few mills took time off for Labor Day. This downtime was needed by some mills to reduce inventory buildup and perform maintenance.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of July totaled 530,417 bales (480-lb), up from 500,348 in June. Stocks held in public storage and compresses in July totaled 3.54 million bales, down from 4.25 million bales in June. Active spindles in July totaled 4.37 million, of which 2.41 million were dedicated to 100 percent cotton, compared with 4.66 million for the same month last year, with 2.47 million dedicated to 100 percent cotton. Cotton’s share on the cotton spindle system was 78.84 percent in July.
U.S. cotton exports in June 2000 totaled 508,000 (480-lb.) bales, 151,000 bales below May 2000 exports of 659,000 bales and 248,000 bales above June 1999 exports of 260,000 bales, according to the U.S. Bureau of the Census. The leading markets in June were Mexico, Turkey, Indonesia, Taiwan, Japan, Hong Kong, and Korea.
U.S. cotton imports in June 2000 totaled 3,500 bales, 4,700 bales below May 2000 imports of 8,200 (480-lb.) bales, and 77,900 bales less than June 1999 imports of 81,400 bales. The major supplier in June 2000 was Egypt, with very modest imports from Turkey and Mexico.
China’s Exports More than Double; United States Remains Top Exporter.
The United States remained the world leader in cotton exports with 6.8 million bales in MY 1999/2000, representing 25 percent of total world cotton exports, in line with historical levels. This is an increase in market share of 7 percent from the previous year, which was affected by low production in the United States. Uzbekistan exported 4.2 million bales for a market share of 15 percent, down slightly from last year’s level of 16.2 percent. Australian exports of 3.2 million bales accounted for 12 percent of the world total, almost unchanged from last year’s market share of 13 percent. China, on the other hand, doubled cotton exports from MY 1998/99 to 1.7 million bales, representing a 6 percent market share.
Australia continues to dominate the Asian and Southeast Asian market due to its proximity and increasing production. In the past year, however, China has become a major competitor with Australia in Asia and Southeast Asia due to changes in the Chinese domestic cotton production policy and the resulting release of stocks into export markets. China’s exports to Thailand, Indonesia, and South Korea have nearly tripled from the preceding year’s level, while Australian exports to Thailand and South Korea fell slightly. The major markets for Uzbeki cotton this past year were Russia, the United Kingdom, Switzerland, and South Korea. Mexico was the top export destination for the United States’ cotton followed by Turkey, Indonesia, Taiwan, and Japan.
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