U.S. Cotton Outlook

The 1999/2000 season estimate saw only minor changes to incorporate end-of-session data from the Bureau of Census and other sources. Consumption was increased 5,000 bales from last month’s estimate. Bureau of Census data for the complete marketing year is now available is shown in Table 7A1. The export estimate for 1999/2000 was decreased to 6.75 million bales, down 25,000 bales based on Bureau of Census, Export Sales Reporting and Step-2 data. Note: Tables 7-A1 and 7-A2 show exports based only on Bureau of Census data. Based on these changes, and a slight change in loss, ending stocks are down 28,000 bales to 3.922 million bales.

The 2000/01 season forecast for production is again down sharply from last month. Production is down 830,000 bales, at 17.45 million bales, largely due to higher abandonment rates primarily in Texas resulting from the effects of extreme heat and drought. Consumption is down 100,000 bales. Exports are down 300,000 bales due to tightening supply and lower foreign import demand. This resulted in a decrease in ending stocks of 400,000 bales to 3.8 million bales.

World Cotton Outlook

The 1999/2000 world outlook features an increase in production from last month of 175,000 bales, due primarily to increases in Pakistan and Zimbabwe, partially offset by a reduction for Uzbekistan. Consumption was lowered slightly to 91.2 million bales, as an increase in Pakistan was more than offset by reductions in Italy and Taiwan. Imports were lowered 194,000 bales, primarily due to a 150,000-bale decrease in Italy. Exports decreased slightly as lower exports for Uzbekistan were partially offset by gains in Zimbabwe and Belgium. These revisions resulted in ending stocks for 1999/2000 growing by 549,000 bales to 40.5 million bales.

The 2000/01 world forecast this month shows revisions in production, consumption, exports, and ending stocks. World production was revised up 150,000 bales to 86.90 million bales as decreases in the United States and Sudan, were more than offset by gains in Pakistan, China and Brazil. Other noteworthy foreign changes include a 150,000 bale production increase in Zimbabwe, and a lower production forecast for Australia, and Mali. Consumption increased by 133,000 bales, bringing world consumption to 92.7 million bales. Increases for Pakistan and China were partially offset by reductions for the traditional importing countries of Taiwan, Korea, and Italy, as well as the United States.

Exports were reduced by 705,000 bales as decreases in the United States, Sudan, Uzbekistan, and Mali, were partially offset by a gain in Pakistan. World ending stocks are up 637,000 bales to 34.99 million bales, due mainly to historical data revisions (see below).

Cotton Prices

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 September, quotes of Greek, Uzbekistan, African ‘Franc Zone’, Spain and Tanzanian cotton were included in the Index. The Index averaged 61.65 cents per pound during the period, a

0.79-cent increase from August’s 60.86 cents per pound average. The Greek quote was the lowest in the Index over the four-week period, averaging 60.14 cents per pound. On Thursday, October 12, the A-Index was 61.05 per pound, a decrease of 1.15 cents from last month’s close of 62.20 cents per pound. The inclusion of cheaper-priced Pakistani cotton in the index, and a bearish market contributed to the decrease in price.

Futures Prices: Futures prices in September averaged 67.82 cents per pound, a decrease of 0.30 cents, in comparison to August’s average price of 68.12 cents per pound. The decrease in price is due to a bearish market. On October 12, the December 2000 contract settled at 64.36 cents per pound, a decrease of 1.58 cents from the previous month’s average. The March 2001 contract settled at 66.20 cents per pound, a decrease of 1.25 cents from the previous month.

U.S. COTTON HIGHLIGHTS

Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in August amounted to 38,637 (480-lb.) bales, compared with July’s level of 38,308 bales. A total of 797,573 bales were consumed during the four weeks in August, compared with 695,533 bales in July (four weeks). The seasonally adjusted annualized consumption rate for the month of August was 10.08 million bales, up from July’s 10.0 million bales.

Domestic mills purchased a light volume of cotton for first quarter 2001 to third quarter 2001 delivery. Interest was best for color 42 and lower, leaf 4 and better, staple 33 and shorter, mike 35-51, and strength 26 and higher. Most mills have covered their expected needs through January 2001. Interest in ring spun yarns remained good while interest in open-end yarns was light to moderate. Demand for fine count yarns was good, while demand for coarse count yarns was light. Sales of domestic denim fabrics and greige cloth were moderate, sales yarn, upholstery, print cloth and industrial fabrics were light to moderate and sales of specialty yarn were very light. Most mills continued to operate on a six-day work week.

Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of August totaled 491,285 bales (480-lb), down from 526,048 in July. Stocks held in public storage and compresses in August totaled 3.06 million bales, down from 3.54 million bales in July. Active spindles in August totaled 4.39 million, of which 2.41 million were dedicated to 100 percent cotton, compared with 4.67 million for the same month last year, with 2.51 million dedicated to 100 percent cotton. Cotton’s share on the cotton spindle system was 78.70 percent in August.

U.S. cotton exports in July 2000 totaled 479,000 (480-lb.) bales, 29,000 bales below June 2000 exports of 508,000 bales and 149,000 bales above July 1999 exports of 330,000 bales, according to the U.S. Bureau of the Census. The leading markets in July were Mexico, Turkey, Indonesia, China, Japan, Korea, and Hong Kong.

U.S. cotton imports in July 2000 totaled 1,700 bales, 1,800 bales below June 2000 imports of 3,500 (480-lb.) bales, and 78,900 bales less than July 1999 imports of 80,600 bales. The major supplier in July 2000 was Egypt, with very modest imports from Mexico.

Historical Revisions for Australia and EU Countries:

Historical revisions were made for a number of the smaller importing countries in the European Union: Austria, Belgium-Luxembourg, Denmark, France, Ireland, Netherlands, Portugal, Sweden, and the United Kingdom. Most of the changes were based on better estimates for ending stocks and revised trade data, particularly to account for re-exports by importing countries. For the 1990/91 to 1998/99 period, cumulative net exports were increased by 150,000 bales and cumulative consumption was increase by only 75,000 bales. The net result was to reduce total EU ending stocks by about 300,000 bales in 1998/1999.

Based on review of official Australian government production, export and ending stocks statistics historical revisions were also made to Australia’s exports, stocks and loss (see table below). No revisions were made to past production or consumption estimates. The Australian government’s estimates of stocks, based on a March-April marketing year adjusted to an August-July year plus trade, indicated that USDA stock estimates were too low. This discrepancy increased in recent years consequently a negative loss was introduced starting in 1993/94 to partially reconcile the discrepancy.

World Cotton Imports Increase 8 percent from MY 1998/99:

by Kari Rojas

World cotton imports in MY 1999/2000 reached 27.13 million, up 8 percent from MY 1998/99. Imports in MY 1998/99 had dropped to the lowest level since MY 1976/77. Despite a 14-percent decrease in imports from the previous year, Indonesia remained the largest importer of cotton in MY1999/2000 with 2 million bales (480-lb), representing 7.3 percent of total cotton imports worldwide. The bulk of Indonesia’s imports were from Australia (36 percent), United States (22 percent), and China (14 percent). Turkey, which more than doubled imports to 1.9 million bales, moved from the ninth to the second largest importer, overtaking Mexico which is third with 1.85 million bales. Turkey imported 44 percent from the United States, while the United States supplied 91 percent of Mexico’s cotton imports. Thailand and Korea also imported significant amounts of cotton in MY199/2000 with 1.7 and 1.5 million bales, respectively. Italy was the fifth largest importer with 1.35 million bales. Korea imported from China (28 percent), Uzbekistan (24 percent), United States (22 percent), and Australia (16 percent).

For more information, please contact Kari Rojas (202)720-0386.

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Last modified: Tuesday, August 30, 2005