U.S. Cotton Outlook
Projected 2000/01 U.S. production, imports, domestic mill use, and exports are all reduced this month. Forecast production is reduced 1 percent due to a reduction in acres harvested in Texas. Domestic mill use is revised down 100,000 bales as August - November monthly mill use rates reflect a slowdown in textile consumption. Projected exports are reduced 4 percent based on lower production, weak year-to-date commitments, and reduced prospects for imports by China and Turkey. U.S. ending stocks are raised 5 percent to 4.1 million bales.
World Cotton Outlook
Global 2000/01 projections reflect higher production and ending stocks relative to last month. World production is raised 2 percent as a large increase for China and small increases for Sudan, Egypt, and Paraguay are partially offset by decreases in Pakistan and the United States. Forecast production for China is raised 2.0 million bales to 20.0 million bales, based on increases in both area and yield. Producers in Chinas east-central region appear to have shifted significant area from grain to cotton in 2000. Projected world consumption is virtually unchanged this month as increases in consumption for China and Russia are offset by decreases for Pakistan, Turkey, India, the United States, and Korea. The increases in Chinas consumption reflects strong year-to-date yarn production. World trade is reduced slightly. World ending stocks are revised up 4.8 percent, with China accounting for most of the change.
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 December, quotes of Greek, Uzbekistan, African Franc Zone, Syria, and Spain were included in the Index. The Index averaged 65.87 cents per pound during the period, a 1.89-cent increase from Novembers 63.98 cents per pound average. The Syrian quote was the lowest in the Index over the four-week period, averaging 64.17 cents per pound. On Thursday, January 4, the A-Index was 64.95 cents per pound, a decrease of 0.80 cents from last months close of 65.75 cents per pound.
Futures Prices: Nearby March 2001 futures prices in December averaged 65.56 cents per pound, up 0.91 cents, from 64.65 cents per pound in November. However, on Thursday, January 4, the March 2001 contract settled sharply lower at 59.61cents per pound, a decrease of 5.62 cents from the previous months average. The May 2001 contract settled at 61.57 cents per pound, a decrease of 6.78 cents from the previous month. The stunning decline came in the aftermath of an official Chinese crop estimate that was almost 2 million bales higher than earlier estimates.
U.S. COTTON HIGHLIGHTS
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in November was 34,940 (480-lb.) bales, compared with Octobers level of 36,386. A total of 687,883 bales were consumed during the four weeks in November, compared with 768,900 in October (four weeks). The seasonally adjusted annualized consumption rate for the month of November was 9.12 million bales, down from Octobers 9.5 million.
Domestic Mills purchased a very light volume of cotton for first through third quarter 2001 delivery. Demand was best for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-49, strength 2 and higher. A few mills have canceled or delayed some cotton shipments. Interest in ring-spun yarn was good, while interest in open-end yarn was light. Demand for fine count yarns was moderate to good and for coarse count yarns was light to moderate. Sales of domestic denim fabrics were moderate; greige cloth, sales yarn, upholstery, print cloth and industrial fabric were light; mill sales of specialty yarns were very light. Most mills operated for six days. Some mills announced their holiday running schedule, taking anywhere from five to fourteen days off.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of November totaled 448,143 bales (480-lb), up from 436,973 in October. Stocks held in public storage and compresses in November totaled 11.23 million bales, up from 8.50 million in October. Active spindles in November totaled 4.20 million, of which 2.25 million were dedicated to 100 percent cotton, compared with 4.54 million for the same month last year, with 2.41 million dedicated to 100 percent cotton. Cottons share on the cotton spindle system was 79.4 percent in November.
U.S. cotton exports in October 2000 totaled 382,000 (480-lb.) bales, 46,000 bales above September 2000 exports of 336,000 and 215,000 above October 1999 exports of 167,000, according to the U.S. Bureau of the Census. The leading markets in October were Mexico, Canada, Turkey, Indonesia, Korea and Japan.
U.S. cotton imports in October 2000 totaled 3,600 (480-lb.) bales, 3,200 bales above September 2000 imports of 400, and 200 less than October 1999 imports of 3,800 bales. The major supplier in October 2000 was Egypt, with very modest imports from India and Mexico.