U.S. Cotton Outlook
Lower disappearance and sharply higher ending stocks characterize this months U.S. 2000/01 projections. Production is unchanged, and a reduction in projected imports results in a marginal decrease in total supply. Domestic mill use is reduced 100,000 bales to 9.7 million, based on continuing indications of slowing growth in consumer demand. U.S. exports are reduced 300,000 bales this month, as recent export sales have averaged below expectations despite lower prices. Prospects for strong late-season exports are constrained by sluggish foreign demand and the large production forecast for Southern Hemisphere countries. Ending stocks are raised nearly 10 percent to 4.5 million bales.
World Cotton Outlook
This months world 2000/01 estimates reflect marginally lower production, consumption, and trade. Production is reduced mainly in India, and consumption, mainly in the United States. The reduction in U.S. exports is partially offset by an increase for Egypt.
Despite lower domestic consumption and imports, U.S. cotton exports to Turkey increase
Following the financial crisis at the end of 2000 and the Governments takeover of a number of banks, the Turkish textile industry continues to be squeezed by high credit costs and a lack of orders. As a result, domestic consumption and imports of foreign cotton will be lower this marketing year than previously anticipated. Hence, USDA lowered its estimate in January imports and consumption by 200,000 bales each to 1.65 million bales and 5.5 million bales, respectively. Despite this decrease, U.S. cotton exports to Turkey as of February 1, 2001, were up 78,300 bales, or 40 percent, from the the same period last year. In FY 2000, total U.S. cotton exports to Turkey increased by about $60 million, for a market share of 35 percent from the previous year, making Turkey one of the most important export destinations for U.S. cotton after Mexico. Greece, the second largest cotton exporter to Turkey had a market share of 26 percent. The increase in U.S. exports could be a result of a decrease in cotton exports from some competing countries such as Greece, Central Asia, Egypt and Pakistan, where production declines have been recorded. Despite Turkeys financial crisis and lower domestic consumption, the outlook for U.S. cotton exports to Turkey continues to be good. A decrease in cotton exports by competing countries and an improvement in the economies of major textile consuming countries in Europe and Asia, contribute to the positive outlook for U.S. cotton exports to Turkey.
Sources: Cotton Circular, Post Reports, USDAs Export Credit guarantees reports.
For more information on this report, contact Pauline Simmons at 202-720-9510
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 January, quotes of Greek, Uzbekistan, African Franc Zone, Paraguay and Spain were included in the Index. The Index averaged 64.13 cents per pound during the period, a 1.74-cent decrease from Decembers 65.87 cents per pound average. The African Franc Zone quote was the lowest in the Index over the four-week period, averaging 62.53 cents per pound. On Thursday, February 1, the A-Index was 62.45 cents per pound, a decrease of 0.50 cents from last months close of 64.95 cents per pound.
Futures Prices: Nearby March 2001 futures prices in January averaged 60.54 cents per pound, down 5.02 cents, from 65.56 cents per pound in December. The May 2001 contract settled at 60.08 cents per pound, a decrease of 1.62 cents from the previous month. The drop in price came after the Federal Reserve made a widely anticipated cut in U.S. interest rates that triggered commodity fund selling. Improving crop conditions in Australia and a drop in the A-index also contributed to the fall in price.
U.S. COTTON HIGHLIGHTS
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in December was 37,898 (480-lb.) bales, compared with Novembers level of 34,659. A total of 790,656 bales were consumed during the five weeks in December, compared with 688,358 in November (four weeks). The seasonally adjusted annualized consumption rate for the month of December was 9.89 million bales, up from Novembers 9.05 million.
Domestic mills purchased a light volume of cotton for March through August 2001 delivery. Mill interest was good for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-49, strength 26 and higher. A few mills fixed prices on previously contracted cotton. Some mills have made inquiries for crop year 2001 cotton, but have not finalized purchases. Interest in ring-spun yarn was good, while interest in open-end yarn was light to moderate. Demand for fine count yarns was moderate to good and for coarse count yarns was moderate. Sales of domestic denim fabrics were moderate; greige cloth, sales yarn, upholstery, print cloth and industrial fabric were light to moderate; mill sales of specialty yarns were very light. Most mills operated on a five to six day workweek.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of December totaled 425,019 bales (480-lb), down from 446,692 in November. Stocks held in public storage and compresses in December totaled 12.36 million bales, up from 11.20 million in November. Active spindles in December totaled 4.01 million, of which 2.14 million were dedicated to 100 percent cotton, compared with 4.40 million for the same month last year, with 2.35 million dedicated to 100- percent cotton. Cottons share on the cotton spindle system was 79.9 percent in December.
U.S. cotton exports in November 2000 totaled 435,000 (480-lb.) bales, 53,000 bales above October 2000 exports of 382,000 and 20,000 bales below November 1999 exports of 455,000 bales, according to the U.S. Bureau of the Census. The leading markets in November were Mexico, Turkey, Korea, Indonesia, Canada and Japan.
U.S. cotton imports in November 2000 totaled 1,900 (480-lb.) bales, 1,700 bales below October 2000 imports of 3,600 bales, and 600 bales less than November 1999 imports of 2,500 bales. The major supplier in November 2000 was Egypt, with very modest imports from India, the United Kingdom and Mexico.