U.S. Cotton Outlook
This month's 2001/02 U.S. projections include larger production and ending stocks. The first survey-based production estimate is a record 20.0 million bales, 4 percent above last month. Favorable conditions in the Southeast, Delta, and far West have more than offset the effects of high abandonment in Texas due to drought. Domestic mill use and exports are unchanged. Despite weaker import demand in Mexico and China, U.S exports are not forecast to fall due to increased competitiveness in other markets. Accordingly, ending stocks are raised 800,000 bales from last month to 8.1 million bales, 46 percent of total use.
The U.S. estimates for 2000/01 include a reduction of 50,000 bales in domestic mill use and an increase of 100,000 bales in exports, reflecting activity to date.
World Cotton Outlook
The revised 2001/02 global cotton situation reflects larger production and slightly lower consumption, with forecast ending stocks up 4 percent from last month. Production is raised in the United States, China, India, Turkey, and Burma, partially offset by reductions for Brazil and Uzbekistan. Consumption is reduced for Brazil, Mexico, and others, partially offset by increases for Turkey and Uzbekistan. A 1-percent decrease in world trade is attributable mainly to a reduction in imports by China, due both to larger production and government policies encouraging domestic use of surplus stocks.
For 2000/01, historical production changes were made for Brazil, Burma, and South Africa. Imports were reduced for the Czech Republic and Romania as well as decreases in domestic use for Kazakhstan, South Africa, the Czech Republic, and Romania.
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. In July, quotes from Syria, Uzbekistan, African Franc Zone, Greece, and Paraguay were included in the index. The index averaged 45.57 cents per pound during the period, a 1.89-cent decrease from June's 47.46 cents per pound average. The Greek quote was the lowest in the index during the four-week period, averaging 43.59 cents per pound.
U.S. COTTON HIGHLIGHTS
Futures Prices: Nearby October 2001 futures prices in July averaged 40.64 cents per pound, down 0.37 cents per pound in June. The December 2001 contract averaged 41.98 cents per pound, a decrease of 0.84 cents from the previous month.
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in June was 30,044 (480-lb.) bales, compared with May's level of 31,069.A total of 762,485 bales were consumed during the five weeks in June, compared with 651,515 in the four weeks of May. The seasonally adjusted annualized consumption rate for the month of June was 7.8 million bales, down from 8.1 million in May.
Domestic mills: Domestic mills purchased a very light volume of 2001-crop cotton for January through March delivery. Demand was best for color 53, leaf 5 and better, staple 32 and longer, mike 40 to 50, strength 26 and higher. Most mills continued to delay August and September deliveries of raw cotton, pushing appointment dates to October and November. Interest in ring-spun yarn was moderate, while interest in open-end yarn was light. Demand for fine count yarns was good and coarse count yarns was light. Sales of domestic denim fabrics, greige cloth, sales yarn, upholstery, print cloth and industrial fabric were light to moderate; mill sales of specialty yarns were very light. Most mills continued to operate the normal five to six day workweek. Many mills continued to schedule additional time off, some taking as much as one week a month off.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of June were 433,765 bales (480-lb), down from 464,290 in May. Stocks held in public storage and compresses in June totaled 6.1 million bales, down from 7.2 million in May. Active spindles in June totaled 3.6 million, of which 2.0 million were dedicated to 100 percent cotton, compared with 4.43 million for the same time last year, with 2.4 million dedicated to 100 percent cotton. Cotton's share on the cotton spindle system was 78.2 percent.
U.S. cotton exports in May 2001 totaled 692,000 (480-lb.) bales, 124,000 bales above April 2001 exports of 568,000 and 33,000 bales below May 2000 exports of 659,000 bales, according to the U.S. Bureau of the Census. The leading markets in May were Mexico, India, Turkey, Indonesia, and Taiwan.
U.S. cotton imports in May 2001 were 1,100 bales, 1000 bales above the previous month's imports. Imports for the same month last year were 8,200 bales.