U.S. Cotton Outlook
This months 2001/02 U.S. projections include lower domestic mill consumption and larger beginning stocks and ending stocks. Domestic mill use is reduced 200,000 bales on diminished expectations of recovery in retail demand, and exports are unchanged. The production forecast is down marginally to 19.99 million bales as lower production in the Delta is nearly offset by an increase in California. The export forecast remains unchanged at 9.0 million bales. Accordingly, ending stocks are raised 600,000 bales from last month to 8.7 million bales, the highest level since 1985/86.
The U.S. estimates for 2000/01 include an increase in ending stocks of nearly 500,000 bales to 6.03 million bales based on Census Bureaus survey of stocks as of July 28, 2001. An adjustment of 498,000 bales was made to loss to account for the higher stocks. A slight increase was made to domestic mill use.
World Cotton Outlook
The revised 2001/02 global cotton situation reflects higher production, beginning and ending stocks and slightly lower consumption and trade. Production is raised 264,000 bales with gains in China (500,000 bales) and Mali (200,000) largely offset by reductions for Brazil, Australia and Sudan. Consumption is reduced marginally as increases for Pakistan and Uzbekistan are more than offset by decreases for China and the United States. With beginning stocks increased by 850,000 bales, larger production and smaller consumption, ending stocks are increased by 1.2 million bales to 42.7 million, the third highest level on record.
For 2000/01, beginning stocks were increased by over 260,000 bales, primarily in Australia. World production is up slightly, with gains in China, Syria and Mali. Domestic consumption is up 60,000 bales as increases in Pakistan and Uzbekistan are partially offset by a decrease in Indonesia. Imports and exports are estimated up marginally. A 400,000-bale increase in exports for Australia was partially offset by decreases for Pakistan and Uzbekistan. Higher beginning stocks, due to historical changes for Australia, coupled with stock increase in the United States, based on a stocks survey by the Bureau of the Census, resulted in total ending stocks estimated 850,000 bales higher.
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 August, quotes from Syria, Uzbekistan, African Franc Zone, Greece, and Spain were included in the index. The index averaged 43.31 cents per pound during the period, a 2.26-cent decrease from Julys 45.57 cents per pound average. The Greek quote was the lowest in the index during the four-week period, averaging 42.52 cents per pound.
Futures Prices: Nearby October 2001 futures prices in August averaged 39.35 cents per pound, down 1.29 cents per pound from July. The December 2001 contract averaged 40.63 cents per pound, a decrease of 1.35 cents from the previous month.
U.S. COTTON HIGHLIGHTS
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in July was 29,587 (480-lb.) bales, compared with Junes level of 29,736. A total of 518,250 bales were consumed during the four weeks in July, compared with 753,813 in the five weeks of June. The seasonally adjusted annualized consumption rate for the month of July was 7.72 million bales, down from 7.76 million in June.
Textile mill report: Domestic mills purchased a light volume of 2001-crop cotton for October 2001 to September 2002 delivery. Demand was best for color 41 and better, leaf 4 and better, staple 34 and longer, mike 35-49, strength 26 and higher. 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 very 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. Some mills announced additional plant closings during the last two weeks. Most mills continued to adjust production schedules to keep inventory levels under control.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of July were 418,319 bales (480-lb), down from 434,313 in June. Stocks held in public storage and compresses in July totaled 5.6 million bales, down from 6.7 million in June. Active spindles in July totaled 3.4 million, of which 1.95 million were dedicated to 100 percent cotton, compared with 4.37 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 78.1 percent.
U.S. cotton exports in June 2001 totaled 781,000 (480-lb.) bales, 89,000 bales above May 2001 exports of 692,000 and 273,000 bales above June 2000 exports of 508,000 bales, according to the U.S. Bureau of the Census. The leading markets in June were Mexico, India, Turkey, Indonesia, Pakistan and Korea.
U.S. cotton imports in June 2001 were 4,700 bales, 3,600 bales above the previous months imports. Imports for the same month last year were 3,500 bales.