U.S. Cotton Outlook
This months 2001/02 U.S. projections include slightly higher beginning stocks and production, unchanged consumption and exports, and higher ending stocks. The production forecast is up marginally to 20.08 million bales due to good weather conditions. Domestic mill use and exports are unchanged despite weaker outlooks for U.S. and world textile demand. Domestic mills are expected to retain a slightly higher share of U.S. retail demand due to concerns about shipping products from South and East Asia. Accordingly, ending stocks are raised 100,000 bales from last month to 8.8 million bales, the highest level since 1985/86.
The U.S. estimates for 2000/01 includes slight adjustments to mill use, exports, and ending stocks.
World Cotton Outlook
The revised 2001/02 global cotton situation reflects lower consumption and production and higher beginning stocks, ending stocks, and trade. Production is decreased 145,000 bales with gains in Central Asia (Kazakhstan and Tajikistan 50,000 bales and Uzbekistan 200,000) and Africa (325,000) somewhat offsetting reductions for Brazil (450,000), Argentina (20,000), and Australia (100,000). The increases in Africa and Central Asia were largely due to increased yield estimates for this year's crop, while the decreases for the Southern Hemisphere countries are due to reduced forecasts of upcoming plantings. Reductions in South and East Asia led to a 500,000-decrease in world consumption.
For 2000/01, consumption fell 118,000 bales, mostly in India, and beginning stocks increased slightly. As a result, ending stocks are up 139,000 bales.
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 September, quotes from Syria, Uzbekistan, Greece, Spain, and Brazil were included in the index. The index averaged 41.26 cents per pound during the period, a 2.05-cent decrease from Augusts 43.31 cents per pound average. The Greek quote was the lowest in the index during the four-week period, averaging 40.67 cents per pound.
Futures Prices: Nearby October 2001 futures prices in September averaged 35.46 cents per pound, down 3.89 cents per pound from August. The December 2001 contract averaged 36.90 cents per pound, a decrease of 3.73 cents from the previous month.
U.S. COTTON HIGHLIGHTS
Cotton Consumption: The seasonally adjusted daily rate of U.S. cotton consumption in August was 30,244 (480-lb.) bales, compared with Julys level of 30,067. A total of 637,156 bales were consumed during the four weeks in August, compared with 528,598 in the four weeks of July. The seasonally adjusted annualized consumption rate for the month of August was 7.89 million bales, up from 7.85 million in July.
Textile mill report: Domestic mill activity was light. Demand was light for 2000-crop cotton and light to moderate for 2001-crop cotton. Demand was best for color 53, leaf 6, staple 32, mike 30-47, strength 26 and color 42, leaf 4, staple 36, mike 35-49, strength 28. Most mills continued to schedule delayed shipments of 2000-crop cotton into November and December and a few mills canceled some shipments. Yarn prices remained low. A few mills bought yarn instead of spinning it in efforts to lower production cost. Interest in ring-spun yarn was moderate to good, while interest in open-end yarn was moderate. 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 moderate; mill sales of specialty yarns were very light. Mills continued to seek ways to control inventory levels. Some have shut down plants for as much as a week at a time.
Cotton Stocks: U.S. cotton stocks on hand in consuming establishments at the end of August were 378,269 bales (480-lb), down from 414,631 in July. Stocks held in public storage and compresses in August totaled 4.7 million bales, down from 5.6 million in July. Active spindles in August totaled 3.4 million, of which 1.95 million were dedicated to 100 percent cotton, compared with 4.4 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 79.7 percent.
U.S. cotton exports in July 2001 totaled 700,000 (480-lb.) bales, bringing total U.S. exports for MY 2000/01 to 6.763 million bales, up 361,000 bales from 99/2000. (USDAs export estimate for 2000/01 was 6.7 million bales). Julys exports were 81,000 bales below June 2001 exports of 781,000 and 221,000 bales above July 2000 exports of 479,000 bales, according to the U.S. Bureau of the Census. The leading markets in July were Mexico, India, Turkey, Indonesia, South Korea, and Taiwan.
U.S. cotton imports in July 2001 were 400 bales, bringing total U.S. imports for MY 2000/01 to 15,200 bales, down 81,300 bales from 99/2000. Julys imports were 4,300 bales below the previous months imports. Imports for the same month last year were 1,700 bales. The major suppliers were Egypt, Turkey, and India, with modest imports from Mexico, the United Kingdom, Barbados, and Italy.