U.S. Cotton Outlook

The MY 2002/03 domestic production forecast was reduced 2 percent from last month to 18.1 million bales. A reduction in forecasted harvested area accounts for the revision, as the U.S. forecasted average yield remained unchanged. From MY 2001/02, U.S. production is expected to fall 10.7 percent, compared to last month's expected fall of 9.2 percent. U.S. mill use and export forecasts were not changed, so the lower production forecast resulted in a lower ending stocks forecast of 6.7 million bales, down 300,000 from the August forecast.

MY 2001/02 U.S. estimates were not changed, apart from a slight upward revision (22,000 bales) to consumption based on preliminary end-of-season Census data. The Census Bureau will release final stocks survey results in late September.

World Cotton Outlook

World total forecasts for MY 2002/03 production and ending stocks are lower this month, down 1 percent and 1.5 percent, respectively, from last month. Consumption and trade forecasts were not changed significantly. Production forecasts were lowered for Australia, the United States, Brazil, West Africa and Central Asia. Forecasted Indian production was raised 200,000 bales, following last month's 1-million bale decrease. The Brazil production revision, like that for the U.S., reflects primarily a decrease in expected harvested area. Due to increased soybean prices, Brazilian farmers are no longer expected to shift out of soybeans into cotton this year. Lower production forecasts for Australia, West Africa and Central Asia, on the other hand, reflect primarily unfavorable weather. The U.S. and Australia account for the fall in the world ending stocks forecast, partially offset by an increase in forecasted ending stocks for China. The higher ending stocks forecast in China is due to higher beginning stocks resulting from trade estimate changes (see below). Currently, world cotton stocks are expected to fall by an impressive 7.7 million bales this marketing year. The world trade forecast was reduced by over 200,000 bales this month. Australian exports are now expected to fall 8.2 percent, compared to the 4.8-percent drop forecast in August, due to a decrease in forecasted supply. India's imports are expected to increase 25.7 percent from last season in MY 2002/03, compared to the 37.1-percent increase forecast last month, as a result of the upward revision to forecast production. This takes India out of the running for top importer, a distinction for which it was tied in last month's report with Turkey and Indonesia.

Very little change was made to the MY 2001/02 estimates. One notable change involved import and export estimates for China. This month's update shows China as a net cotton importer last marketing year, whereas last month's estimates of Chinese imports and exports were equal. China's estimated MY 2001/02 imports were raised 74,000 bales and estimated exports were lowered 33,000 bales.

Cotton Prices

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, the index averaged 49.43 cents per pound, up 2.84 cents from the previous month. The lowest quote in the index averaged 47.55 cents per pound. The Memphis quote averaged 50.60 cents per pound, up 1.10 cents from the previous month.

U.S. Cotton Highlights

COTTON CONSUMPTION: The seasonally adjusted daily rate of U.S. cotton consumption in July 2002 was 33,226 (480-lb.) bales, up from 30,936 in June. A total of 592,763 bales were consumed during the four weeks of July, compared with 782,110 during the five weeks of June. The seasonally adjusted annualized consumption rate for the month of July was 8.672 million bales, up from 8.074 million in June.

TEXTILE MILL REPORT: Domestic mills purchased light volume of 2001-crop cotton for delivery through November. The availability of 2001-crop cotton continued to slow demand for 2002-crop cotton. Demand for ring-spun yarn was moderate and demand for open-end yarn was good. Consumption of raw cotton remained steady. Many mills took four days to a week off for Labor Day.

COTTON STOCKS: U.S. cotton stocks on hand in consuming establishments at the end of July were 480,758 bales (480-lb), up from 402,152 in June. Stocks held in public storage and compresses in July totaled 6.55 million bales, down from 7.86 million in June. Active spindles in July totaled 2.71 million, of which 1.57 million were dedicated to 100-percent cotton, compared with 3.3 million for the same time last year, with 1.93 million dedicated to 100-percent cotton. Cotton's share on the cotton spindle system in July was 81.5 percent.

U.S. COTTON EXPORTS in June 2002 totaled 822,113 (480-lb) bales, down from 893,128 bales in May 2002. According to the U.S. Bureau of the Census, Mexico and Turkey were the major destinations in June. Thailand, Indonesia, Hong Kong, India and China were other important destinations in June. 

U.S. COTTON IMPORTS in June 2002 totaled 1199 (480-lb) bales, up from 823 bales in May. The majority of the imports came from Egypt.

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Last modified: Tuesday, August 30, 2005