U.S. Cotton Outlook

No changes were made to the U.S. estimates for 2002/03.

The U.S. forecast for 2003/04 has production up 656,000 bales from last month to 18.2 million bales. U.S. production increased in all regions except for the far West. While production in the U.S. once again increased; consumption declined by 200,000 bales to 6.2 million bales. Lower mill use in recent months combined with higher cotton prices forced the U.S. consumption forecast down. U.S. exports are forecast sharply higher at 13.2 million bales due to the increase in exportable supply combined with an increase world demand for imports, notably in China.

World Cotton Outlook

The world production forecast for 2003/04 was lowered 2.3 million bales from last month. China’s 3.5-million-bale decrease was the major factor. Heavy rains in the Northern China Plain has reduced yield in some areas by as much as 50-percent from last year. Unfavorable weather during harvest in Uzbekistan has decreased production by 100,000 bales. A pest problem in Pakistan reduced yields, lowering the production estimate by 400,000 bales. A shortage of irrigation supplies in Australia has reduced projected area and production in the region. Favorable weather in Turkmenistan, Mali, Kazakhstan, and Azerbaijan has increased production in those regions by providing higher yields. In response to higher prices and an increased world demand for imports, South American countries are planting more cotton. The combined production estimate in Brazil, Paraguay, and Argentina has been raised 700,000 bales. 

Decreased production in major cotton consuming countries has increased the demand for cotton imports. The 2003/04 import forecast is increased by 2 million bales and exports by 1.9 million bales from last month. China's import forecast is up 2.7 million bales from last month, while Pakistan’s is up 250,000 bales. These countries along with Bangladesh (525,000 bales) accounted for all of the increase in projected imports. However, because of higher cotton prices and decreased mill use many countries have reduced imports. Imports for 2003/04 for Mexico and Turkey, two of the United States top export markets, are reduced by 350,000 and 500,000 bales respectively. South Africa’s imports declined by 50,000 bales from last month due to an increase in production; India’s imports declined by 100,000 bales due to a consumption decrease of 100,000 bales in 2003/04. Brazil’s imports declined by 100,000 bales due to an increase in production of 600,000 bales and exports rose by 350,000 bales. Exports from the Former Soviet Union rose by 130,000 bales due to 
increased production in the region. Higher demand for cotton has also caused increased exports and tightened stocks in many Franc Zone Africa countries. 

The world estimate for consumption in 2003/04 is down by 760,000 bales and is 525,000 bales (0.5 percent) below the 2002/03 estimates. For the top consuming countries including China, Bangladesh, India, Pakistan and Brazil, this month's estimates continue to show year-to-year growth . However, the expected rate of growth was lowered for most. China fell from a 5.1 percent to a 2.4 percent growth rate. Only Bangladesh's growth rate was raised from 5 percent to 8 percent based on new information which indicates stronger growth rates in recent years. The forecasts for Turkey and Mexico now show year-to-year declines.

The 2003/04 world production forecast decreased by 1.6 million bales more than the decrease in total consumption, resulting in total ending stocks being decreased by 2.1 million bales. As a result the world stocks-to-use ratio declined to 32.4 percent, its lowest level since 1994/95. The U.S. stocks-to-use ratio of 21.9 percent is the lowest level since 1998/99, and China’s stock to use of 22.5 percent is at a historical low.

Cotton Prices

The A-Index, a principal measure of international cotton prices, is an average of the five lowest quotes of major cotton growths for delivery to Northern European ports. In October, the index averaged 72.56 cents per pound, up 9.01 cents from September’s average. In New York, the nearby December futures contract settlement price rose 8.93 cents between the end of September and the end of October, closing at 76.73 cents per pound on October 31.

U.S. Cotton Highlights

Textile mill report. Domestic mill purchases were slow, as reports indicated that buyers were reluctant to buy at the current price levels. Buyers bought a light volume of 2003-crop cotton for December 2003 through March 2004 delivery. A few mills have delayed some of their October deliveries to November. Sales of finished products determined when and how much raw cotton would be bought. 

U.S. COTTON EXPORTS totaled $152 million or 575,600 bales in August according to Census data, down from $371 million or 1.48 million bales in July. Mexico was the top destination for U.S. cotton in August at 131,000 bales or $24.3 million, followed by Turkey at 90,815 bales or $22.5 million.

U.S. COTTON IMPORTS decreased to $1.5 million (2264 bales) in August from $2.7 million (7,257 bales) in July. In August, Egypt accounted for all imports. In July, Egypt accounted for $2.3 million (5,772 bales) and Australia accounted for $323,000 (1947 bales).



Note: The November Supplement is not provided this month; however the data from the supplement may be attained online at http://www.fas.usda.gov/psdonline/psdHome.aspx

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Last modified: Sunday, March 17, 2013