February 2002

2002/03 Foreign Cotton Area and Production Expected to Fall

Foreign cotton area and production for the 2002/03 season are expected to fall based on several factors. Domestic and world financial conditions influence foreign cotton area along with government policies and weather. For those countries that export cotton, the world cotton price and prices of in-country competing crops play a crucial role in the area planted to cotton. The Cotlook A-Index is often used by farmers as an indication of the profitability that can be achieved from the production of cotton. The A-Index is the daily average of the five lowest-priced quotations of comparable growths offered for sale by cotton exporting countries. Generally, a direct relationship exists between cotton area and the price index for the previous year (See Graph). The price line on the graph shows an average annual market year price beginning in 1991/92, and includes an average price from August-January for 2001/02. Preliminary indications are that foreign cotton area and production should be roughly around 27.0 million hectares and 72.5 million bales in 2002/03, compared with an estimated 28.4 million and 76.8 million for 2001/02, respectively. 

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