COTTON AND WOOL April 11, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- COTTON AND WOOL Outlook is published monthly (except January) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. CWS--0495. ----------------------------------------------------------------------------- Larger Acreage Projected in 1995 Farmers intend to plant 16.2 million acres of cotton in 1995, according to USDA's Prospective Plantings report released March 31. Upland acreage is projected at 16 million acres and extra-long staple (ELS) at 188,000. Upland area is expected to expand by nearly 2.5 million acres (18 percent) from 1994. A zero percent acreage reduction program for upland cotton, along with significantly higher prices than a year ago, could lead to the highest cotton area since 1962. ELS acreage is forecast up nearly 12 percent from 1994. The expansion of cotton acreage continues in the Southeast. Over 3 million acres are projected for this season, up a whopping 45 percent from last season's impressive figures and the largest since 1955. Leading the climb in the Southeast is Georgia, where acreage is projected to increase over 500,000 in 1995. Area there is estimated at 1.4 million acres, the largest since 1952. Other Southeastern States also show dramatic gains. Increased acreage also is projected for the other 3 regions. Delta acreage is expected to rise 15 percent above 1994 to 4.7 million acres, the largest since 1972. Area in the Southwest is estimated at nearly 6.6 million acres (up 15 percent), while the West is projected near 1.6 million (up 6 percent). As of April 9, 6 percent of the crop had been planted, compared with 8 percent last year. Crop progress in the Western States remains behind schedule. Plantings in Arizona were 32 percent complete, compared with the 5-year average of 38 percent. In California, only 5 percent of the crop had been planted, well below the 21-percent average. However, 11 percent of the acreage in Texas had been planted by early April, matching the 5-year average. Plantings are just getting under way in the Delta and Southeastern States. The first official USDA cotton production estimate for 1995/96, based on the Prospective Plantings report, along with the other supply and demand estimates will be released on May 10, 1995. Meanwhile, the 1994 U.S. cotton production estimate was revised slightly to more closely reflect the latest Cotton Ginnings data. In late March, the National Agricultural Statistics Service estimated 1994/95 cotton ginnings at 19.65 million bales (upland-19.31 million and ELS-337,200). USDA's current estimate for 1994 cotton production is 19.67 million bales, slightly below the previous 19.73-million-bale estimate. Final 1994 production will also be released on May 10. Mill Demand Solid Cotton mill consumption remains impressive, according to the latest U.S. Commerce Department consumption data. Based on a calendar month, preliminary February cotton mill use totaled 895,000 bales, down from January's 961,000 bales. On a daily basis, however, February mill use reached 44,700 bales per day, up 1,000 bales from the revised January estimate. Compared with a year ago, February's daily average was 3,800 bales higher. Cotton mill use during the first 7 months of 1994/95 totaled 6.5 million bales, compared with nearly 5.9 million last season. On a seasonally adjusted annual rate basis, February's consumption declined from the previous month but remained above the 11.3-million-bale level. The current USDA mill use estimate for 1994/95 remains at 11.3 million bales, nearly a million bales above 1993/94. Cotton's share of fiber use on the cotton system decreased slightly in February to 76.6 percent. However, cotton's share has averaged 76.9 percent so far this season. The continued strength in domestic demand for denim, apparel, and home furnishings, in addition to the cotton textile export demand, is expected to keep cotton's share of fiber use near current levels and the highest since the 1967 season. U.S. Textile Trade Deficit Increases in January Textile imports in January jumped 97 million pounds (17 percent) from December to 6.56 million (raw fiber equivalent). Imports of all fibers increased from a month earlier. Cotton textile imports rose nearly 36 million pounds (12 percent) with increases in all major end-use categories. Manmade imports increased 30 million pounds, with the January rise largely attributed to apparel products. January textile exports fell below December shipments, dropping 5 million pounds (2 percent) to 218 million. Total exports declined in all major fibers and all major end uses except linen and silk apparel products. Yarn, thread, and fabric exports accounted for 50 percent of total January exports. Cotton and manmade fiber exports both declined about 2 million pounds from a month earlier. However, export volumes for January 1995, compared with a year ago, were nearly 23 million pounds (12 percent) higher. Apparel shipments were 12 million pounds or 19 percent above January 1994. Textile exports of all fibers, except linen, experienced gains. Overall, the January textile trade deficit was 438 million pounds, with cotton accounting for 56 percent of the total (245 million pounds). The deficit increased over 100 million pounds, compared with a month earlier, and was 52 million above January 1994. Similarly, the cotton textile trade deficit was 217 million pounds (56 percent of the total) in January 1994. Foreign Production, Consumption, and Trade Historical revisions dominated this month's changes, with 1993/94 ending stocks revised down 1.1 million bales largely due to new consumption figures for Brazil and Pakistan. At 27.3 million bales, 1994/95 ending stocks were also lowered about 1 million bales as forecast production and consumption each fell about 200,000 bales. World exports were also forecast 200,000 bales lower, at 28.7 million. U.S. exports in 1994/95 were unchanged at 10 million bales. U.S. shipments in the last month have maintained a pace consistent with the current forecast, and commitments have been stable at 10.8 million 480- pound bales. Consumption Revised Up for 1993/94, Down for 1994/95 Additional Brazilian data have led to a reassessment of Brazilian cotton use over the last 2 months, resulting in trade adjustments in March and extensive upward revisions in consumption during April. Consumption was revised back as far as 1986, and continued through to a 200,000-bale increase in expected 1994/95 consumption. Corresponding adjustments in stocks culminated in an 880,000-bale cut in expected 1994/95 ending stocks. This accounted for most of this month's changes in world ending stocks. Pakistan's 1993/94 consumption was also raised 200,000 bales, and the forecast for 1994/95 was raised 400,000 bales as continued strong exports of Pakistan's cotton products suggest stable, rather than declining mill use. Consumption in both 1993/94 and 1994/95 is now estimated at 6.7 million bales. While historical revisions in Pakistan and Brazil raised estimated 1993/94 foreign consumption 370,000 bales this month, the forecast for 1994/95 fell about 200,000 bales, to 73.7 million. In China, total yarn production has been lagging year-earlier levels by 12 percent through the first half of the year. Yarn production has reportedly been hampered by mill refurbishment and difficulties in procuring cotton. While amelioration of these difficulties is expected, the weakness in mill consumption to date led to a 500,000-bale decline in the forecast for China's 1994/95 cotton consumption. Consumption is now expected to total 20 million bales, 4 percent below 1993/94. Foreign 1994/95 Production Lowered Foreign production was lowered slightly this month, to 64.1 million bales. Uzbekistan's 1994/95 production estimate was lowered 155,000 bales based on official seed cotton data from the Commonwealth of Independent States Statistical Committee. Lower production is also estimated for Mali (down 100,000 bales this month) and Burkina Faso (75,000 bales). However, continued good weather led to a 200,000-bale increase for Brazil, where record yields are currently forecast for soybeans and corn as well as cotton. Offsetting changes occurred in South Asia's estimated 1994/95 production this month. A slow pace of arrivals led to a 200,000-bale cut in the forecast for India's 1994/95 crop, but accelerating arrivals supported a 200,000-bale increase in Pakistan's. Gin deliveries in Pakistan surpassed year-earlier levels by more than 400 percent during February-March. Cotton Prices Continue Higher U.S. cotton prices moved higher in March, continuing its historical rise this season. The average price received by upland producers advanced through mid- March to 85.1 cents per pound, compared with a revised February price of 81.6 cents and 66.1 cents a year ago. Spot prices also moved upward. The upland spot price surpassed the dollar mark, averaging $1.04 during March, 12 cents above February. In addition, the ELS spot price reached $1.15 per pound, up about a nickel from February. Similarly, mill-delivered upland prices continue to reach new heights, averaging about $1.12 per pound in March. The price was 12 cents above February and more than 30 cents above March 1994. Meanwhile, polyester prices have risen modestly. Although 15 cents above last year, March polyester staple prices were only 86 cents per pound. Despite polyester's price advantage, mills have not decreased their cotton use. The adjusted world price (AWP) remains above 90 cents, as the spring transition period from old-crop to new-crop prices continues. For the week of April 7-13, the AWP equaled 93.09 cents per pound, down a penny from the previous week. After declining at the end of March, the A Index moved higher in early April. For the week ending April 6, the A Index averaged above $1.07 per pound with only 6 of the 14 styles quoted. The Central Asian quote remains the cheapest with about 7 cents separating it from the highest quote in the A Index. New Upland Quota Announced With the limited import quota based on spot prices ending on April 6, the continued high cotton prices have triggered a special import (Step 3) quota. The Step 3 quota is being established on April 12, and applies to upland cotton purchased not later than July 10, 1995 and entered into the United States not later than October 8, 1995. The quota period of 180 days will permit the importation of 103,082,657 pounds (214,756 bales) of upland cotton. The amount is equal to one week's consumption of upland cotton by domestic mills at the seasonally adjusted average rate for the most recent 3 months for which data are available. Future quotas will be announced if price conditions warrant. No cotton was imported under the quota which ended April 6. The next issue of the Cotton and Wool Outlook will be released on May 11, 1995. For further information, contact Bob Skinner, Leslie Meyer, John Lawler, or Steve MacDonald at (202) 219-0840. U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 --------------------------- Item 1993/94 Feb Mar Apr ---------------------------------------------------------------------- Upland: Million acres Planted 13.25 13.56 13.56 13.56 Program 11.44 11.11 11.11 11.11 Harvested 12.59 13.16 13.16 13.16 Pounds Yield/harvested acre 601 707 707 705 Million 480-lb. bales Beginning stocks 4.46 3.30 3.30 3.30 Production 15.76 19.39 19.39 19.33 Total supply 20.23 22.69 22.70 22.65 Mill use 10.35 11.02 11.22 11.22 Exports 6.56 9.23 9.61 9.61 Total use 16.90 20.24 20.83 20.83 Ending stocks 3.30 2.60 2.02 1.92 Percent Stocks-to-use ratio 19.5 12.9 9.7 9.2 Extra-long staple: 1,000 acres Planted 190 169 169 169 Program 89 84 84 84 Harvested 189 166 166 166 Pounds Yield/harvested acre 938 987 987 975 1,000 480-lb. bales Beginning stocks 206 227 227 227 Production 370 342 342 338 Total supply 576 569 569 565 Mill use 72 85 85 85 Exports 307 375 390 390 Total use 379 460 475 475 Ending stocks 227 99 84 80 Percent Stocks-to-use ratio 59.9 21.5 17.7 16.8 ---------------------------------------------------------------------- Based on USDA estimates. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 --------------------------- Item 1993/94 Feb Mar Apr ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 37.50 30.14 30.72 29.62 Foreign 32.84 26.61 27.19 26.09 Production World 76.89 84.04 84.02 83.80 Foreign 60.76 64.31 64.29 64.13 Imports World 27.90 29.78 29.81 29.68 Foreign 27.89 29.78 29.80 29.67 Use: Mill use World 85.44 84.99 85.20 84.98 Foreign 75.02 73.89 73.90 73.68 Exports World 26.73 28.64 28.88 28.69 Foreign 19.86 19.04 18.88 18.69 Ending stocks World 29.62 30.22 30.36 29.27 Foreign 26.09 27.52 28.26 27.27 Stocks-to-use ratio Percent World 34.7 35.6 35.6 34.4 Foreign 34.8 37.2 38.2 37.0 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1994 1995 1994 --------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 2,904 588 107 159 Imports since August 1 6.6 7.7 NA 1.8 Stocks, beginning 3,812 14,835 13,348 12,987 At mills 598 667 655 678 Public storage 11,450 12,260 10,507 11,260 CCC stocks 2,338 2,861 3,111 2,067 Manmade: Million pounds Production 817.9 815.3 791.2 756.2 Noncellulosic 773.6 774.6 750.8 721.5 Cellulosic 44.3 40.7 40.4 34.7 Total since January 1 9,622.4 815.3 1,606.5 1,560.7 1994 1995 1994 --------------- Nov Dec Jan Jan -------------------------------------- Million pounds Raw fiber imports 93.9 94.3 84.9 78.4 Noncellulosic 87.4 87.8 78.5 65.3 Cellulosic 6.5 6.5 6.4 13.1 Total since January 1 894.0 988.3 84.9 78.4 Wool and Mohair: 1,000 pounds Raw wool imports, clean 8,116 7,313 10,441 10,002 48's-and-finer 5,346 5,738 8,903 6,558 Not-finer-than-46's 2,388 1,291 1,538 3,249 Total since January 1 84,404 91,717 10,441 10,002 Wool top imports 1,087 360 360 205 Total since January 1 4,467 4,827 360 205 Mohair imports, clean 41 5 4 0 Total since January 1 212 217 4 0 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1994 1995 1994 --------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 785 961 895 818 Total since August 1 1/ 4,642 5,603 6,498 5,873 SA annual rate 2/ 11,157 11,363 11,312 10,304 SA daily rate 2/ 42.9 43.7 43.5 39.6 Daily rate 35.7 43.7 44.7 40.9 Upland consumed by mills 1/ 778 952 885 811 Total since August 1 1/ 4,606 5,559 6,444 5,837 SA annual rate 2/ 11,083 11,259 11,191 10,218 SA daily rate 2/ 42.6 43.3 43.0 39.3 Daily rate 35.4 43.3 44.3 40.6 Spindles in place 7,266 7,262 7,267 7,924 Active spindles 6,824 6,875 6,815 7,429 100 percent cotton 2,918 2,942 2,944 3,214 100 percent manmade 1,169 1,160 1,126 1,267 Blends 2,737 2,773 2,745 2,948 Cotton's share of fibers 77.0 77.1 76.6 76.1 Manmade: 1,000 pounds Total consumed by mills 1/ 112,299 136,738 131,248 123,343 Total since August 1 1/ 671,601 808,339 939,587 894,986 Daily rate 5,105 6,215 6,562 6,167 Noncellulosic staple 4,354 5,356 5,688 5,248 Cellulosic staple 751 859 874 919 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1994 1995 1994 ---------------- Item Nov Dec Jan Jan ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 695 1,072 1,068 709 Total since August 1 1,866 2,938 4,006 2,481 Sales for next season 2,775 -187 8 14 Total since August 1 2,874 2,687 2,695 141 ELS exports 14.8 26.7 47.0 29.7 Total since August 1 48.8 75.4 122.4 115.5 Sales for next season 4.2 9.9 20.1 0.2 Total since August 1 4.2 14.1 34.1 1.8 Manmade: Million pounds Raw fiber exports 83.4 88.4 89.2 63.3 Noncellulosic 75.9 81.4 83.5 60.1 Cellulosic 7.5 7.0 5.7 3.2 Total since January 1 825.9 914.3 89.2 63.3 Wool and Mohair: 1,000 pounds Raw wool exports, clean 6.9 262.3 190.8 121.7 Total since January 1 2,600.3 2,862.6 190.8 121.7 Wool top exports 1,115.3 1,728.7 636.5 561.6 Total since January 1 12,097.8 13,826.5 636.5 561.6 Mohair exports, clean 900.4 1,081.7 874.1 879.1 Total since January 1 7,652.1 8,733.8 874.1 879.1 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1995 1994 --------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 80.66 85.84 95.83 68.17 May'95 futures 90.43 93.78 104.72 73.83 Dec'95 futures 74.42 75.25 77.43 NA Upland spot 41-34 88.11 91.89 104.20 72.74 Pima spot 03-46 108.88 110.61 115.02 93.65 Avg. price received by: Upland producers 79.70 81.60 85.10 66.10 Mill delivered: Cotton Actual 95.17 100.06 111.91 79.42 Raw fiber equivalent 105.74 111.18 124.34 88.24 Rayon staple Actual 104.00 104.00 104.00 103.00 Raw fiber equivalent 108.33 108.33 108.33 107.29 Polyester staple Actual 82.00 86.00 86.00 71.00 Raw fiber equivalent 85.42 89.58 89.58 73.96 Price ratios Percent Cotton/rayon 97.6 102.6 114.8 82.2 Cotton/polyester 123.8 124.1 138.8 119.3 Northern Europe cotton quotes: Cents per pound A Index 95.63 100.51 110.63 82.06 Memphis Territory 100.31 103.94 116.65 83.75 California/Arizona 105.06 108.69 121.30 83.60 B Index 96.60 98.39 108.67 79.01 Orleans/Texas 97.56 101.13 113.30 81.15 Wool prices (clean): Dollars per pound U.S. 56's 1.45 1.55 1.63 1.11 Australian 56's 1/ 2.32 2.45 2.62 1.64 U.S. 60's 1.66 1.82 1.99 1.26 Australian 60's 1/ 2.47 2.61 2.70 1.81 U.S. 64's 2.45 2.52 2.65 1.70 Australian 64's 1/ 2.91 2.97 3.02 2.05 ---------------------------------------------------------------------- NA = Not available. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1994 1995 1994 ------------------- Item Nov Dec Jan Jan ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 158,101 179,254 208,050 185,650 Cotton 70,193 83,394 83,807 75,525 Linen 19,599 27,808 49,940 49,707 Wool 4,322 3,470 3,610 4,781 Silk 908 696 698 258 Manmade 63,079 63,885 69,994 55,379 Apparel 386,329 327,367 392,530 334,344 Cotton 213,810 189,844 219,876 183,764 Linen 16,232 10,152 15,741 17,117 Wool 15,001 8,639 10,609 8,156 Silk 12,604 11,567 14,415 17,175 Manmade 128,682 107,165 131,889 108,132 House furnishings 28,354 28,593 31,859 26,365 Cotton 19,753 20,276 24,199 20,483 Linen 131 221 195 68 Wool 133 133 121 44 Silk 23 22 6 10 Manmade 8,314 7,941 7,338 5,760 Floor covering 17,563 19,012 16,668 17,889 Cotton 3,599 3,863 4,353 5,134 Linen 3,065 3,389 2,627 1,429 Wool 3,379 5,124 3,822 6,242 Silk 439 499 402 210 Manmade 7,081 6,186 5,465 4,874 Total imports 2/ 595,346 559,434 656,206 570,892 Cotton 309,031 299,592 335,758 287,605 Linen 13,976 12,734 15,524 68,516 Wool 23,014 17,509 18,299 19,394 Silk 39,075 41,872 68,960 17,654 Manmade 210,250 187,726 217,665 177,723 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 116,093 114,805 108,558 102,203 Cotton 37,800 37,800 37,305 28,150 Linen 3,462 3,477 2,673 2,053 Wool 2,924 3,474 3,332 2,485 Silk 1,754 1,464 887 1,095 Manmade 70,153 69,243 67,921 68,420 Apparel 87,686 76,977 75,380 63,317 Cotton 53,885 49,127 47,827 40,647 Linen 2,195 1,793 2,087 1,396 Wool 3,111 2,410 2,554 2,182 Silk 1,488 1,042 1,225 1,117 Manmade 27,008 22,605 21,688 17,975 House furnishings 7,403 5,903 4,096 4,195 Cotton 4,167 3,308 2,498 2,540 Linen 318 277 163 160 Wool 77 81 40 35 Silk 183 198 73 90 Manmade 2,657 2,038 1,322 1,370 Floor covering 28,422 25,833 26,558 25,705 Cotton 3,550 3,119 3,166 3,139 Linen 1,271 1,127 1,240 1,253 Wool 1,424 1,318 1,322 1,342 Silk 3/ --- --- --- --- Manmade 22,177 20,268 20,830 19,971 Total exports 2/ 240,182 223,812 218,453 195,594 Cotton 99,474 92,743 90,827 74,497 Linen 7,261 2,705 2,184 4,866 Wool 7,565 7,304 7,259 6,056 Silk 3,424 6,683 6,171 2,302 Manmade 122,458 114,378 112,011 107,873 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. 2/ Includes headgear. 3/ Absence of trade. ACTUAL AND PROJECTED COTTON ACREAGE ------------------------------------------------------------------- State/ Actual Actual Projected Region 1993 1994 1995 1/ 1995/1994 ------------------------------------------------------------------- 1,000 acres Percent Upland: Alabama 443 468 600 128 Florida 54 69 75 109 Georgia 615 885 1,400 158 N. Carolina 390 487 700 144 S. Carolina 202 225 280 124 Virginia 23 42 95 225 Southeast 1,727 2,176 3,150 145 Arkansas 990 980 1,080 110 Louisiana 890 900 1,010 112 Mississippi 1,330 1,280 1,500 117 Missouri 345 352 480 136 Tennessee 625 590 660 112 Delta 4,180 4,102 4,730 115 Kansas 2 1 2 121 Oklahoma 370 360 370 103 Texas 5,550 5,450 6,200 114 Southwest 5,922 5,811 6,572 113 Arizona 316 313 340 109 California 1,050 1,100 1,170 106 New Mexico 54 55 50 91 West 1,420 1,468 1,560 106 Total Upland 13,248 13,558 16,012 118 Pima: Arizona 57 48 49 102 California 91 81 100 123 New Mexico 11 11 14 127 Texas 31 29 25 88 Total Pima 190 169 188 112 Total All 13,438 13,726 16,200 118 ------------------------------------------------------------------- 1/ Planting intentions as indicated by reports from farmers.