HDR1011800200500511951600 COTTON AND WOOL OUTLOOK May 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--0595. ----------------------------------------------------------------------------- Record Crop Projected in 1995/96 The first official USDA forecast for 1995/96 U.S. cotton production is 21 million bales. The forecast is based on the Prospective Plantings report, which indicated cotton acreage at 16.2 million acres, 18 percent above 1994 area. Additional assumptions about harvested acreage and yield were made in reaching this crop forecast. Projected harvested area was based on the 5-year average abandonment rate, by State, of 6.5 percent. Projected yield of 665 pounds per harvested acre was based on 5-year State averages, weighted by area. If realized, the 1995 crop would surpass the record 1994 production, which was finalized at 19.66 million bales. As of May 7, 39 percent of the crop had been planted, compared with 50 percent last year. Cotton plantings lagged last season in virtually all States. However, significant progress was made during the past week. Compared with their 5-year averages, the major producing States have had varying success in getting their crop planted. In Texas, 29 percent of the crop was reported planted by May 7, compared with the 5-year average of 26 percent. In Georgia, 61 percent of the acreage was planted, compared with a 44-percent average. In contrast, California and Arkansas remain well below their historical averages, while Mississippi plantings are slightly below the 5-year average. Although plantings were behind a year ago, higher prices have enticed growers to forward contract more of their crop earlier. As of April 1, 32 percent of the acreage had been forward contracted, compared with 16 percent in 1994 and only 4 percent in 1993. By region, the West had booked 46 percent of their acreage; the Southeast, 44 percent; the Delta, 35 percent; and the Southwest, 21 percent. With cotton stocks projected to fall to 1.7 million bales by the start of the season, another large crop will be necessary to meet the expected demand in 1995/96. Domestic mill demand is projected to advance to 11.6 million bales, 2 percent above the current season, matching the highest U.S. mill use on record. Meanwhile, U.S. exports are expected to decline from this season's near record 10.2 million bales. A rise in foreign production in 1995/96 will likely limit U.S. shipments to 8.5 million bales, still well above the 5-year average. Based on these U.S. supply and demand projections, stocks would rise only 1 million bales as production exceeds demand. Ending stocks on July 31, 1996 are forecast at 2.7 million bales, a stock-to-use ratio of 13 percent and well below the legislated target of 29.5 percent. Mill Consumption Data Revised On April 26, the U.S. Commerce Department revised the cotton consumption estimates back to August 1994 and reported preliminary March 1995 data. The revisions occurred as a result of mill establishments not previously included. These establishments represented approximately 1.75 percent of total cotton consumption and accounted for an increase in cotton mill use of about 115,000 bales. Preliminary March consumption continued impressive, totaling 1.05 million bales for the calendar month. On a daily basis, March mill use totaled 45,600 bales per day, equal to the revised February estimate. Compared with a year ago, March's daily average was 4,100 bales higher. In addition, cotton's share of fiber use on the cotton system has averaged 77.1 percent so far this season, compared with the 1993/94 average of 76 percent. Despite higher cotton prices, continued demand for U.S. textiles, both here and abroad, is expected to keep cotton's share near current levels. Based on the revised consumption figures, cotton mill use during the first 8 months of 1994/95 reached 7.66 million bales, compared with 6.83 million last season. On a seasonally adjusted annual rate basis, monthly consumption has averaged about 11.4 million bales since August 1994. Based on the revisions, the USDA mill use estimate for 1994/95 was increased to 11.4 million bales, a million above last season and the largest since 1942. February Cotton Textile Exports--Second Largest on Record February textile exports, at 232 million (raw fiber equivalent) pounds, increased 6 percent from January and were 17 percent above February 1994. Total exports were higher in all major fibers and all end-use categories, except floor covering. Only linen floor covering exports rose above January shipments. Cotton textile exports, at 102 million pounds, were 12 percent above January and 38 percent above a year ago. Textile imports in February totaled 605 million pounds, down nearly 8 percent from January. Overall, imports decreased in each major end-use category except floor covering. Lower shipments of cotton, linen, silk, and manmade fibers more than offset a slight increase in wool textiles. Cotton imports, at 318 million pounds, accounted for 53 percent of all textile shipments. However, textile imports during the first 2 months of 1995 were more than 15 percent above the corresponding period of 1994, and cotton textile imports were up 17 percent. Overall, the textile trade deficit during January and February 1995 totaled 811 million pounds, 32 percent higher than a year earlier. The cumulative cotton trade deficit was 19 percent above the first 2 months of 1994. However, cotton's share of the trade deficit declined from 63.4 to 56.9 percent due to stronger export demand. Increasing cotton textile exports continue to support domestic mill consumption and limit the rise in the trade deficit. Foreign Cotton Production, Consumption, and Trade Foreign production is projected to rise 4.1 million bales in 1995/96, to 68 million, while consumption grows only 1.6 million bales, to 75.2 million. Reduced world trade is projected, with U.S. exports expected to fall 17 percent. Foreign stocks are expected to grow 1.5 million bales to 26.8 million. Foreign area is projected to rise 5.5 percent to 28.4 million hectares in 1995/96, responding less to higher prices than U.S. area, and less than in 1994/95. In three out of the top four cotton producers overseas, area gains are constrained by competing crops, government policy, or availability of suitable land. India has the world's largest cotton area, and prices of competing crops there have fallen while cotton prices have remained high, suggesting good prospects for increasing area. But India is the exception among the 4 major foreign cotton producers. In the past, China's area has been as much as 1 million hectares above its 1994/95 level of 5.6 million, but for 1995/96, high returns from competing crops and a persistent bollworm threat suggest that even the targeted area of 6.0 million hectares is optimistic. Central Asia's planned area is little changed again in 1995/96, as governments there continue to favor increasing food crop production and the retirement of marginal and damaged lands. And in Pakistan, opportunities for increasing area are limited, although poor returns from sugarcane in 1994/95 could support a slight area increase for cotton. Foreign yields are projected slightly higher in 1995/96, up 0.9 percent to 521 kilograms per hectare (465 pounds per acre). Foreign yields have changed little since a 10.6-percent drop in 1992/93. To varying degrees, yields in China and Pakistan have been constrained by pests and disease during 1992/93- 1994/95, while yields in Central Asia have fallen due to reduced input use. In 1995/96, the potential for pest damage remains a concern in China and Pakistan, and only marginal increases in input use--at best--are likely in Central Asia. Foreign consumption is projected to rise for the first time since 1989/90, climbing 2.2 percent to 75.2 million bales. Foreign consumption suffered its sharpest decline over the last 4 years in 1994/95, in large part because consumption in China fell by a nearly unprecedented 1.2 million bales. China is forecast to import 3.6 million bales in 1994/95, building stocks, and dramatically reducing the likelihood of another decline in consumption in 1995/96. This month, USDA revised China's consumption estimates over 1982/83- 1993/94, with the largest changes in 1984/85, 1985/86, and 1991/92. The revisions resulted in a cumulative 1.8-million-bale decline in China's stocks. Over the longer term, most of the persistent weakness in foreign consumption through 1994/95 has been in Russia. Between 1989/90 and 1994/95, Russia accounted for virtually all of the 4.6-million-bale decline in foreign consumption. The decline has generally paralleled Russia's broader economic contraction, which shows signs of nearing its end. Despite the increase in consumption, world exports are projected to fall 1.7 million bales in 1995/96 to 27.2 million. Shortfalls in producing countries helped drive trade sharply higher in 1994/95. In 1995/96, improved beginning stocks or higher production in a number of countries will permit domestic supplies to substitute for imports, cutting world trade and U.S. exports. The United States has been the primary beneficiary of 1994/95's export surge and would likely bear the brunt of trade contracting in 1995/96. The United States will also face renewed competition from other exporters. Cotton Prices Remain High U.S. cotton prices continued strong in April. The average price received by upland producers reached 90.6 cents per pound through mid-April, compared with a revised March price of 86.5 cents and 67.7 cents last April. Similarly, the upland spot price averaged near $1.05 per pound, while the ELS spot price exceeded $1.23, up from $1.15 in March. Mill-delivered upland prices also moved higher in April, averaging $1.13 per pound, 32 cents above a year ago. Meanwhile, polyester staple prices have remained stable. However, polyester prices are now 20 cents above a year ago. Despite cotton's higher price, mills have continued their strong use of the fiber, although a slowdown may occur during the summer months as a result of the tight stock situation. The adjusted world price (AWP) continued above the 90-cent level at the beginning of May. For the week of May 5-11, the AWP equaled 90.14 cents per pound, down 4 cents from the previous week. On the other hand, "current" A Index prices continued to rise and reached about $1.20 per pound in late April, the highest level of the season. For the week ending May 5, however, the A Index averaged $1.18 per pound. Only 5 of the 14 styles were quoted, with Central Asia offering the lowest quote. The two U.S. quotes are the highest in the Index, about 18 cents above the low quote. The continued high cotton prices have triggered a sixth special import (Step 3) quota which will begin on May 17. Under this quota, cotton must be purchased by August 14 and imported into the United States by November 12. This quota permits the importation of 105,902,662 pounds (220,631 bales) of upland cotton. Thus far, only a small quantity of cotton has been imported under these special quotas which opened April 12. The next issue of the Cotton and Wool Outlook will be released on June 12, 1995. For further information, contact Leslie Meyer at (202) 501-8528, Robert Skinner at (202) 219-0836, John Lawler at (202) 501-8525, or Steve MacDonald at (202) 219-1179. U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 --------------------------- Item 1993/94 Mar Apr May ---------------------------------------------------------------------- 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 601 707 705 705 Million 480-lb. bales Beginning stocks 4.46 3.30 3.30 3.30 Production 15.76 19.39 19.33 19.32 Total supply 1/ 20.23 22.70 22.65 22.64 Mill use 10.35 11.22 11.22 11.32 Exports 6.56 9.61 9.61 9.80 Total use 16.90 20.83 20.83 21.12 Ending stocks 3.30 2.02 1.92 1.63 Percent Stocks-to-use ratio 19.5 9.7 9.2 7.7 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 938 987 975 974 1,000 480-lb. bales Beginning stocks 206 227 227 227 Production 370 342 338 338 Total supply 1/ 576 569 565 567 Mill use 72 85 85 85 Exports 307 390 390 400 Total use 379 475 475 485 Ending stocks 227 84 80 72 Percent Stocks-to-use ratio 59.9 17.7 16.8 14.8 ---------------------------------------------------------------------- Based on USDA estimates. 1/ Includes imports. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 --------------------------- Item 1993/94 Mar Apr May ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 35.60 30.72 29.62 27.42 Foreign 30.94 27.19 26.09 23.89 Production World 76.89 84.02 83.80 83.54 Foreign 60.76 64.29 64.13 63.87 Imports World 27.89 29.81 29.68 30.11 Foreign 27.88 29.80 29.67 30.09 Use: Mill use World 85.72 85.20 84.98 84.99 Foreign 75.30 73.90 73.68 73.59 Exports World 26.73 28.88 28.69 28.90 Foreign 19.86 18.88 18.69 18.70 Ending stocks World 27.42 30.36 29.27 27.01 Foreign 23.89 28.26 27.27 25.31 Stocks-to-use ratio Percent World 32.0 35.6 34.4 31.8 Foreign 31.7 38.2 37.0 34.4 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1995 1994 ------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 588 110 0 0 Imports since August 1 7.7 9.1 NA 2.7 Stocks, beginning 14,754 13,250 11,063 11,828 At mills 675 663 691 687 Public storage 12,261 10,508 8,322 9,817 CCC stocks 2,861 3,111 2,090 1,798 Manmade: Million pounds Production 859.1 793.6 865.5 831.4 Noncellulosic 776.5 753.2 821.4 789.5 Cellulosic 40.7 40.4 44.1 41.9 Total since January 1 815.3 1,606.5 2,472.0 2,236.2 1994 1995 1994 ----------------- Dec Jan Feb Feb -------------------------------------- Million pounds Raw fiber imports 94.3 91.8 89.8 74.0 Noncellulosic 87.8 85.4 84.2 64.4 Cellulosic 6.5 6.4 5.6 9.6 Total since January 1 988.3 84.9 174.7 150.2 Wool and Mohair: 1,000 pounds Raw wool imports, clean 7,313 10,441 7,722 7,683 48's-and-finer 5,738 8,903 6,431 5,112 Not-finer-than-46's 1,291 1,538 1,291 2,296 Total since January 1 91,717 10,441 18,164 25,134 Wool top imports 360 360 590 140 Total since January 1 4,827 360 950 974 Mohair imports, clean 5 4 0 1 Total since January 1 217 4 4 1 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1995 1994 --------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 978 912 1,050 955 Total since August 1 1/ 5,701 6,613 7,663 6,828 SA annual rate 2/ 11,568 11,538 11,647 10,607 SA daily rate 2/ 44.5 44.4 44.8 40.8 Daily rate 44.5 45.6 45.6 41.5 Upland consumed by mills 1/ 969 902 1,039 948 Total since August 1 1/ 5,657 6,559 7,598 6,784 SA annual rate 2/ 11,464 11,416 11,530 10,522 SA daily rate 2/ 44.1 43.9 44.3 40.5 Daily rate 44.1 45.1 45.2 41.2 Spindles in place 7,262 7,274 7,250 7,921 Active spindles 6,875 6,850 6,796 7,371 100 percent cotton 2,942 2,972 2,963 3,176 100 percent manmade 1,160 1,118 1,124 1,279 Blends 2,773 2,760 2,709 2,916 Cotton's share of fibers 77.4 76.9 76.8 76.1 Manmade: 1,000 pounds Total consumed by mills 1/ 136,738 131,299 152,432 144,289 Total since August 1 1/ 808,339 939,637 1,092,069 1,039,275 Daily rate 6,215 6,565 6,627 6,273 Noncellulosic staple 5,356 5,690 5,771 5,385 Cellulosic staple 859 875 856 888 -------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1994 1995 1994 ----------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 1,072 1,068 1,332 478 Total since August 1 2,938 4,006 5,338 2,957 Sales for next season -187 8 193 23 Total since August 1 2,687 2,695 2,888 164 ELS exports 26.7 47.0 51.3 34.8 Total since August 1 75.4 122.4 173.8 150.3 Sales for next season 9.9 20.1 24.5 2.2 Total since August 1 14.1 34.1 58.6 4.0 Manmade: Million pounds Raw fiber exports 88.4 79.9 72.1 62.8 Noncellulosic 81.4 74.2 66.9 58.8 Cellulosic 7.0 5.7 5.2 4.0 Total since January 1 914.3 89.2 161.3 126.1 Wool and Mohair: 1,000 pounds Raw wool exports, clean 262.3 190.8 351.9 481.4 Total since January 1 2,862.6 190.8 542.8 603.0 Wool top exports 1,728.7 636.5 1,182.1 659.4 Total since January 1 13,826.5 636.5 1,818.5 1,220.9 Mohair exports, clean 1,081.7 874.1 610.4 646.2 Total since January 1 8,733.8 874.1 1,484.5 1,525.3 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1995 1994 --------------------------- Item Feb Mar Apr Apr ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 85.84 95.83 94.53 69.93 May'95 futures 93.78 104.72 108.16 73.56 Dec'95 futures 75.25 77.43 78.51 NA Upland spot 41-34 91.89 104.20 104.94 76.12 Pima spot 03-46 110.61 115.02 123.39 94.00 Avg. price received by: Upland producers 81.60 86.50 90.60 67.70 Mill delivered: Cotton Actual 100.06 111.91 113.17 81.38 Raw fiber equivalent 111.18 124.34 125.74 90.42 Rayon staple Actual 104.00 104.00 104.00 112.00 Raw fiber equivalent 108.33 108.33 108.33 116.67 Polyester staple Actual 86.00 86.00 86.00 72.00 Raw fiber equivalent 89.58 89.58 89.58 75.00 Price ratios Percent Cotton/rayon 102.6 114.8 116.1 77.5 Cotton/polyester 124.1 138.8 140.4 120.6 Northern Europe cotton quotes: Cents per pound A Index 100.51 110.63 114.55 83.94 Memphis Territory 103.94 116.65 120.25 86.81 California/Arizona 108.69 121.30 124.63 86.69 B Index 98.39 108.67 111.41 81.00 Orleans/Texas 101.13 113.30 116.88 84.38 Wool prices (clean): Dollars per pound U.S. 56's 1.55 1.63 1.86 1.24 Australian 56's 1/ 2.45 2.62 2.64 1.75 U.S. 60's 1.82 1.99 2.26 1.48 Australian 60's 1/ 2.61 2.70 2.80 1.90 U.S. 64's 2.52 2.65 2.88 2.01 Australian 64's 1/ 2.97 3.02 3.02 2.23 ---------------------------------------------------------------------- NA = Not available. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1994 1995 1994 ----------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 179,254 208,050 175,393 151,543 Cotton 83,394 83,807 70,957 66,452 Linen 27,808 49,940 39,989 28,035 Wool 3,470 3,610 3,330 4,153 Silk 696 698 598 612 Manmade 63,885 69,994 60,519 52,291 Apparel 327,367 392,530 374,798 312,391 Cotton 189,844 219,876 216,584 174,517 Linen 10,152 15,741 13,447 12,964 Wool 8,639 10,609 9,479 7,735 Silk 11,567 14,415 12,216 15,134 Manmade 107,165 131,889 123,072 102,041 House furnishings 28,593 31,859 30,687 25,652 Cotton 20,276 24,199 22,746 19,079 Linen 221 195 161 166 Wool 133 121 89 82 Silk 22 6 31 26 Manmade 7,941 7,338 7,660 6,299 Floor covering 19,012 16,668 17,893 16,601 Cotton 3,863 4,353 3,847 4,372 Linen 3,389 2,627 2,529 2,357 Wool 5,124 3,822 5,338 4,796 Silk 499 402 515 224 Manmade 6,186 5,465 5,664 4,852 Total imports 2/ 559,434 656,206 605,316 511,567 Cotton 299,592 335,758 317,948 267,403 Linen 12,734 15,524 13,361 43,663 Wool 17,509 18,299 18,369 16,882 Silk 41,872 68,960 56,205 15,997 Manmade 187,726 217,665 199,433 167,622 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 114,805 112,118 114,017 103,294 Cotton 37,800 37,305 38,007 27,153 Linen 3,477 2,673 3,067 2,216 Wool 3,474 3,332 3,365 2,640 Silk 1,464 887 1,606 1,075 Manmade 69,243 67,921 67,972 70,210 Apparel 76,977 75,380 89,926 65,495 Cotton 49,127 47,827 57,533 41,114 Linen 1,793 2,087 2,117 1,395 Wool 2,410 2,554 3,228 2,260 Silk 1,042 1,225 1,521 1,168 Manmade 22,605 21,688 25,528 19,558 House furnishings 5,903 4,096 4,434 3,774 Cotton 3,308 2,498 2,742 2,326 Linen 277 163 149 138 Wool 81 40 52 43 Silk 198 73 107 83 Manmade 2,038 1,322 1,384 1,184 Floor covering 25,833 26,558 23,688 25,368 Cotton 3,119 3,166 3,547 2,919 Linen 1,127 1,240 1,033 1,127 Wool 1,318 1,322 1,071 1,130 Silk 3/ --- --- --- --- Manmade 20,268 20,830 18,037 20,192 Total exports 2/ 223,812 218,453 232,317 198,223 Cotton 92,743 90,827 101,864 73,549 Linen 2,705 2,184 5,418 4,884 Wool 7,304 7,259 14,990 6,088 Silk 6,683 6,171 6,373 2,326 Manmade 114,378 112,011 113,115 111,376 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. 2/ Includes headgear. 3/ Absence of trade. ESTIMATED AND FINAL 1994 COTTON ACREAGE, YIELD, AND PRODUCTION ------------------------------------------------------------------------- Item Aug Sep Oct Nov Dec Jan May ------------------------------------------------------------------------- Upland: Southeast Harvested 1/ 2,123 2,163 2,163 2,147 2,147 2,154 2,148 Yield 2/ 699 716 725 746 782 818 820 Production 3/ 3,092 3,227 3,267 3,337 3,497 3,669 3,671 Delta Harvested 1/ 4,030 4,030 4,060 4,095 4,100 4,060 4,060 Yield 2/ 758 742 748 795 805 815 818 Production 3/ 6,360 6,230 6,330 6,780 6,880 6,895 6,916 Soutwest Harvested 1/ 5,566 5,566 5,566 5,566 5,566 5,491 5,491 Yield 2/ 465 453 452 452 452 458 451 Production 3/ 5,391 5,251 5,241 5,236 5,236 5,242 5,163 West Harvested 1/ 1,454 1,454 1,464 1,464 1,459 1,457 1,457 Yield 2/ 1,316 1,304 1,279 1,279 1,188 1,179 1,177 Production 3/ 3,985 3,950 3,900 3,900 3,610 3,580 3,574 Total Upland Harvested 1/ 13,173 13,213 13,253 13,267 13,272 13,162 13,156 Yield 2/ 686 678 686 691 695 707 705 Production 3/ 18,828 18,658 18,938 19,098 19,223 19,386 19,324 Pima Harvested 1/ 174 174 174 174 174 166 166 Yield 2/ 1,015 1,015 1,009 982 962 987 974 Production 3/ 367 367 365 355 350 342 338 Total All Kinds Harvested 1/ 13,347 13,387 13,426 13,440 13,446 13,328 13,322 Yield 2/ 690 682 690 695 699 710 708 Production 3/ 19,195 19,025 19,303 19,453 19,573 19,728 19,662 ------------------------------------------------------------------------- 1/ Thousand acres. 2/ Pounds per acre. 3/ Thousand bales. 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