|
|
|
|
|
|
MAY, 1997
COTTON: WORLD MARKETS AND TRADE
May 1997
This report provides the text and analysis from the
current COTTON: WORLD MARKETS AND TRADE publication.
This report draws on information from USDA's global network
of agricultural attaches and counselors, official
statistics of foreign governments, other foreign source
materials, and results of office analysis. Estimates of U.S.
acreage, yield and production are from the USDA Agricultural
Statistics Board, except where noted. This report is based
on unrounded data; numbers may not add to totals because of
rounding. The report reflects official USDA estimates
released in the World Agricultural Supply Estimates
(WASDE number 326, May 12, 1997.)
The report was prepared by the Cotton, Oilseeds, Tobacco and Seeds
Division, FAS, AGBOX 1051, 14th and Independence Ave.,
Washington, DC 20250-1000. Further information may be
obtained by writing to the division, or by calling (202)
720-9516, or by FAX (202) 690-1171.
The next issue of the Cotton circular will be available
electronically after 3:30 pm local time on June 13, 1997.
Further Information Contact:
U.S. Department of Agriculture
Foreign Agricultural Service
Cotton, Oilseeds, Tobacco, and Seeds Division
Stop 1051
1400 Independence Ave. SW
Washington, D.C. 20250-1051
Telephone -- (202) 720-9516
Fax -- (202) 690-1171
Larry Blum, Director
Lana Bennett, Deputy Director, Analysis
Abdullah A. Saleh, Group Leader, Cotton, Tobacco, and Seeds Analysis
Principal Contributors
Anita Regmi Cotton Analyst for Asia, Latin America & Oceania
Jon Ann Flemings Cotton Analyst for Africa, FSU, Middle East & Europe
Ada Arrington Electronic Word Processor
Ron Roberson Chairperson for Foreign Area and Production, PECAD
The United States Department of Agriculture (USDA) prohibits
discrimination in its programs on the basis of race, color, national origin, sex,
religion, age, disability, political beliefs and marital or familial status. (Not all prohibited bases apply to all programs).
Persons with disabilities who require alternative means for communication of program information
(braille, large print, audiotape, etc.) should contact the USDA Office of Communications at
(202) 720-2791 (voice) or (202) 720-7808 (TDD).
To file a complaint, write the Secretary of Agriculture, U.S.Department of Agriculture,
Washington, D.C., 20250, or call (1-800) 245-6340 (voice) or (202) 720-1127 (TDD). USDA is
an equal employment opportunity employer.
Summary
World cotton production for MY 1997/98 is forecast at 87.5 million
bales, down about 450,000bales from the current season. U.S. cotton
production is forecast at 18.5 million bales, down 2.3percent from
1996/97.
World cotton production for MY 1996/97 is estimated at 87.9 million
bales, down 177,000 bales from last month's forecast. U.S. cotton
production is estimated at 18.9 million bales, unchanged from last
month's forecast.
World cotton consumption for MY 1997/98 is forecast at 88.5 million
bales, up 2 percent from the current season. U.S. consumption is
forecast at 11.0 million bales, 100,000 bales higher than 1996/97's
estimate.
World cotton consumption for MY 1996/97 is estimated at 86.4 million
bales, down 115,000 bales from last month's forecast. U.S.
consumption is estimated at 10.9 million bales, down 100,000 bales
from last month's forecast.
World cotton exports for MY 1997/98 are forecast at 27.2 million
bales, up 2 percent from the current season's estimate. U.S. exports
are forecast at 7.3 million bales, 4 percent higher than the current
season's estimate.
World cotton exports for MY 1996/97 are estimated at 26.7 million
bales, down 45,000 bales from last month's forecast. U.S. exports
are forecast at 7.0 million bales, unchanged from last month's
forecast.
World cotton ending stocks for MY 1997/98 are forecast at 36.5
million bales, down about 3 percent from this season's estimate.
U.S. ending stocks are forecast at 4.3 million bales, 5 percent
higher than the beginning level.
World cotton ending stocks for MY 1996/97 are forecast at 37.5
million bales, down 308,000 bales from last month's forecast. U.S.
ending stocks are forecast at 4.1 million bales, up 100,000 bales
from last month's forecast.
World Situation
World cotton production for MY 1996/97 is estimated at 87.9 million
bales, down 177,000 bales from last month's estimate. Major
adjustments include the following:
Argentina's production was decreased by 200,000 bales due to lower
yields resulting from dry spells in January and March.
Australia's production was increased by 100,000 bales as excellent
pre-harvest and harvest weather has increased yield prospects.
World cotton consumption for MY 1996/97 is estimated at 86.4 million
bales, down 115,000 from last month's estimate. Decreases in the
consumption estimates for the United States and Uzbekistan more than
offset the minor increases in the consumption estimates for other
countries.
World cotton exports for MY 1996/97 are estimated at 26.7 million
bales, down 45,000 bales from last month's estimate. The increases
in the export estimates for Australia and Uzbekistan were more than
offset by the decreases in the export estimates for Argentina and
other countries.
World cotton ending stocks for MY 1996/97 are estimated at 37.5
million bales, down 308,000 bales from last month's estimate. The
decreases in the ending stocks estimates for Korea and Argentina more
than offset an increase in the ending stocks estimates for the United
States. Korea's ending stocks estimate decreased due to upward
adjustments in consumption for 1992/93 and 1993/94.
World and U.S. Cotton Outlook for Marketing Year 1997/98
USDA's initial world supply, use and trade projections for MY 1997/98
indicate stable production, higher consumption and lower stocks.
World production for the coming season is forecast at 87.5 million
bales, about equal the current season's estimate. World consumption
is projected at 88.5 million bales, up 2.4 percent from the current
marketing year. Imports, at 27.5 million bales, nearly equal 1996/97
level, while exports are projected 1.8 percent higher at 27.2 million
bales. These initial projections would result in MY 1997/98 ending
stocks of 36.5 million bales, 2.8 percent below the carryover
estimate for the current season.
The U.S. outlook for 1997/98 is for a slightly smaller production,
continued strong demand and marginally higher stocks. The 1997 crop
is projected to decrease 2.4 percent to 18.5 million bales based on
planting intentions of 14.5 million acres, average growing conditions
and trend yields. U.S. exports are projected to increase by 4.3
percent to 7.3 million bales. These projections would result in
ending stocks of 4.3 million bales, 4.9 percent higher than the
estimated beginning level.
Cotton Prices
The 1996/97 Cotlook A-Index averaged 78.92 cents/lb. during April,
down from March's average of 80.63 cents/lb. The A-Index which began
the month at 78.15 cents/lb. ended April 30 at 79.55 cents/lb. The
Central Asian quote was the lowest in the Index, averaging 75.39
cents/lb. During April, the California/Arizona and Memphis Territory
quotes were above the A-index by an average of 3.25 cents/lb. and
1.68 cents/lb., respectively. May 97 futures prices on the New York
Cotton Exchange remained relatively range-bound in April. The May
contract began the month at 71.7 cents/lb. rising initially upon
continued strong export sales. However, reports of a large
Australian crop and large U.S. intended plantings prevented major
price gains, and May 97 futures prices closed April 30 at 71.90
cents/lb.
U.S. Highlights
The seasonally adjusted daily rate of U.S. cotton consumption in
March amounted to 40,309 bales (480-lb), below February's level of
41,167 bales. A total of 1,047,000 bales were consumed during five
weeks in March, compared with 847,050 bales in February (4 weeks).
The seasonally djusted annualized consumption rate for the month of
March was 10.5 million bales, down from February's 10.7 million
bales. Domestic mill buying was active during March. Purchases were
heavy for prompt and nearby shipments. A large volume of cotton was
purchased for third quarter 1997 through third quarter 1998 delivery.
Consumer demand for textile goods was good. Interest in denim
products increased. Demand for housewares, infant wear, casual
apparel, and sales yarn was good. Demand for gray cloth and fleece
was fair, while demand for industrial fabrics remained weak.
Cotton stocks on hand in consuming establishments during March
totaled 699,185 bales (480-lb), up from 682,864 bales in February.
Stocks held in public storage and at compresses totaled 7.6 million
bales, down from 9.1 million in February. Active spindles in place
in March 1997 totaled 5.8 million, of which 2.6 million were
dedicated to 100-percent cotton, compared with 6.5 million and 2.7
million, respectively, during the same period in 1996. Cotton's
share on the cotton spindle system was 78 percent.
U.S. cotton exports for February totaled 728,000 bales, 9 percent
above the 666,000 bales in January, and 44 percent below February
1996 exports, according to the U.S. Bureau of the Census. The
leading markets in February were China, Indonesia, Japan, Mexico,
Thailand, and Taiwan.
U.S. cotton imports for February totaled 3,000 bales compared with
8,000 bales in February 1996, according to the U.S. Bureau of the
Census. Turkmenistan and Uzbekistan were the main sources for
imports in February.
No new Step Three cotton import quota was announced by the USDA, on
May 8, 1997. U.S. price quotations declined to the point where they
were considered competitive in world cotton trade. After 80
consecutive 10-week periods in which U.S. price quotations exceeded
the A-Index by more than 1.25 cents per pound, thereby triggering the
special import quotas, U.S. prices for the week ending May 8 were
above the A-Index by only 0.96 cents.
Each of the 80 announced quotas was approximately 200,000 bales in
size, the amount estimated to be consumed by American textile mills
in one week's time. To be incorporated under a quota, upland cotton
must be purchased not later than 90 days and imported into the United
States not later than 180 days from the beginning of the quota
period. Of the 80 quotas, 43 have reached the end of the 180-day
period and have closed. Approximately 765,000 bales were imported
under these quotas. As of May 8, 1997, twenty-six quotas remain
open. Two of these will close each week. There are also 11 quotas
which have been announced but will enter into effect over the next 6
weeks. The final date for purchasing cotton under the last of these
quotas is September 13, 1997, while the final date for importing is
December 12, 1997.
International Highlights
India
The Government of India released an additional export quota of 22,000
bales (170-kg) of medium staple cotton, raising 1996/97's total quota
to 1.24 million bales (170-kg), or approximately 1 million 480-lb
bales. Of the additional quota, 12,000 bales have been allocated to
the Cotton Corporation of India, and 10,000 to the Madhya Pradesh
Federation. To date, a total of 1.078 (170-kg) bales has been
registered for exports, while actual exports, including spillover
from 1995/96's quota, totaled 906,317 bales (170-kg).
Thailand
To improve the competitiveness of Thai textiles in the global market,
the Royal Thai Government, with joint cooperation between the Bank of
Thailand, Ministry of Finance, and the Ministry of Industry,
initiated a project in mid March to provide soft loans of 25 billion
baht (about US$1.0 billion) to Thai textile manufacturers. The loans
are aimed at replacing inefficient machinery to improve the quality
of Thai textile products. The soft loan project will be available
during 1997-2000, starting with a lending of about 2 billion baht in
1997. According to a government official, 25 percent of total loans
will be provided by the Bank of Thailand, through the Export Import
Bank of Thailand (Exim Bank) and the Industrial Finance Corporation
of Thailand (IFCT), at an interest rate of 2.5 percent per year. The
18.75 billion baht balance will be lent by the Exim Bank and IFCT at
interest rates of between 11 to 13 percent. Cotton consumption in
Thailand, one of the world's largest textile exporters, is declining.
This is the result of high production costs, shortage of working
capital, and antiquated equipment. In recent years, competitors from
neighboring countries, who enjoy lower labor costs, have posed an
increasing threat to Thai textile product exports. Although textile
exports remained the largest source of foreign exchange earnings for
the country, export value dropped by 16 percent in 1996.
Zimbabwe
Zimbabwe is starting the privatization of various agricultural
parastatals with the sale of the national cotton buying and ginning
corporation, the Cotton Company, later this year. This is a major
change for Zimbabwe which has historically operated under a political
creed that emphasizes state control of the economy. The call for
economic reform by the International Monetary Fund (IMF) and the
World Bank, and enforced by IMF's threat of holding back on aid
funding has brought about the move toward privatization.
Even though the decision to privatize was made over a year ago,
policy makers in the Finance Ministry are still debating details of
the sale. One area of discussion is the valuation of assets. The
government of Zimbabwe (GOZ) insists that the actual value of the
Cotton Company's eight ginneries well exceeds the book value of $40
million. However, serious buyers are only willing to pay the book
value plus a small percentage for goodwill. The question of how to
divide the shares has also become a hurdle for the new venture. The
ususal method of dispersion via the national stock exchange is
forbidden due to the racial inequality of the exchange. Currently,
the decision is that the shares will be offered to specific groups as
follows: the GOZ, 25 percent; small holders, 20 percent;
"indigenous investors", 15 percent; the general public, 15 percent;
large-scale commercial growers, 10 percent; the National Investment
Trust, 10 percent; and management and employees, 5 percent. Large-
scale commercial estate growers, who account for one-third of the
total crop, are extremely unhappy with their proposed ten percent
because they fear that they will have little to no say in the new
organization's affairs.
Depending on prices and production, cotton normally ranks second
after tobacco as Zimbabwe's most profitable crop, while all other
crops lag far behind. As domestic consumption decreases due to the
closure of mills and production is expected to increase, lint
available for export could increase significantly. During the
1996/97 marketing year, Zimbabwe's estimated production is 400,000
bales of cotton and is expected to export 225,000 bales of lint. The
eight gins owned by the Cotton Company play a major role in the
country's economy because the Cotton Company purchases, processes and
sells about 80 percent of the national crop. In the presence of
limited financial resources, the Cotton Company also offers a credit
scheme specifically for cotton production through which over 50
percent of producers in the country benefit. Zimbabwe's single
largest cotton export market is South Africa while significant
exports are also channeled to Germany, Sweden, Italy, Spain and
Switzerland. The success or failure of the privatization of the
Cotton Company could have a substantial effect on these six markets
and indirectly on other cotton exporters, including the United
States.
|
|