COTTON AND WOOL OUTLOOK June 13, 1996 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--0596. ----------------------------------------------------------------------------- Average Start for U.S. Cotton Crop The 1996 U.S. cotton crop is off to an average start, and in some areas, a less than ideal start. Nationally, cotton plantings were 86 percent complete as of June 9. This compares with 88 percent a year ago and a 5-year average of 90 percent. Most States had completed or nearly completed planting with the exceptions of Texas and Oklahoma, where moisture has been very sparse this year. Between January 1 and June 1, precipitation in Texas has ranged from 10 percent of normal in Brownsville to 75 percent of normal in Abilene. In Oklahoma, precipitation is about 50 percent of normal. Due to this lack of moisture, cotton plantings in Texas were 67 percent complete, compared with the 5-year average of 80 percent. However, Oklahoma was 74 percent planted versus an average of 75 percent. In addition, crop conditions as of early June are similar to those of a year ago. While 13 percent of the crop is rated "poor" or "very poor," compared with 12 percent in 1995, a larger percentage (57 percent versus 53 percent) is rated "good" or "excellent" this year. All States, with the exception of Texas, are doing as well or better than in 1995. For Texas, where wind and hail have damaged some acreage, 30 percent of the crop is rated "poor" or "very poor;" this compares with 21 percent in 1995. On the other hand, only 27 percent of the Texas crop is in "good" or "excellent" condition, contrasted with 48 percent a year ago. With all the uncertainties surrounding cotton planted area this year, most would agree, however, that cotton acreage will decline from the Prospective Plantings report as high grain prices attracted area from cotton. A clearer picture should emerge on June 28 when USDA releases its survey based on actual plantings. Meanwhile, the current USDA cotton production projection for 1996 remains at 19 million bales. Although U.S. mill use is projected to rise to 11 million bales in 1996/97, exports are expected to decline to 6.8 million. With projected production rising above total demand and the expectation of 300,000 bales of raw cotton imports, stocks during 1996/97 are likely to rise significantly. Based on the current 1996/97 supply and demand projections, stocks would rise 1.5 million bales to 4.2 million, indicating a stocks-to-use ratio of about 24 percent. China's 1995/96 Production and Stocks Higher Foreign production for 1995/96 was raised 1.6 million bales in June to an estimated 72.1 million. With little change in 1995/96 consumption or trade, the estimate for ending stocks rose by a similar amount, to 30.6 million bales. Foreign ending stocks in 1995/96 are now forecast 4.5 million bales above beginning stocks, with China accounting for virtually all of the increase. China also accounted for virtually all of this month's increase in 1995/96 foreign production. China's State Statistical Bureau (SSB) recently published its latest update of China's 1995/96 cotton crop, 21.9 million bales. Better crops than the year before in Henan, Hubei, Xinjiang, and Jiangsu more than offset losses in Shandong and Jiangxi. The 1996/97 outlook for foreign cotton was virtually unchanged this month, awaiting July's first comprehensive, country-by-country forecasts by USDA. Production is forecast at 71 million bales, consumption at 77 million, and exports at 20.2 million. Foreign ending stocks are forecast to reach 30.8 million bales, an increase from May's forecast due to higher beginning stocks. U.S. Mill Consumption Remains Strong April cotton mill consumption continued strong, albeit below March's dramatic recovery. Based on the latest U.S. Commerce Department data, U.S. cotton mill use averaged a seasonally adjusted 40,700 480-pound bales per day in April, compared with 41,100 bales in March. During April 1995, the daily rate totaled 43,100 bales. On a seasonally adjusted annual rate (SAAR) basis, April consumption declined 100,000 bales from March's rate to over 10.6 million bales. So far this season, the SAAR has averaged about 10.5 million bales. Cotton mill use during the first 9 months of 1995/96 reached nearly 7.9 million bales, compared with 8.5 million for the corresponding period a year ago. To reach the current estimate of 10.5 million bales, cotton mill use needs to average 39,500 bales per day for the remaining 3 months. Manmade fiber consumption declined in April to 121 million pounds, 1 percent below a month earlier and 5 percent below April 1995. The majority of the decrease from a year ago occurred in noncellulosic staple consumption. Since August 1, total manmade consumption on the cotton system reached 1.1 billion pounds, about 14 percent below a year ago. In addition, cotton's share of fiber use rose to 78.6 percent in April, the highest since November 1995. So far this season, cotton's share averaged 78.2 percent, compared with 1994/95's 77 percent. Cotton Prices Decline U.S. cotton prices moved lower in May. The average price received by upland producers averaged 78.8 cents per pound, down from April's revised 79.6 cents. Similarly, spot prices for both upland and ELS cotton declined. The spot price for base-quality upland fell to about 83 cents per pound, while the ELS spot price was near $1.54. Mill-delivered upland prices also decreased from April to about 90 cents per pound. However, polyester staple prices declined further, increasing its competitiveness with cotton. In May, polyester staple prices averaged 80 cents per pound, a 4-cent decline in each of the last 2 months. Meanwhile, the cotton/polyester price ratio increased to 1.21 in May, but remains below May 1995 when the ratio equalled 1.41. New crop cotton prices have declined in recent weeks. In May, the December 1996 futures averaged nearly 82 cents per pound, but during the first part of June, these prices returned to the 78-cent area, as west Texas received some much needed precipitation. Textile Exports Continue To Rise Preliminary textile trade data indicate exports increased for the third consecutive month in March, totaling 285 million pounds (raw-fiber equivalent), 4 percent above a year earlier. Textile exports were higher in all major fibers and all end-use categories. Apparel exports, at 124 million pounds, accounted for 43 percent of total March exports and were 13 percent above March 1995. Manmade textile shipments represented 48 percent of the total and cotton, 44 percent. Textile imports declined for the third consecutive month to 534 million pounds, down 5 percent from February. Lower shipments of cotton, silk, wool, and manmade fibers more than offset a slight increase in linen imports. A drop in apparel shipments accounted for most of the decline in imports. Cotton imports, at 288 million pounds, accounted for 54 percent of all textile shipments. Overall, the March textile trade deficit was 249 million pounds, with cotton accounting for 65 percent of the total (162 million pounds). The March deficit declined 34 percent from a year earlier when it totaled 379 million pounds. In addition, the deficit for the first 3 months of 1996 was 928 million pounds, compared with 1.19 million a year ago. Weaker textile imports, primarily of manmade fiber, and stronger cotton and manmade textile exports have lowered the trade deficit this year. U.S. Wool Production and Consumption Continue Decline In 1995, wool production continued its long-term downward trend, while mill consumption was the lowest since 1990. Revised 1995 estimates indicated raw wool consumption totaled 142 million pounds (clean), 7 percent below 1994. Consumption on the woolen and worsted systems fell by about 7 percent and carpet mill use was down 14 percent from a year ago. Domestic raw wool production of 34 million pounds (clean) accounted for about 24 percent of mill use in 1995. However, with lower mill use last year, raw wool imports also declined 3 percent below 1994 to 89 million pounds. Carryover supplies declined 5 million pounds to 47 million, representing about 32 percent of total use. Slight declines in wool production and consumption are forecast this season. Wool production is projected at 30 million pounds, while use is expected to stabilize near 140 million pounds. Raw wool imports, at 85 million pounds, will likely increase the share of foreign production consumed by U.S. textile mills. Sheep and Wool Research and Promotion Order Suspended On May 17, 1996, the U.S. Department of Agriculture announced it will suspend the Sheep and Wool Promotion, Research, Education, and Information Order, which became effective May 3. All scheduled order actions, including the collection of assessments, which were to begin July 1 will be affected. The order's suspension is the result of a review of voting procedures which confirmed that rules were applied differently and inconsistently by official polling places during the February 6 referendum. The review was carried out in response to voter complaints about perceived inconsistencies. A second referendum will be scheduled, and eligible voters--sheep producers, sheep feeders, and importers of sheep and sheep products--will have another opportunity to vote on the order. For the order to become effective, it must be approved by a majority of voters or by voters who account for two-thirds of the production represented in the referendum. The program, which was authorized by the 1994 Sheep Promotion, Research, and Information Act, would be funded by mandatory assessments on domestic sheep producers and feeders and on importers of sheep and sheep products. The assessments would be used to develop a program to strengthen the position of sheep and sheep products in the marketplace. The next Cotton and Wool Outlook (CWS-0696) will be released on July 15. For further information, contact Leslie Meyer at (202) 501-8528 (U.S. Cotton), Steve MacDonald at (202) 219-1179 (Foreign Cotton), or Robert Skinner at (202) 219-0767 (Textiles and Wool). U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ---------------------------- Item 1994/95 Apr May Jun ---------------------------------------------------------------------- Upland: Million acres Planted 13.55 16.72 16.72 16.72 Program 11.62 11.02 11.02 11.02 Harvested 13.16 15.78 15.80 15.80 Pounds Yield/harvested acre 705 536 533 533 Million 480-lb. bales Beginning stocks 3.30 2.59 2.59 2.59 Production 19.32 17.56 17.53 17.53 Total supply 1/ 22.65 20.44 20.41 20.42 Mill use 11.10 10.31 10.41 10.40 Exports 8.98 7.29 7.39 7.40 Total use 20.07 17.59 17.79 17.80 Ending stocks 2.59 2.87 2.67 2.67 Percent Stocks-to-use ratio 12.9 16.3 15.0 15.0 Extra-long staple: 1,000 acres Planted 169 215 215 215 Program 84 26 26 26 Harvested 166 211 211 211 Pounds Yield/harvested acre 974 821 836 836 1,000 480-lb. bales Beginning stocks 227 59 59 59 Production 338 367 368 368 Total supply 1/ 567 436 437 432 Mill use 102 95 95 105 Exports 424 315 315 300 Total use 526 410 410 405 Ending stocks 59 26 27 27 Percent Stocks-to-use ratio 11.2 6.3 6.6 6.7 ---------------------------------------------------------------------- Based on USDA estimates. 1/ Includes imports. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ------------------------------ Item 1994/95 Apr May Jun ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 26.30 28.87 28.91 28.77 Foreign 22.77 26.22 26.26 26.12 Production World 85.61 89.83 88.41 89.98 Foreign 65.95 70.90 70.51 72.08 Imports World 30.51 28.57 28.59 28.42 Foreign 30.49 28.27 28.29 28.12 Use: Mill use World 84.69 85.78 85.62 85.50 Foreign 73.50 75.38 75.12 75.00 Exports World 28.77 28.51 28.39 28.18 Foreign 19.37 20.91 20.69 20.48 Ending stocks World 28.77 31.79 31.73 33.34 Foreign 26.12 28.89 28.03 30.64 Stocks-to-use ratio Percent World 34.0 37.1 37.1 39.0 Foreign 35.5 38.3 38.6 40.9 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1996 1995 -------------------------- Item Feb Mar Apr Apr ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 21 0 0 0 Imports since August 1 12.8 28.3 NA 12.4 Stocks, beginning 11,088 8,962 7,297 8,640 At mills 638 650 641 736 Public storage 8,597 6,916 5,575 6,258 CCC stocks 2,142 1,899 1,501 1,318 Manmade: Million pounds Production 768.3 814.9 785.6 847.3 Noncellulosic 731.1 773.1 745.5 803.2 Cellulosic 37.2 41.8 40.1 44.1 Total since January 1 1,568.2 2,373.3 3,158.9 3,365.1 1996 1995 --------------------------- Jan Feb Mar Mar ---------------------------------------------------------------------- Million pounds Raw fiber imports 83.2 80.5 92.3 103.3 Noncellulosic 78.1 75.3 85.5 96.7 Cellulosic 5.1 5.2 6.8 6.6 Total since January 1 83.2 163.7 256.0 287.3 Wool and Mohair: 1,000 pounds Raw wool imports, clean 9,624 9,114 8,728 10,772 48's-and-finer 7,248 5,891 6,162 7,929 Not-finer-than-46's 2,376 3,223 2,566 2,843 Total since January 1 9,624 18,737 27,465 28,935 Wool top imports 629 170 103 605 Total since January 1 629 799 902 1,556 Mohair imports, clean 2 1 NA 7 Total since January 1 2 3 3 10 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1996 1995 --------------------------- Item Feb Mar Apr Apr ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 861 902 921 879 Total since August 1 1/ 6,069 6,971 7,892 8,540 SA annual rate 2/ 10,315 10,758 10,669 11,254 SA daily rate 2/ 39.4 41.1 40.7 43.1 Daily rate 41.0 42.9 41.8 43.9 Upland consumed by mills 1/ 851 890 904 869 Total since August 1 1/ 6,006 6,895 7,799 8,465 SA annual rate 2/ 10,191 10,614 10,471 11,131 SA daily rate 2/ 38.9 40.5 40.0 42.6 Daily rate 40.5 42.4 41.1 43.5 Spindles in place 6,433 6,417 6,378 7,238 Active spindles 5,957 5,947 5,807 6,741 100 percent cotton 2,678 2,677 2,845 2,954 100 percent manmade 1,003 1,039 1,047 1,110 Blends 2,276 2,231 2,115 2,677 Percent Cotton's share of fibers 78.0 78.0 78.6 76.8 Manmade: 1,000 pounds Total consumed by mills 1/ 116,440 121,817 120,509 127,269 Total since August 1 1/ 811,452 933,268 1,053,778 1,219,676 Daily rate 5,545 5,801 5,478 6,363 Noncellulosic staple 4,690 4,876 4,676 5,473 Cellulosic staple 855 925 802 890 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1996 1995 -------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 1,204 1,257 739 1,310 Total since August 1 4,085 5,342 6,081 6,646 Sales for next season 87 28 96 217 Total since August 1 253 281 377 3,104 ELS exports 58.6 37.9 38.7 81.9 Total since August 1 152.4 190.3 229.0 255.7 Sales for next season 17.4 18.4 25.7 75.4 Total since August 1 95.6 113.9 139.7 133.9 Manmade: Million pounds Raw fiber exports 75.2 96.7 97.5 95.3 Noncellulosic 70.9 92.8 91.5 87.8 Cellulosic 4.3 3.9 6.0 7.5 Total since January 1 75.2 171.9 269.4 247.4 Wool and Mohair: 1,000 pounds Raw wool exports, clean 336.5 183.4 440.5 423.7 Total since January 1 336.5 519.9 960.3 966.5 Wool top exports 822.2 1,147.9 842.0 888.9 Total since January 1 822.2 1,970.1 2,812.1 2.707.5 Mohair exports, clean 1,236.8 206.8 323.9 289.4 Total since January 1 1,236.8 1,443.6 1,767.5 1,773.8 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1996 1995 ----------------------------- Item Mar Apr May May ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 68.26 68.53 69.87 87.04 Jul'96 futures 84.75 86.12 82.89 82.73 Dec'96 futures 79.88 81.19 81.86 NA Upland spot 41-34 81.13 84.69 83.22 105.38 Pima spot 03-46 162.11 163.46 154.35 127.77 Avg. price received by: Upland producers 77.20 79.60 78.80 82.60 Mill delivered: Cotton Actual 88.79 92.10 90.39 113.94 Raw fiber equivalent 98.66 102.33 100.43 126.60 Rayon staple Actual 125.00 120.00 120.00 119.00 Raw fiber equivalent 130.21 125.00 125.00 123.96 Polyester staple Actual 88.00 84.00 80.00 86.00 Raw fiber equivalent 91.67 87.50 83.33 89.58 Price ratios Percent Cotton/rayon 75.8 81.9 80.3 102.1 Cotton/polyester 107.6 117.0 120.5 141.3 Northern Europe cotton quotes: Cents per pound A Index 83.18 82.90 83.23 115.13 Memphis Territory 94.13 96.69 95.60 121.75 California/Arizona 98.31 100.13 98.50 124.17 B Index 77.76 77.53 77.71 108.96 Orleans/Texas 89.88 91.06 89.00 116.13 Wool prices (clean): Dollars per pound U.S. 56's 1.35 1.35 1.35 1.88 Australian 56's 1/ 1.90 1.83 1.84 2.51 U.S. 60's 1.57 1.57 1.56 2.29 Australian 60's 1/ 2.03 1.97 1.95 2.71 U.S. 64's 1.97 1.97 1.95 2.95 Australian 64's 1/ 2.38 2.34 2.42 3.07 ---------------------------------------------------------------------- NA = Not available. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1996 1995 ----------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 165,841 139,967 146,106 205,476 Cotton 65,330 61,012 57,646 81,711 Linen 35,821 22,606 26,665 47,675 Wool 3,002 3,000 3,372 3,787 Silk 708 556 644 685 Manmade 60,980 52,792 57,779 71,618 Apparel 389,768 372,675 339,157 381,936 Cotton 226,847 221,484 203,188 224,816 Linen 12,753 9,925 7,562 10,858 Wool 11,170 11,058 10,236 10,880 Silk 12,506 9,888 8,795 10,936 Manmade 126,492 120,320 109,376 124,446 House furnishings 31,545 27,596 28,427 32,114 Cotton 22,892 20,749 20,966 23,439 Linen 154 178 135 269 Wool 127 99 86 147 Silk 10 29 28 20 Manmade 8,362 6,541 7,213 8,238 Floor covering 16,729 15,041 14,602 25,402 Cotton 4,177 3,518 3,184 4,459 Linen 2,746 2,228 2,136 3,034 Wool 4,432 3,791 3,172 9,253 Silk 479 335 230 437 Manmade 4,896 5,169 5,880 8,219 Total imports 2/ 611,224 562,291 533,687 652,042 Cotton 323,250 310,967 287,881 338,263 Linen 51,509 34,957 36,534 61,940 Wool 18,790 17,983 16,915 24,239 Silk 13,704 10,812 9,701 12,078 Manmade 203,972 187,571 182,656 215,522 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 105,961 116,595 123,971 130,267 Cotton 38,190 41,978 45,675 44,774 Linen 2,734 3,321 3,166 3,194 Wool 2,572 2,777 3,169 3,388 Silk 1,296 1,314 1,319 1,509 Manmade 61,170 67,205 70,642 77,402 Apparel 105,420 104,565 123,585 109,166 Cotton 61,697 62,252 72,932 68,573 Linen 1,813 2,117 2,618 2,164 Wool 4,801 4,597 6,168 4,079 Silk 1,769 1,757 2,014 1,919 Manmade 35,340 33,842 39,852 21,431 House furnishings 4,781 5,327 6,140 6,124 Cotton 2,838 3,172 3,965 3,677 Linen 174 270 257 284 Wool 65 105 56 44 Silk 11 151 59 165 Manmade 1,592 1,629 1,802 1,954 Floor covering 25,181 25,649 30,657 27,136 Cotton 2,250 2,754 3,138 3,288 Linen 1,053 1,072 1,273 1,136 Wool 1,340 1,793 1,727 1,540 Silk 3/ --- --- --- --- Manmade 20,538 20,030 24,519 21,173 Total exports 2/ 241,613 252,615 284,847 273,022 Cotton 105,019 110,214 125,791 120,363 Linen 5,782 6,793 7,331 6,789 Wool 8,796 9,296 11,156 9,073 Silk 3,176 3,222 3,392 3,593 Manmade 118,841 123,090 137,178 133,204 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. 1996 data are subject to revision. 2/ Includes headgear. 3/ Absence of trade. 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