COTTON AND WOOL January 12, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- COTTON AND WOOL Outlook is published monthly by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. CWS-0195. ----------------------------------------------------------------------------- The 1994 Cotton Crop in Review The 1994 U.S. cotton crop is forecast at a record 19.7 million bales. Upland production is estimated at 19.4 million bales and extra-long staple (ELS) is projected at 342,000. Last August the crop was expected to total 19.2 million, but improved weather conditions, primarily in the Delta and Southeastern States, increased yields and the crop size. The national average yield is forecast at 710 pounds per harvested acre, 4 pounds above the record set in 1987. The acreage abandonment rate for the 1994 crop, at 3 percent, is less than half of the average of the previous 5 years. Upland production in the Southeast is currently forecast at 3.6 million bales, up 18 percent from the August estimate. Yield potential increased each month during the season, raising the crop size. Georgia's production, at 1.6 million bales, is up 19 percent from August and the largest crop on record. Similarly, North Carolina's crop is forecast at 820,000 bales, the largest since 1951. The Delta States are expected to produce 6.9 million bales, 8 percent above the August estimate, and 48 percent above last season's crop. Yields in the Delta States improved throughout the season and are estimated at a record 815 pounds per harvested acre. Arkansas is expected to produce 1.8 million bales, 61 percent above the 1993 crop and the largest since 1948. Cotton production in Louisiana is also up significantly at 1.5 million bales, the largest on record. In contrast, production forecasts show yields and production lower this season in the Southwestern and Western States. For the Southwest, production is projected at 5.2 million bales, with yields averaging 458 pounds per harvested acre. In the West, the upland crop is expected to total 3.6 million bales based on a yield of 1,179 pounds. Lower yields and production forecasts have occurred as the season progressed for the 1994 ELS crop. Yields are expected to average 987 pounds per harvested acre, down 3 percent from the initial estimate last August. ELS production, at 342,000 bales, is the smallest since 1988. Ginning estimates this season indicate that 19.0 million bales had been ginned prior to January 1, compared with 15.7 million in 1993. Based on the current production estimate, 96 percent of the crop had been ginned versus about 97 percent in 1993. The final USDA 1994 upland and ELS cotton production estimates will be released May 10. Consumption Remains Strong Cotton mill consumption remains strong according to the latest U.S. Commerce Department data. For the calendar month, preliminary November cotton mill use totaled 940,200 bales, near that of October, but well above November 1993's 836,200 bales. On a daily basis, cotton mill use fell from October's 44,500 bales to 42,700. However, compared with a year ago, the daily average exceeded November 1993's by 4,700 bales per day. Cotton consumption during the first 4 months of this season totaled 3.86 million bales, compared with 3.50 million a year ago. On a seasonally adjusted annual rate, consumption during the first 4 months of 1994/95 averaged 11 million bales, compared with 10.1 million last season. Cotton's share of fibers used on the cotton system declined slightly in November. However, cotton's share has averaged nearly 77 percent this season, the highest since 1967. Cotton's share of fiber use in markets where it competes with manmade fibers has increased each year since 1983. Increasing market share and strong demand for denim, apparel, and home furnishings are expected to push mill use to 11 million bales in 1994/95, the highest since 1942. U.S. Textile Exports Rise U.S. textile imports in October totaled 683 million pounds (raw fiber equivalent), down nearly 2 percent and the smallest since June. Imports decreased in each major end-use category except yarn, thread, and fabric. Lower shipments of cotton, wool, and manmade textiles more than offset slight increases in other fibers. Cotton imports, at 342 million pounds, accounted for 50 percent of all textile shipments. However, these were the smallest cotton imports since May. Textile imports during January through October were 8 percent above the corresponding period of 1993. Cotton textile imports were up only 5 percent during the first 10 months of 1994. October textile exports, at 248 million pounds, increased for the third consecutive month and were the largest monthly shipments of 1994. Exports were up more than 5 million pounds from September and slightly above October 1993. Increases occurred for all end uses and for all types of fibers, except manmade. Cotton textile exports, at a record 106 million pounds, were 4 percent above September and 20 percent above a year ago. Overall, the textile trade deficit for the first 10 months of 1994 totaled 3.9 billion pounds, 8 percent higher than a year earlier. The cumulative cotton trade deficit, however, was only 1 percent above shipments during the first 10 months of 1993. In addition, cotton's share of the trade deficit has declined from 61.4 to 57.7 percent due to stronger export demand. Larger cotton textile exports continue to support domestic mill use and limit increases in the total trade deficit. Foreign Production and Consumption Outlook Favors U.S. Exports Estimated foreign production for 1994/95 was lowered nearly 2 million bales this month to 64.3 million, while trade and consumption were raised slightly. The largest production change was in China, where the crop was reduced 1.2 million bales to 19.5 million. Estimated Pakistani production was reduced further in January to 6 million bales, the lowest since 1985. Smaller reductions occurred in other countries and in Central Asia. Reduced crop prospects in China and Pakistan mean higher expected imports by these coutries, while smaller Central Asian crops ensure an even higher share of world trade for the United States. In 1994/95, China is forecast to import 1.85 million bales of cotton, up 450,000 bales from December's forecast, while Pakistan is forecast to import 600,000 bales, up 300,000. With this improved outlook for foreign demand, the U.S. export forecast was raised 1 million bales, to 9.2 million. Increasingly favorable trade prospects have been reflected in U.S. export sales. Export commitments continued rising during December, growing about 1 million bales and surpassing 10 million bales in early January. With U.S. exports forecast at 9.2 million bales for 1994/95, the U.S. share of world trade is expected to reach 33 percent, the highest since 1960. Cotton Prices Increase U.S. cotton prices moved higher in December and reached their highest level in more than 3 years. The average price received by producers for upland cotton through mid-December was 71.3 cents per pound, compared with 69.3 cents in November and 56.5 cents a year ago. Similarly, spot prices for both ELS and upland cotton increased in December. ELS spot prices rose to $1.08, up 6 percent from a month earlier and 24 cents higher than a year earlier. Upland spot prices climbed to 82 cents per pound, the highest since May 1990. Since the December average was more than 130 percent of the average for the preceding 36 months, producers with cotton loans that expire January 31 will not be allowed to extend these loans for an additional 8 months. In addition, current U.S. price conditions have triggered a "limited global import quota" that will allow cotton users to import an additional 426.9 million pounds of upland cotton from January 6 through April 6, 1995. Because world cotton supplies are relatively tight, only small quantities of upland, if any, are expected to be imported during this period. Similarly, mill-delivered cotton prices increased 9.5 cents in December to 87.4 cents per pound. December's prices were 22 cents above December 1993 and the highest since June 1990. While cotton prices have increased dramatically in the past 3 months, manmade and rayon prices have been flat. Even so, polyester prices, at 78 cents per pound, are at their highest since March 1991. Rayon prices are also higher this year, averaging $1.04 per pound between October and December. The adjusted world price (AWP) continued to rise into early January as foreign production problems and strong export demand have elevated prices. For the week of January 6-12, the AWP in effect was 77.87 cents per pound, the highest since the marketing loan program began in August 1986. In addition, Northern Europe prices have risen since mid-October. The Cotlook A Index increased from an average price of 74 cents in October to 87 cents in December. By early January, the A Index reached 92 cents per pound, with 7 of the 14 styles quoted. About 12 cents separated the lowest and highest quotes in the Index. Central Asia remains the lowest quote while California/Arizona is the highest. Memphis territory was the second highest priced cotton. For coarse grades, the B Index has not been quoted since mid-November as only two styles are offered at this time. About 7 cents separated the low Central Asian and the Orleans/Texas quote. 1995/96 Cotton Outlook The outlook for 1995/96 points to larger planted acreage as a result of the final zero percent upland ARP announcement. Strong demand for U.S. cotton this season is expected to offset the record production and has pushed projected 1994/95 carryover 9 percent below the beginning level and the lowest since 1990/91. Although area could rise over a million acres next season, a return to more normal yields and abandonment may limit the potential of the 1995 crop. U.S. production in 1995/96 could range between 19 and 21 million bales. Despite the possibility of back-to-back record crops, total cotton use is projected to continue strong, which could moderate any rise in stocks next season. U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 -------------------------- Item 1993/94 Nov Dec Jan ---------------------------------------------------------------------- Upland: Million acres Planted 13.25 13.89 13.89 13.56 Program 11.44 11.11 11.11 11.11 Harvested 12.59 13.27 13.27 13.16 Pounds Yield/harvested acre 601 691 695 707 Million 480-lb. bales Beginning stocks 4.46 3.30 3.30 3.30 Production 15.76 19.10 19.22 19.39 Total supply 20.23 22.41 22.53 22.69 Mill use 10.35 10.93 10.93 10.93 Exports 6.56 6.85 7.85 8.85 Total use 16.90 17.78 18.78 19.78 Ending stocks 3.30 4.75 3.86 3.07 Percent Stocks-to-use ratio 19.5 26.7 20.5 15.5 Extra-long staple: 1,000 acres Planted 190 175 175 169 Program 89 84 84 84 Harvested 189 174 175 166 Pounds Yield/harvested acre 938 982 962 987 1,000 480-lb. bales Beginning stocks 206 227 227 227 Production 370 355 350 342 Total supply 576 582 577 569 Mill use 72 75 75 75 Exports 307 350 350 350 Total use 379 425 425 425 Ending stocks 227 147 142 134 Percent Stocks-to-use ratio 59.9 34.6 33.4 31.5 ---------------------------------------------------------------------- Based on USDA estimates. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1994/95 -------------------------- Item 1993/94 Nov Dec Jan ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 37.33 29.82 30.38 29.94 Foreign 32.66 26.29 26.85 26.41 Production World 76.92 86.83 85.82 84.01 Foreign 60.79 67.38 66.25 64.29 Imports World 27.94 27.23 27.85 28.76 Foreign 27.93 27.23 27.84 28.75 Use: Mill use World 84.89 85.90 85.80 86.11 Foreign 74.47 74.90 74.80 75.11 Exports World 26.84 26.98 27.24 27.92 Foreign 19.98 19.78 19.04 18.72 Ending stocks World 29.94 30.89 30.85 28.57 Foreign 26.41 25.99 26.85 25.37 Stocks-to-use ratio Percent World 35.3 36.0 36.0 33.2 Foreign 35.5 34.7 35.9 33.8 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1994 1993 ---------------------------- Item Sep Oct Nov Nov ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 1,700 6,824 6,826 5,335 Imports since August 1 2.6 2.6 NA 0.6 Stocks, beginning 2,676 3,083 8,631 9,362 At mills 657 602 591 603 Public storage 1,802 2,089 6,734 7,495 CCC stocks 233 116 940 1,314 Manmade: Million pounds Production 828.0 870.7 811.9 761.1 Noncellulosic 786.0 827.0 773.2 722.9 Cellulosic 42.0 45.0 38.7 38.2 Total since January 1 7,126.1 7,998.1 8,810.0 8,088.2 1994 1993 ---------------------------- Aug Sep Oct Oct -------------------------------------- Million pounds Raw fiber imports 101.4 92.4 94.6 77.0 Noncellulosic 93.8 86.6 88.8 68.0 Cellulosic 7.6 5.8 5.8 9.0 Total since January 1 613.7 706.1 800.7 783.8 Wool and Mohair: 1,000 pounds Raw wool imports, clean 6,476 4,081 5,723 7,707 48's-and-finer 4,466 1,907 3,363 5,733 Not-finer-than-46's 1,940 2,147 2,314 1,851 Total since January 1 66,484 70,564 76,288 84,718 Wool top imports 387 428 271 344 Total since January 1 2,681 3,109 3,380 3,034 Mohair imports, clean 62 0 62 0 Total since January 1 109 109 171 14 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1994 1993 ---------------------------- Item Sep Oct Nov Nov ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 961 935 940 836 Total since August 1 1/ 1,985 2,921 3,861 3,500 SA annual rate 2/ 11,112 10,997 11,179 7,936 SA daily rate 2/ 42.7 42.3 43.0 38.2 Daily rate 43.7 44.5 42.7 38.0 Upland consumed by mills 1/ 954 928 933 832 Total since August 1 1/ 1,971 2,899 3,831 3,480 SA annual rate 2/ 11,063 10,928 11,092 9,882 SA daily rate 2/ 42.3 41.9 42.7 38.0 Daily rate 43.4 44.2 42.4 37.8 Spindles in place 7,481 7,398 7,372 8,169 Active spindles 7,069 6,961 6,933 7,660 100 percent cotton 2,965 2,919 2,913 3,229 100 percent manmade 1,231 1,181 1,182 1,292 Blends 2,873 2,861 2,838 3,139 Cotton's share of fibers 77.1 76.9 76.5 76.1 Manmade: 1,000 pounds Total consumed by mills 1/ 137,085 135,427 138,356 126,155 Total since August 1 1/ 285,490 420,717 559,273 535,048 Daily rate 6,231 6,449 6,289 5,734 Noncellulosic staple 5,341 5,492 5,323 4,845 Cellulosic staple 890 957 966 889 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1994 1993 ---------------------------- Item Aug Sep Oct Oct ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 515 320 336 334 Total since August 1 515 835 1,171 832 Sales for next season 16 12 74 2 Total since August 1 16 28 102 133 ELS exports 16.1 12.9 5.1 14.2 Total since August 1 16.1 29.0 34.1 51.1 Sales for next season 0.0 0.0 0.0 0.0 Total since August 1 0.0 0.0 0.0 1.6 Manmade: Million pounds Raw fiber exports 82.6 81.1 79.6 64.2 Noncellulosic 77.4 76.6 74.3 60.6 Cellulosic 5.2 4.5 5.3 3.6 Total since January 1 581.9 663.0 742.6 559.6 Wool and Mohair: 1,000 pounds Raw wool exports, clean 141.7 122.7 409.9 76.8 Total since January 1 2,060.9 2,183.6 2,593.4 2,244.1 Wool top exports 1,564.5 1,357.0 912.4 870.4 Total since January 1 8,713.0 10,070.0 10,982.5 7,608.7 Mohair exports, clean 766.0 695.7 1,268.0 605.6 Total since January 1 4,788.0 5,483.7 6,751.7 4,693.5 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1994 1993 ---------------------------- Item Oct Nov Dec Dec ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 60.11 63.14 72.09 45.52 Mar'95 futures 70.77 75.57 84.84 65.55 Dec'95 futures 68.93 70.24 72.21 NQ Upland spot 41-34 67.58 72.00 81.92 60.29 Pima 46-03 99.07 101.20 108.83 84.17 Avg. price received by: Upland producers 65.70 69.30 71.30 57.10 Mill delivered: Cotton Actual 72.98 76.91 87.39 64.96 Raw fiber equivalent 81.09 85.46 97.10 72.18 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 78.00 78.00 78.00 72.00 Raw fiber equivalent 81.25 81.25 81.25 75.00 Price ratios Percent Cotton/rayon 74.9 78.9 89.6 61.9 Cotton/polyester 99.8 105.2 119.5 96.2 Northern Europe cotton quotes: Cents per pound A Index 74.09 77.28 87.06 59.84 Memphis Territory 76.88 80.94 92.15 64.55 California/Arizona 77.56 82.94 96.65 63.25 B Index 72.31 75.98 NQ 57.31 Orleans/Texas 73.81 78.31 90.01 58.32 Wool prices (clean): Dollars per pound U.S. 56's 1.40 1.45 1.45 1.05 Australian 56's 1/ 1.96 2.06 2.17 1.48 U.S. 60's 1.60 1.61 1.61 1.15 Australian 60's 1/ 2.09 2.21 2.27 1.54 U.S. 64's 2.38 2.38 2.38 1.33 Australian 64's 1/ 2.56 2.75 2.81 1.76 ---------------------------------------------------------------------- NQ = No quote. 1/ In bond, Charleston, SC. 2/ greasy. TEXTILE TRADE ---------------------------------------------------------------------- 1994 1993 ---------------------------- Item Aug Sep Oct Oct ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 178,599 152,636 168,038 167,880 Cotton 86,544 72,620 73,350 81,335 Linen 16,025 12,693 25,628 22,958 Wool 4,263 3,930 4,491 3,713 Silk 898 724 834 321 Manmade 70,869 62,669 63,735 59,553 Apparel 526,249 474,103 462,646 387,025 Cotton 275,392 243,391 242,630 197,420 Linen 24,162 22,183 23,753 24,546 Wool 28,012 26,812 24,164 18,091 Silk 14,579 12,977 15,924 17,255 Manmade 184,104 168,740 156,175 129,713 House furnishings 39,175 37,305 28,471 35,060 Cotton 28,448 26,381 19,642 26,090 Linen 169 156 221 120 Wool 125 175 164 115 Silk 27 35 19 16 Manmade 10,406 10,558 8,425 8,719 Floor covering 21,615 21,824 18,066 16,853 Cotton 5,156 4,299 4,466 5,084 Linen 3,479 3,568 3,322 1,483 Wool 6,128 7,027 3,231 5,439 Silk 398 494 416 314 Manmade 6,454 6,436 6,631 4,533 Total imports 2/ 772,618 692,395 682,840 613,015 Cotton 398,462 349,158 341,900 312,562 Linen 43,938 38,766 52,962 49,174 Wool 38,916 38,281 32,282 27,624 Silk 15,905 14,231 17,194 17,908 Manmade 275,397 251,959 238,502 205,747 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 115,969 117,415 118,195 111,149 Cotton 34,770 36,674 38,087 32,281 Linen 3,179 3,238 3,551 2,372 Wool 3,102 3,060 3,336 2,173 Silk 1,259 1,199 1,471 1,217 Manmade 73,659 73,244 71,750 73,106 Apparel 88,937 91,770 93,865 75,900 Cotton 54,998 58,263 59,592 47,914 Linen 2,316 2,153 2,840 1,905 Wool 3,701 3,222 3,003 3,016 Silk 1,534 1,489 1,568 1,537 Manmade 26,388 26,643 26,862 21,528 House furnishings 6,516 5,812 7,503 6,101 Cotton 3,855 3,341 4,426 3,560 Linen 191 198 187 251 Wool 74 48 80 75 Silk 89 80 99 175 Manmade 2,307 2,145 2,711 2,040 Floor covering 28,390 27,027 28,006 53,293 Cotton 2,990 2,984 3,410 4,159 Linen 1,366 1,311 1,180 2,367 Wool 1,603 1,333 1,753 1,222 Silk 3/ --- --- --- --- Manmade 22,431 21,399 21,663 45,545 Total exports 2/ 240,189 242,431 247,930 246,899 Cotton 96,678 101,321 105,556 87,958 Linen 7,065 6,912 7,767 6,904 Wool 8,499 7,688 8,196 6,504 Silk 2,882 2,768 3,138 2,929 Manmade 125,065 123,742 123,273 142,604 --------------------------------------------------------------------- 1/ Raw fiber equivalent. 2/ Includes headgear. 3/ Absence of trade. ESTIMATED 1994 COTTON ACREAGE, YIELD, AND PRODUCTION --------------------------------------------------------------------------- Item Aug Sep Oct Nov Dec Jan --------------------------------------------------------------------------- Upland: Southeast Harvested 1,000 acres 2,123 2,163 2,163 2,147 2,147 2,154 Yield lbs/acre 699 716 725 746 782 818 Production 1,000 bales 3,092 3,227 3,267 3,337 3,497 3,669 Delta Harvested 1,000 acres 4,030 4,030 4,060 4,095 4,100 4,060 Yield lbs/acre 758 742 748 795 805 815 Production 1,000 bales 6,360 6,230 6,330 6,780 6,880 6,895 Southeast Harvested 1,000 acres 5,566 5,566 5,566 5,566 5,566 5,491 Yield lbs/acre 465 453 452 452 452 458 Production 1,000 bales 5,391 5,251 5,241 5,236 5,236 5,242 West Harvested 1,000 acres 1,454 1,454 1,464 1,464 1,459 1,457 Yield lbs/acre 1,316 1,304 1,279 1,279 1,188 1,179 Production 1,000 bales 3,985 3,950 3,900 3,900 3,610 3,580 Total Upland Harvested 1,000 acres 13,173 13,213 13,253 13,267 13,272 13,162 Yield lbs/acre 686 678 686 691 695 707 Production 1,000 bales 18,828 18,658 18,938 19,098 19,223 19,386 Pima Harvested 1,000 acres 174 174 174 174 174 166 Yield lbs/acre 1,015 1,015 1,009 982 962 987 Production 1,000 bales 367 367 365 355 350 342 Total All Kinds Harvested 1,000 acres 13,347 13,387 13,426 13,440 13,446 13,328 Yield lbs/acre 690 682 690 695 699 710 Production 1,000 bales 19,195 19,025 19,303 19,453 19,573 19,728 --------------------------------------------------------------------------- The next issue of the Cotton and Wool Outlook will be released on February 13, 1995. For further information, contact Bob Skinner, Leslie Meyer, John Lawler, or Steve MacDonald at (202) 219-0840. END-END-END