COTTON AND WOOL YEARBOOK--SUMMARY November 17, 1995 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. The complete text of the COTTON AND WOOL YEARBOOK is available 7-10 working days following release of this summary. ----------------------------------------------------------------------------- U.S. Cotton Demand Lower in 1995/96; Foreign Production Higher Based on November 1 crop conditions, U.S. cotton production in 1995 is estimated at 18.8 million bales, down from last season's record 19.7 million. Planted area increased 23 percent in 1995 to 16.8 million acres, the largest since 1956. The hike reflects this season's zero-percent acreage reduction requirement for upland cotton and high prices at planting time. Harvested area is estimated at 15.9 million acres, resulting in an abandonment rate of 5 percent. The national average cotton yield is forecast at 567 pounds per harvested acre, down 20 percent from last season's record and the lowest since 1986. U.S. mill use of cotton in 1995/96 is projected at 11 million bales, 200,000 below last season. Higher cotton prices and a slowdown in consumer demand are expected to weigh on domestic mill consumption this season. Despite the sluggish mill activity, cotton textile exports are expected to rise for the eleventh consecutive year and support U.S. mill use. In 1995, these exports are estimated to reach the equivalent of nearly 2.8 million bales of raw cotton. On the other hand, cotton textile imports also continue upward. In 1995, imports could approach 9 million bale equivalents and thus widen the cotton textile trade deficit further. However, domestic cotton consumption (mill use plus net textile trade) remains on the rise. In 1995, per capita domestic cotton consumption will likely surpass the 30 pounds recorded in 1994 and be the highest since 1946. U.S. cotton exports in 1995/96 are forecast to fall from the extraordinarily high level of 1994/95. This season, U.S. exports are projected at 6.8 million bales, 2.6 million below last season but similar to 1993/94 shipments. A larger foreign crop and greater competition in the export market account for this decline. In addition, China's import demand, of which the United States is a major supplier, is forecast lower this season. Nevertheless, the U.S. share of world trade is forecast at a healthy 25 percent. Based on these supply and demand projections, U.S. ending stocks for 1995/96 are estimated at 3.7 million bales. Although a million bales above last season, stocks are projected at only 21 percent of use in 1995/96, up from last year's low 13 percent. U.S. total supplies are estimated at 21.5 million bales, while total use is forecast at 17.8 million. World cotton production in 1995/96 is projected to increase to 89.3 million bales, 4 percent above last season's outturn. Foreign production is estimated at 70.5 million bales, up 7 percent from last year's crop. Larger foreign production is attributable to a 7-percent increase in planted area to 70.1 million acres and slightly higher expected yields. Among major foreign cotton producers, 1995/96 output is expected to significantly increase in Pakistan, with smaller increases occurring in India, Brazil, and the African Franc Zone countries. However, China's production, at 19.5 million bales, is projected to decline about 2 percent from last season. World consumption is projected to increase to 86 million bales in 1995/96, up 2 percent from last season and the third largest on record. Larger consumption is forecast for several of the major cotton producing countries. In China, consumption is expected to rise 4 percent to 20.5 million bales, the first increase in 3 years. Consumption in India is projected up 2 percent to a record 10.5 million bales, the fourth consecutive annual increase. Similarly, after 12 years of steady increases, Pakistan's domestic use is forecast at a record 6.8 million bales. World cotton exports in 1995/96 are expected to fall 5 percent from a year ago to 27.5 million bales. However, foreign exports are projected up 6.5 percent from last season to 20.7 million bales, as larger foreign production will be available for world markets. Pakistan and India are expected to regain export market share lost during the past 2 years. With relatively small gains in world consumption and reduced trade prospects forecast, world carryover supplies in 1995/96 are expected to reach 32.8 million bales, the largest in 3 years. China is expected to increase stocks by 900,000 bales (representing nearly 50 percent of the increase in foreign supplies) and hold 34 percent of world stocks at season's end. World and U.S. cotton prices reached historic levels last season. However, with increased acreage in 1995/96 and prospects for larger production, world prices have been lower this season. In addition, the United States is not as competitive on the world market as in 1994/95. Last season, the U.S. cotton farm price averaged 73 cents per pound, the highest since 1980/81 when the price level was similar. U.S. raw wool production in 1995 is estimated moderately lower at 32 million pounds. Imports are also projected below 1994, at 85 million pounds, as demand is estimated to decline slightly this year. Total raw wool demand is projected at 152 million pounds. While domestic mill consumption is expected to fall 5 percent to 145 million pounds, exports of raw wool are forecast to more than double to 7 million. Ending stocks are expected to decline from beginning levels of 52 million pounds to 37 million. Printed copies of the Cotton and Wool Situation and Outlook Yearbook will be available in about a week. For more information, contact Leslie Meyer (202) 501-8528. Text of the full report also will be available electronically. For details, call ERS Customer Service (202) 219-0515. END-END-END