COTTON AND WOOL YEARBOOK--SUMMARY November 21, 1996 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 (CWS-1996) is available 2-3 working days following release of this summary. -------------------------------------------------------------------------------- Larger U.S. Cotton Production and Smaller Exports Boosting Stocks Based on November 1 crop conditions, U.S. cotton production in 1996 is forecast at 18.6 million bales, up from last season's 17.9 million and the third largest on record. The production rise this season is attributable to a rebound in the national average yield. While planted area to cotton fell 16 percent to 14.2 million acres, the national average yield is forecast to jump 30 percent to 698 pounds per harvested acre, only 10 pounds from the record. Harvested area is estimated at 12.8 million acres, resulting in an above-average abandonment rate of 10 percent. U.S. cotton exports in 1996/97 are forecast to fall 24 percent from last season to 5.8 million bales. Larger foreign supplies, which have been building over the past 2 seasons, have resulted in greater price competition for U.S. cotton this season. In addition, import demand by China, a major U.S. market, is forecast lower. With the increased competition, coupled with a decline in world cotton trade, the U.S. share of the global market is projected to diminish from 28 percent in 1995/96 to 22 percent this season. U.S. mill use of cotton in 1996/97 is projected to rise after experiencing its first decline in 5 years last season. Mill use is forecast to reach 11 million bales, 4 percent above 1995/96. Abundant supplies at lower prices and rising cotton textile exports are expected to support mill consumption. In 1996, cotton textile exports are expected to advance for the twelfth consecutive year, reaching the equivalent of 3 million bales. In contrast, cotton textile imports are anticipated to weaken for the first time since 1988. In 1996, these imports could fall to 8 million bale equivalents and thus narrow the cotton textile trade deficit. Meanwhile, total domestic cotton consumption (mill use plus net textile trade) will likely decrease for the second consecutive year, with per capita consumption declining below 1995's 30 pounds. U.S. cotton supplies in 1996/97 will once again include a relatively large quantity of imports, as raw cotton purchases made late last season are still making their way into the United States. Imports are projected at 500,000 bales for 1996/97, up from 408,000 last season. U.S. total supplies are estimated at 21.7 million bales. Meanwhile, total use is forecast at 16.8 million bales, 8 percent below 1995/96. Based on these supply and demand estimates, U.S. ending stocks for 1996/97 are projected at 4.9 million bales. With U.S. stocks expected to rise over 2 million bales this season, the stocks-to-use ratio is estimated at 29 percent. World cotton production in 1996/97 is forecast to decline to 87 million bales, 5 percent below last season's outturn. Foreign production is projected at 68.4 million bales, 7 percent lower than in 1995/96. Smaller area and lower yields account for the decrease in foreign production. Among the major foreign producers, 1996/97 output is expected to fall significantly in China, Pakistan, and Uzbekistan. However, much larger production is anticipated in African Franc Zone and Southern Hemisphere countries. World consumption is projected to rise marginally to 85.7 million bales in 1996/97, with foreign consumption rising for only the second time since 1989/90. While consumption in China, the largest consumer of cotton, is forecast unchanged at 19.8 million bales, India, the second largest consumer, is expected to use 11.8 million, 3.5 percent above 1995/96. Gains in Europe are also anticipated this season. World cotton exports in 1996/97 are expected to decline 4 percent to 26.3 million bales. However, foreign exports are forecast up 4 percent from last season to 20.5 million bales, as rising foreign stocks during the past 2 seasons are expected to permit higher exports by a number of countries. Australia, Argentina, and African Franc Zone countries provide the largest increases, while Pakistan's reduced crop in 1996/97 will limit its exportable supplies. Despite a decline in world cotton production and a slight increase in consumption, world stocks are projected to build to 36.9 million bales, 3.5 percent above last season. The United States is responsible for the rise as foreign stocks are forecast to decline 1 million bales in 1996/97 to 32 million. A large decline is expected in China, with lower ending stocks also forecast for India, Uzbekistan, Pakistan, and Turkmenistan. China will hold 38 percent of the world's cotton stocks at season's end, down from 42 percent in 1995/96. U.S. raw wool production in 1996 is estimated at 30 million pounds, clean, 10 percent below last year and about half the production of the early 1980's. Wool imports also are projected down this year, at 80 million pounds, due to weaker mill demand this season. Although carryover supplies are forecast to decline to 31 million pounds, the lowest in over 25 years, farm prices are expected to average near 70 cents per pound, 34 cents below 1995. Sales of nearly 700,000 bales from the Australian wool stockpile have pressured U.S. and world prices this season. This issue of the COTTON AND WOOL YEARBOOK contains a special article entitled "Background and Perspectives on U.S. Cotton Imports." Printed copies of the yearbook will be available in about a week. For more information contact Leslie Meyer (202) 501-8528; lmeyer@econ.ag.gov. Text of the full report also will be available electronically. For details, call ERS Customer Service (202) 219-0515. END_OF_FILE