COTTON AND WOOL YEARBOOK -- SUMMARY November 20, 1997 November 1997, CWS-1097 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The complete text of the COTTON AND WOOL YEARBOOK (CWS-1997) will be available within 1-2 weeks following release of this summary. ----------------------------------------------------------------------------- United States and World Cotton Demand To Strengthen in 1997/98 Based on November 1 crop conditions, U.S. cotton production in 1997 is forecast at 18.85 million bales, slightly below last season's 18.9 million and the fourth largest on record. While planted area to cotton fell 5 percent to 13.9 million acres, lower abandonment this season is expected to result in harvested area above 1996. Harvested area is estimated at 13.4 million acres, 4 percent higher, but the national average yield is forecast to decline 34 pounds from last season's near record to 673 pounds per harvested acre. U.S. cotton exports in 1997/98 are forecast to rise 2 percent from last season to 7 million bales despite larger foreign supplies and reduced import demand by China. U.S. cotton has been more price competitive overseas this year as evidenced by the strong early-season export sales. During the first 3 months of 1997/98, U.S. export commitments have already surpassed 5 million bales. And, with a slight increase in world cotton trade this season, the U.S. share of the global market is projected to rise to 26 percent. U.S. mill use of cotton in 1997/98 is also projected to rise 2 percent above last season to 11.4 million bales. Abundant supplies at lower prices early in the season, coupled with an improving domestic demand for denim and rising cotton textile exports, are expected to support mill consumption. In 1997, cotton textile exports are expected to advance for the 13th consecutive year, reaching the equivalent of 3.6 million bales. On the other hand, cotton textile imports are anticipated to rise for the 9th year in a row. In 1997, these imports could reach 9.5-million-bale equivalents and thus widen the cotton textile trade deficit after last year's decline. Meanwhile, total domestic cotton consumption (mill use plus net textile trade) will likely surpass 8 billion pounds, with per capita consumption remaining near 30 pounds. U.S. cotton supplies in 1997/98 are not expected to include a significant volume of imports, unlike the previous two seasons, as adequate supplies of U.S. cotton were available at the beginning of the season and U.S. prices are closer to world prices. However, U.S. total supplies are estimated at 22.8 million bales, 4 percent above a year earlier. Meanwhile, total use is forecast at 18.4 million bales, 2 percent above 1996/97. Based on these supply and demand estimates, U.S. ending stocks for 1997/98 are projected at 4.4 million bales. With U.S. stocks expected to rise modestly this season, the stocks-to-use ratio is estimated at 24 percent, 4 percentage points above the 5-year average. World cotton production in 1997/98 is forecast to increase to 90.2 million bales, 1.1 million above last season's outturn. Foreign production, projected at 71.3 million bales, accounts for all of the increase in world production in 1997/98. Higher yields account for the rise in foreign production. Although larger production is anticipated in Pakistan, Uzbekistan, the African Franc Zone, and Southern Hemisphere countries, 1997/98 output in India is expected to fall significantly. World consumption is projected to rise slightly to 89.8 million bales in 1997/98, with foreign consumption expected to increase for the third consecutive season. Consumption in China and India (the two largest cotton consumers) is forecast to expand 2 percent to 21.5 and 13.2 million bales, respectively. Gains in the European Union, Newly Independent States (formerly referred to as the former Soviet Union) and Eastern Europe are also anticipated this season, while Southeast Asia's consumption declines. This is the first significant decrease in Southeast Asia's consumption since 1980/81 and is a direct result of the region's financial difficulties. World cotton exports in 1997/98 are expected to gain 1 percent to 26.9 million bales. Foreign exports are forecast up slightly from last season to 19.9 million bales, as foreign beginning stocks were the highest in 5 years, permitting higher exports by a number of countries. Australia, Argentina, Pakistan, and the African Franc Zone countries are projected to export more cotton in 1997/98, while India and Uzbekistan are expected to reduce their exports. With the rise in world cotton production and consumption, world stocks are projected to remain near last season's 36.4 million bales. However, as the United States builds stocks in 1997/98, foreign stocks are forecast to decline nearly 500,000 bales to 32 million. While many foreign countries' stocks will increase in 1997/98, a large decline is expected in China, with lower ending stocks also forecast for India. China will hold 38 percent of the world's cotton stocks at season's end, down from 41 percent in 1996/97. U.S. raw wool production in 1997 is estimated at 28 million pounds, clean, 7 percent below last year and about half the production of the early 1980's. Raw wool imports also are projected down this year, at 60 million pounds, due to weaker mill demand. Mill demand is forecast at 110 million pounds this season, 11 percent below 1996. Carryover supplies are forecast to decline to 36 million pounds, the lowest in over 25 years. For more information regarding this report, contact Leslie Meyer 202-694-5307. END_OF_FILE