Cotton and Wool Situation and Outlook Yearbook. Market and Trade Economics Division, Economic Research Service. U.S. Department of Agriculture, November 2002, CWS-2002. CONTENTS Summary U.S. Cotton Situation and Outlook World Cotton Situation and Outlook Situation and Outlook for Other Fibers List of Tables Report Coordinator Leslie Meyer (202) 694-5307 Fax (202) 694-5823 E-mail: LMEYER@ers.usda.gov Other Contributors Stephen MacDonald (202) 694-5305 Robert Skinner (202) 694-5313 Wilma Davis (202) 694- 5304 (Statistics) Editors Martha Evans and Lou King Layout and Design Wynnice Pointer-Napper Summary World cotton consumption in 2002/03 (August/July marketing year) is forecast at a record 96.2 million bales, more than 2 million bales above a year earlier, as global demand for textiles and apparel continues its rebound from the stagnant growth seen in the 1990s. Foreign mill use this season is expected to rise to its fourth consecutive record-high while U.S. mill use remains flat. The largest gains are expected in China, India, Pakistan, and Turkey. In contrast with rising consumption, world cotton production in 2002/03 is forecast at 88.1 million bales, more than 10 million bales below last season. Production is estimated lower in most major producing countries this season, with by far the largest decreases expected in China (2.9 million bales lower), the United States (2.5 million), India (1.4 million), and Australia (1.2 million). Foreign cotton production in 2002/03 is forecast to be its lowest in 8 years at 70.3 million bales, with only a few countries, including the major South American producers, Turkey, and Zimbabwe, expected to harvest larger crops than the year before. World cotton exports are expected to increase nearly 2 percent in 2002/03 to 29.4 million bales, the highest since 1990/91. Although foreign exports are projected to rise nearly 4 percent from 2001/02 to 18.7 million bales, they will remain the second lowest in nearly two decades. While many foreign countries’ exports are likely to expand this season, exports from Australia and Syria are expected to decrease as crop problems there have led to lower supplies. With rising world consumption and declining production in 2002/03, cotton stocks are projected to fall this season to 40 million bales, 7.5 million below last season and the lowest in 7 years. Although the bulk of the decrease is attributable to China, where stocks are expected to drop 4 million bales this season, significant declines are seen elsewhere, including Australia, India, the United States, and Pakistan. U.S. cotton production in 2002/03 is forecast at 17.8 million bales, 2.5 million bales ,or 12 percent, below last season's record crop. This season's cotton output is based on smaller area and a lower, more normal national yield. U.S. cotton planted area declined nearly 1.4 million acres from 2001 to 14.4 million this season, the lowest in 4 years. Generally favorable conditions throughout much of the growing season permitted better than average U.S. cotton crop development and conditions. However, inclement harvest weather, particularly in the eastern half of the Cotton Belt, delayed progress significantly this fall. Nevertheless, abandonment is estimated at about 11 percent this year, slightly below 2001/02. Harvested cotton area is estimated at 12.9 million acres, nearly 1 million below last season and the second lowest in the past 9 years. The national yield is projected at 665 pounds per harvested acre, well below last season’s near record. U.S. cotton exports in 2002/03 are projected to remain at a relatively high 10.8 million bales, albeit slightly lower than last season’s 75- year high. Large U.S. supplies of exportable cotton remain this season despite total supplies being 1 million bales below 2001/02. In addition, projections of smaller foreign production and increased consumption are expected to benefit U.S. exports and push world trade higher. With prospects for world cotton exports rising modestly in 2002/03, the U.S. share of global trade is expected to approach 37 percent, slightly below last season but well above the 10-year average. In contrast, U.S. cotton mill consumption is forecast at only 7.7 million bales in 2002/03, similar to the previous season but well below the recent high of 11.3 million bales in 1997/98. The continued growth of U.S. cotton textile and apparel imports over the last 5 years has forced major restructuring, including reduced capacity, in the U.S. manufacturing industry. To remain competitive, U.S. textile and apparel processors have focused on core products and niche markets. U.S. cotton stocks at the beginning of 2002/03 were estimated at 7.4 million bales. With a reduced crop forecast this season, total U.S. cotton supply in 2002/03 is projected at 25.3 million bales, or 4 percent below a year ago. Meanwhile, U.S. cotton demand is forecast to exceed production for the first time in 4 years, with total demand projected at 18.5 million bales, slightly below 2001/02. As a result, based on these supply and demand estimates, U.S. ending stocks for 2002/03 are estimated to decline for the first time since 1999/2000 to 6.8 million bales. Consequently, the U.S. stocks-to-use ratio is expected to decrease slightly to about 37 percent in 2002/03. U.S. Cotton Situation and Outlook U.S. Cotton Review, 2001/02 The 2001/02 (August/July) marketing year began with U.S. cotton stocks estimated at 6 million bales, more than 2 million bales above the previous season. The 2001 cotton crop was the sixth and final planted under the Federal Agriculture Improvement and Reform (FAIR) Act, which provided total planting flexibility to producers. In 2001, this flexibility allowed additional acreage to be planted to cotton as relative net returns at planting time, the marketing loan program, and the insurance program seemed to favor cotton over competing crops. In the United States, 2001 cotton area increased slightly to 15.8 million acres, 2 percent above the 15.5 million planted in 2000. At the same time, the national abandonment rate fell from 16 percent in 2000 to near 12 percent in 2001 as smaller than average losses occurred in three of the four regions. Only the Southwest region-- accounting for 95 percent of the total abandonment in 2001--was affected by drought conditions that led to higher abandonment. Consequently, 2001 total cotton harvested area was 13.8 million acres, 6 percent above the previous year. With large abandonment in the Southwest and smaller losses in other higher yielding regions, the U.S. yield averaged 705 pounds per harvested acre, equal to that of 1996 and the highest since the record of 1994. With the higher yield and larger harvested area, U.S. 2001 cotton production totaled a record 20.3 million bales, an astonishing 18 percent (3.1 million bales) above the previous year. In 2001/02, total U.S. cotton demand jumped dramatically to 18.7 million bales, a 3.1-million-bale increase and the largest total demand since 1997/98. While U.S. cotton mill use declined for the fourth consecutive season, raw cotton exports increased to levels not seen in 75 years. In 2001/02, U.S. cotton exports reached 11 million bales, over 60 percent above the 6.7 million bales exported during the previous season. Despite an increase in foreign cotton production, a record foreign mill use, coupled with the largest foreign import demand since 1994/95, helped push U.S. exports to a modern high. With world cotton trade expanding to 29 million bales in 2001/02, the U.S. share of global trade increased substantially from 25 percent in 2000/01 to 38 percent. In contrast, U.S. cotton mill consumption in 2001/02 declined to 7.7 million bales from nearly 8.9 million the year before, a 13-percent reduction. In addition, 2001/02 U.S. mill use was the lowest since 1987/88 when mill use was 7.6 million bales. The decline stemmed from reduced textile consumption combined with competition from cotton textile and apparel imports. The recession that began in the spring of 2001 also dampened consumer demand for cotton textiles. At the same time, the recent strength of the U.S. dollar encouraged imports and hampered U.S. cotton textile exports abroad. These factors forced textile and apparel manufacturers to reduce their output and capacity dramatically. With U.S. cotton supply at 26.3 million bales in 2001/02 and total demand at 18.7 million, stocks at the end of last season jumped nearly 24 percent. Ending stocks were placed at 7.4 million bales, an increase of nearly 1.5 million bales during the season. As a result, a stocks-to-use ratio of approximately 40 percent in 2001/02 was the highest since 1988/89. Despite a gain in demand, the record U.S. and foreign crops forced the average upland price received by producers from 49.8 cents per pound in 2000/01 to 29.8 cents, the lowest market price since 1972/73. Similarly, the extra-long staple (ELS) price fell from 2000/01's $1.00 per pound to average 86 cents in 2001/02. Supply Outlook for 2002/03 As planting time for the 2002 crop approached, U.S. cotton futures prices had risen slightly from the lows during the fall of 2001; however, they were still more than 25 percent below a year earlier. Meanwhile, futures prices for competing crops--like corn and soybeans--were only about 5 percent lower, which made these alternatives attractive enough to pull area away from cotton. Favorable springtime weather allowed producers to plant 14.4 million acres of cotton this season, 9 percent below 2001 and 300,000 acres below the 5-year average (table A). Upland cotton acreage this season is estimated at 14.1 million acres, compared with 15.5 million in 2001. Likewise, ELS cotton area decreased to 264,500 acres in 2002, compared with 270,000 acres a year earlier. The decline in ELS acreage resulted from offsetting changes but was largely attributable to California, where 10,000 acres moved out of ELS production this season. With the decrease in cotton planted area this season, harvested area declined nearly 1 million acres from 2001 to 12.9 million. Although the abandonment rate based on the November estimate of 11 percent--1.5 million acres--was slightly below last season’s, the loss remains above average. As a result, U.S. cotton harvested area is the second lowest in the past 9 years. Despite below average U.S. crop conditions during June, favorable moisture in Texas helped boost these conditions significantly in July. U.S. crop conditions remained well above both 2001 and the 5-year average during the rest of the growing season despite severe dryness in the Southeast this summer and substantial rainfall in the eastern half of the Cotton Belt as the harvest began. Based on November 1st conditions, the 2002 U.S. cotton crop was estimated at 17.8 million bales, 2.5 million, or 12 percent, below last season’s record crop. Compared with 2001, this season’s smaller crop is based on fewer harvested acres and a lower, more normal yield. The U.S. average cotton yield is currently projected at 665 pounds per harvested acre, 40 pounds lower than last season but still the second highest in the past 5 years (fig.1). Upland production is projected at nearly 17.2 million bales in 2002, with an average yield forecast at 653 pounds per harvested acre. On a regional basis, forecast production is smaller in three of the four Cotton Belt regions this season. In the Southeast, a 200-plus pound reduction in yield in 2002 has reduced output to only 3.9 million bales, the lowest in 3 years. In the Delta, upland output is projected at 5.8 million bales--well below last season’s 6.9-million-bale record--as alternatives pulled area out of cotton this season. Favorable moisture conditions in the Southwest in 2002 are expected to push upland production above a year ago. Current estimates place output at nearly 5.4 million bales, as both yield and harvested area are higher than in 2001. In the West, the upland crop is estimated at only 2.1 million bales this season, the lowest in 4 years. Despite excellent growing conditions in 2002, record yields in the region could not offset the acreage shift out of upland production. ELS production is forecast at 635,000 bales in 2002, 9 percent below the 2001 record crop but still the fourth largest on record. Reduced area was somewhat offset by a second consecutive year with record ELS yields. The national ELS yield is projected at 1,263 pounds per harvested acre, 9 pounds above 2001. California continues to dominate ELS production, accounting for about 90 percent of the area and output. U.S. cotton stocks on August 1, 2002, were estimated at 7.4 million bales, well above the 6 million bales estimated at the beginning of 2001/02. And like the past two seasons, only a small volume of raw cotton imports are expected to enter the United States this season, as ample supplies from last season’s record-large production and recent declines in mill use limit the need for foreign supplies. As a result, total U.S. cotton supply in 2002/03 is projected at 25.3 million bales, 1 million below last season but the second highest since 1966/67. Demand Outlook for 2002/03 The U.S. cotton demand outlook for 2002/03 is projected to remain similar to that of a year earlier. This season’s total use is forecast at 18.5 million bales, down from 18.7 million in 2001/02 but well above the preceding 3 years. U.S. exports are expected to contribute the largest share--nearly 60 percent--of total U.S. cotton demand for the second consecutive season. U.S. cotton exports are forecast at 10.8 million bales, slightly below last season’s 75-year high. Large U.S. supplies of exportable cotton remain this season despite total supplies being 1 million bales below 2001/02. Also, projections of smaller foreign production and increased consumption, along with competitively priced cotton, should keep U.S. exports relatively high (table B). Upland cotton shipments in 2002/03 are projected to surpass 10.3 million bales, 2.5 percent below the previous season, while ELS exports are expected to reach 475,000 bales, 20 percent above a year earlier and a record-high. With U.S. exports remaining near historical highs and prospects for world trade rising slightly in 2002/03, the U.S. share of global trade is expected to reach 37 percent, 1 percentage point below last season but well above the 10-year average (fig. 2). Based on U.S. Export Sales data through mid-November, U.S. cotton export commitments (shipments plus outstanding sales) for 2002/03 totaled 5.7 million 480-pound bales, sharply below the 8 million reported a year earlier. Upland cotton shipments to date have reached 2 million bales, compared with 2.6 million in 2001/02. Similarly, upland outstanding sales are reported at 3.5 million bales or 1.5 million below the comparable period last season. In contrast, combined ELS shipments and outstanding sales are nearly identical to the year- earlier level. As of mid-November, ELS commitments were approximately 275,000 bales, or about 58 percent of the current ELS export forecast. U.S. cotton mill consumption is forecast to reach 7.7 million bales in 2002/03, unchanged from last season after four consecutive years of decline. The current projection is more than 3.5 million bales below the recent high seen in 1997/98 as growth of U.S. cotton textile and apparel imports has continued to pressure the U.S. spinning industry. Consequently, restructuring in the U.S. textile and apparel industry has occurred over the last several years, forcing the industry to reduce capacity and output. As a result, mills’ share of total U.S. cotton demand has fallen significantly over the last several years (fig. 3). To remain competitive, many U.S. textile and apparel processors have become less vertically integrated and focused on core products and niche markets that are not price driven. The level and origin/destination of the textile and apparel imports/exports will affect the amount of raw cotton consumed by U.S. mills. Upland mill use is forecast at nearly 7.6 million bales in 2002/03, while ELS consumption is projected at 105,000 bales. Based on the first 3 months of data from the Department of Commerce, the seasonally adjusted annual rate of cotton consumption averaged approximately 7.4 million bales. Actual cotton mill use for August through October 2002 totaled 1.98 million bales, compared with 2.07 million a year earlier. Like cotton, manmade fiber mill use has also decreased similarly during the first 3 months of 2002/03. Consequently, cotton’s share of fiber consumption on the cotton system remains near year-earlier levels at 81.2 percent and is slightly higher than the 2001/02 average of 81 percent. Based on these U.S. cotton supply and demand projections, ending stocks for the 2002/03 marketing year are estimated to decline to 6.8 million bales, 8 percent, or 600,000 bales, below the beginning level (fig. 4). The decline is attributable to similar demand and lower production than last season. Despite the reduction from 2001/02, however, 2002/03 ending stocks remain the second highest in 14 years. As a result, the U.S. stocks-to-use ratio is expected to decrease slightly from 40 percent in 2001/02 to 37 percent this season. Upland stocks are estimated at 6.4 million bales, while ELS stocks are projected to rise to 388,000 bales, two-thirds of estimated demand and a record level. U.S. Textile Trade and Domestic Consumption The overall volume of U.S. textile trade in calendar 2002 is expected to rebound (based on preliminary data) from last year’s decline that was affected by the U.S. recession. The decade-long trend of expanding U.S. imports and exports is expected to resume in 2002 as the liberalization of world textile and apparel trade continues. Consequently, the U.S. textile trade deficit will increase again, as imports have risen modestly so far this year while exports remain near the 2001 level. In calendar 2001, the textile trade deficit for all fibers reached a record of 8.7 billion (raw-fiber-equivalent) pounds, 5 percent above 2000. U.S. textile and apparel imports during the first 9 months of 2002 were 11.4 billion pounds, 10 percent above the comparable period in 2001. However, textile exports through September 2002 have slipped below last year’s 3.8 billion pounds to 3.7 billion as the strength of the U.S. dollar throughout much of the year has kept exports relatively more expensive to foreign customers. As a result, the textile trade deficit for all fibers during the first 9 months of 2002 reached 7.7 billion pounds, 18 percent above the same period in 2001. U.S. cotton textile trade has followed a similar pattern so far in 2002. Cotton textile imports totaled nearly 6.4 billion pounds through September 2002, 10 percent above a year earlier. Meanwhile, cotton textile exports were similar to the 9-month period of 2001 at 1.6 billion pounds. For calendar 2002, U.S. cotton textile and apparel imports are expected to rise for the 14th consecutive year, while exports may remain near year-ago levels. Imports for the year will likely exceed the equivalent of 17 million bales (8.3 billion pounds) of raw cotton, about 10 percent higher than in 2001. On the other hand, U.S. cotton textile and apparel exports are likely to remain below the 5-million- bale level (2.1 billion pounds), similar to a year earlier. With imports increasing and exports steady, the U.S. cotton textile trade deficit is expected to climb higher in 2002 to the equivalent of nearly 13 million bales of raw cotton (fig. 5). Imported textile and apparel products continue to displace U.S. mill use of all fibers. In 2002, total U.S. fiber mill use is expected to fall to approximately 13 billion pounds, the fifth consecutive annual decline and the lowest since 1988. While total U.S. manmade fiber mill use is expected to be similar to 2001, cotton mill use will decline for the fifth consecutive year to about 3.6 billion pounds, the lowest in 14 years. As a result, cotton’s share of U.S. fiber mill use continues to erode and will likely decline from nearly 28 percent in 2001 to about 27.5 percent in 2002, while manmade fiber share remains above 70 percent. In contrast, 2002 total domestic consumption (mill use plus net textile trade) of cotton is expected to reverse last year’s drop as imported products provide a bigger boost this year. Based on data for the first 9 months of 2002, domestic consumption totaled 7.5 billion pounds, 6 percent above the comparable period in 2001. By year’s end, cotton domestic consumption is likely to approach 9.8 billion pounds, 6 percent higher than in 2001 but similar to 2000 (fig. 6). Consequently, the U.S. per capita cotton consumption would rise to approximately 34 pounds, above last year but below the 2000 level. However, less than 40 percent of this total is being spun in U.S. mills. World Cotton Situation and Outlook Steep Decline in World Cotton Production Expected for 2002/03 World cotton production is forecast down 9 percent in 2002/03 as weak cotton prices have induced a shift to other crops throughout much of the world and yields decline to more normal levels. Consumption of cotton around the world is expected to continue increasing, growing by 2 percent in 2002/03 as world economic growth continues to pick up. World ending stocks are expected to fall to their lowest share of world consumption since the early 1990s. However, China once again accounts for the largest share of the world’s year-to-year decline in stocks, and 2002/03’s stocks outside of China are still expected to surpass their 2000/01 share of consumption. As a result, the world price of cotton through November 2002 remains well below its long-term average, even as prices for other crops have returned close to normal levels. World cotton production in 2002/03 is forecast at 88.1 million bales, while world consumption is forecast at 96.2 million. World ending stocks are forecast to fall from 47.5 million bales in 2001/02 to 40 million. China’s ending stocks are expected to decline 4 million bales, accounting for much of the decline forecast in world stocks (table C). Policies and Structural Change Insulate Production from Price Declines Since 1995 the inflation-adjusted price of world cotton has dropped about 50 percent. However, foreign cotton production has dropped only 6 percent during that period. In a number of large cotton-producing countries, factors such as changing macro-economic policies, national economic development goals, and technical change have prevented production from falling more. Between 1996/97 and 2002/03, the Franc Zone’s production has averaged 25 percent above its 1995/96 level, or 800,000 bales. While world prices have declined during this period, the lagged effects of an unprecedented devaluation in 1994 have driven cotton area in the Franc Zone 45 percent higher between 1995/96 and 2002/03. With consumption in the region falling, exports in 2002/03 are expected to be 1.2 million bales higher than in 1995/96. Production rose as the devaluation enabled the region’s cotton companies to increase prices in local currency even as world prices declined. Local prices also remained stable as state-owned cotton companies deliberately smoothed prices to insulate low-income farmers from the effects of presumably short-lived declines in world prices. According to data from the International Cotton Advisory Committee (ICAC), Togo’s seed cotton price in 2001 was 81 percent above its pre-devaluation level, while consumer prices had risen only 23 percent. In 2002, Franc Zone producers could expect reduced returns in the coming year due to lower world prices, but press reports indicate producers can still expect to be paid prices well above what they received in the mid-1990s. In Mali, the region’s largest producer, the government set the 2002/03 price at 180 CFA francs, compared with 200 CFA in 2001/02 and 85 CFA in 1993/94. In addition to favorable local prices, Franc Zone farmers are drawn to cotton production by the credit offered by the region’s cotton companies. Markets are poorly developed in the region, and farmers’ only access to credit typically comes through growing cotton, and in many cases their only access to fertilizer and insecticides are inputs supplied by these companies. In addition to credit and inputs, the region’s farmers also benefit from the purchasing guarantees offered by the cotton companies, permitting them to profit from greater flexibility in the marketing of other crops. Producers reduced planted area from the year before only slightly in 2002/03, down 4 percent, but problems with rainfall cut yields 9 percent and the crop is expected to be 700,000 bales smaller than in 2001/02. China’s crop in 2002/03 is also expected to fall, but will remain its second largest since 1995/96. Area planted to cotton in China fell significantly after 1995 and remains low, but an enormous irrigation investment in Xinjiang and the introduction of Bt cotton in the East has driven yields steadily higher. Following reduced prices in 2001/02, China’s cotton area fell 12 percent in 2002/03. However, recent reports suggest that Xinjiang, China’s highest-yielding province, was able to maintain production close to last year’s level due to rising yields. A recent report by China’s National Bureau of Statistics suggests that yields elsewhere might have risen as well. As a result, China’s yields are estimated higher for the fourth consecutive year (fig. 7). Between 1995/96 and 2001/02, Xinjiang’s cotton area increased 52 percent as the central government’s development objectives in this border region fostered continued investment in irrigation capacity. Yields in Xinjiang also rose, and during this time Xinjiang’s production rose more than 2.1 million bales. In 2001/02, Xinjiang’s cotton output totaled 6.7 million bales, a level of production exceeded by only three countries outside of China, and exceeding all of Sub-Saharan Africa. Beginning in 1999, the spread of Bt cotton began raising yields in eastern China. Starting at 530,000 hectares in 1999, Bt area grew an additional 500,000 hectares annually in 2000 and 2001, accounting for about 40 percent of China’s eastern cotton plantings. Studies have shown Bt cotton yields about 15 percent higher than conventional cotton in Hebei and Shandong, so the expansion of Bt cotton probably accounts for much of the 17-percent increase realized in China’s cotton yields outside of Xinjiang during 1998/99-2001/02. While total cotton area fell in China in 2002/03, the profitability of Bt cotton probably resulted in increased plantings, a rising share of Bt area in China’s total area, and an improved average yield from the year before. Australia’s cotton area in 2002/03 is expected to fall significantly from the year before, but largely due to poor precipitation that has reduced water allocations for irrigation and led to a large reduction in dryland plantings. Between 1995/96 and 2000/01, Australia’s cotton area rose 67 percent despite falling world prices as investment in irrigation opened up new land to cotton production and as Australian producers’ innovative use of hedging in cotton and futures markets protected them from price fluctuations (fig. 8). With the exception of a 0.5-percent decline in 1999/2000, Australia’s irrigated area planted to cotton rose every year between 1994/95 and 2000/01. Irrigated area is estimated to have fallen about 10 percent in 2001/02, and a significant shortfall in precipitation during the last year is expected to lead to a substantial reduction in irrigated plantings in 2002/03. However, even if Australia’s irrigated area in 2002/03 is half of its 2001/02 level, it could still reach about the same amount planted in 1995/96. In recent years, Pakistan has been increasing its area planted to cotton despite lower prices, as a prolonged drought has hampered the profitability of rice. With world rice prices low due to China’s efforts to reduce burdensome stocks and India’s subsidized exports, farmers in Pakistan shifted area formerly planted to rice into cotton, which has substantially lower irrigation requirements. Area planted to cotton approached a record high in 2001/02, while dropping finally in 2002/03. Pakistan’s crop is forecast 400,000 bales lower than in 2001/02, at 7.8 million bales. Consumption Continues Growing World economic activity in 2001 was its slowest in about a decade, and while 2002 was better, world gross domestic product (GDP) growth remained below average. By 2003, the world economy is expected to have returned to an average rate of expansion, and this recovery is expected to sustain growth in world cotton consumption. In 2000/01, world cotton consumption grew by only 1 percent from the year before, but growth in 2001/02 is estimated at 2.3 percent. Buoyed by a recovering world economy and the lagged effect of lower prices, world cotton consumption is expected to continue expanding slightly faster than average in 2002/03, with growth forecast at 2.1 percent. Once again, China’s textile industry accounts for much of the expected growth. In 2002/03, China’s cotton consumption is expected to increase 1.3 million bales from the year before, while world consumption is expected to grow by 2 million bales. China’s yarn output of all fibers has been growing at double-digit rates from a year earlier in recent months, and while the surge in chemical fiber production in 2001 suggests cotton may once again be facing a falling share of fiber use in China, cotton use is growing strongly. Yarn output growth is expected to slow as the year progresses, but China’s share of world cotton use is expected to grow for the fifth consecutive year in 2002/03 (fig. 9). In 1997/98, China’s share of world cotton consumption was estimated at 22 percent. In 2002/03, after an 8- million-bale increase in consumption, China’s textile industry is forecast to account for 28 percent of the world’s cotton use. During this same period, the U.S. share of world cotton consumption fell from 13 percent to 8 percent. Despite Foreign ELS Output Decline, Stocks Expected Higher According to the ICAC, ELS output in foreign-producing countries is expected to decrease in 2002/03 as stocks have risen recently. At 2.7 million bales, foreign ELS cotton production is forecast 9 percent below the year before, largely because of declines in China and Egypt that have more than offset the recent gains seen in Sudan. Foreign ELS output had been relatively stable from 1998-2000 before last season’s expansion. Despite this season’s expected decline, ELS foreign production remains forecast above the 2.3-million-bale average of the preceding 5 years (table D). ELS cotton consumption by foreign producers in 2002/03 is expected to rise about 5 percent but remain substantially below production. At 1.64 million bales, 2002/03 foreign producers’ consumption is forecast at its highest level since 1997/98. As is the case with production, Egypt is the largest consumer and is expected to account for more than half of the total increase seen this season. Egypt is expected to consume 675,000 bales, compared with 586,000 bales by India, the second largest consumer. Foreign ELS producers’ exports are also expected to increase about 5 percent in 2002/03 to 944,000 bales. This would be their highest export volume in nearly a decade. Egypt, the largest exporter, accounts for most of the gains this season and half of the total foreign producers’ exports. In contrast, declines are projected for Central Asia and China this season. Despite a boost in consumption by foreign ELS producers, production continues above consumption, leaving ending stocks to rise significantly once again in 2002/03. At 2.1 million bales, stocks are up nearly 15 percent from last season and are rising in both Egypt and Sudan. Egypt’s share of 2002/03 ending stocks is expected to rise to 50 percent while Sudan holds another 20 percent. However, China’s stocks are expected to remain near last season and account for 11 percent of the foreign ELS ending stocks in 2002/03. Situation and Outlook for Other Fibers U.S. Wool Production and Mill Use Continued Decline U.S. sheep numbers and wool production declined for the 12th consecutive year in 2001. The U.S. farm price for shorn wool averaged $0.36 per pound, greasy in 2001, 9 percent above a year earlier. Sheep numbers on January 1, 2002, were 4.9 million head, 1 percent below January 2001 and 51 percent below 1990. Wool production is estimated at 22.8 million pounds, clean (43 million greasy) for the 2001 marketing year (table E). During 2001, U.S. raw wool imports totaled 35.6 million pounds, clean, 11 percent below a year earlier (table F). During 2001, imports of fine wool represented 45 percent of total shipments. Imports of unimproved or other grades not-finer-than 46’s totaled 19.7 million pounds in 2001. Shipments from New Zealand represented 80 percent of these coarser grades, while Australia accounted for 80 percent of the finer wools last year. With beginning stocks of 48.6 million pounds, total 2001 supplies were 127 million pounds, clean, 4 percent below a year earlier. Raw wool mill consumption totaled 66.3 million pounds, 14 percent below 2000 and, less than one-half the level just 4 years ago. Apparel wool consumption, at 53 million pounds, was 15 percent below a year earlier, while carpet mill use was 1.9 million below 2000 at 13.3 million pounds (table G). In 2001, the woolen system used 25.9 million pounds and the worsted system used 27.1 million. Raw wool exports during 2001 were 6.2 million pounds, clean, compared with 6.6 million a year earlier. Shorn wool shipments were 5.6 million pounds and not-shorn (pulled) exports were 743,674 pounds. Carbonized wool exports totaled 1.2 million pounds, compared with 1.1 million pounds in 2000. The majority of shorn wool exports went to Germany, Belgium, Spain, and Italy. The majority of not-shorn wool went to Canada. U.S. prices for clean, mill-delivered territory raw wool increased during 2001 compared with the previous year. Finer grades 64’s and 62’s averaged $1.21 and $1.04 per pound, respectively, while the 60’s and 58’s averaged $0.91 and $0.77 per pound, respectively. Both fine and coarse grades averaged over $0.10 per pound higher than a year earlier. Domestic prices of Australian raw wool of all but the finest grades averaged above market prices of a year earlier. Prices for Australia’s finest wool, the 80’s, averaged $2.42 per pound in 2001, 14 percent below 2000, and the 64/70’s remained unchanged at $1.69 per pound. For the coarser grades, prices rose over $0.20 per pound, compared with a year earlier. The 60/62’s averaged $1.60 per pound and the 58/56’s averaged $1.54 per pound. Lower sheep numbers in 2002 imply that wool production could decline further. While the number of sheep declined only 1 percent from last year, the number of sheep shorn was down 7 percent. Continued weak wool prices were likely responsible for the larger decline in the number of sheep shorn. Stronger prices and the new price support program for wool may lead to stable or slightly larger production this year (fig. 10). The 2002 Farm Bill extended non-recourse loans with marketing loan provisions to wool and mohair. The loan rates are fixed in legislation during the 2002 through 2007 seasons. Graded wool is supported at $1.00 per pound and ungraded wool, at $0.40 per pound. The support rate for mohair is $4.20 per pound. During 2002 wool prices increased substantially throughout the year. The latest price information indicates the finer grades 64’s and 62’s rose to $2.04 and $1.88 per pound, respectively, in October. The coarser grades experienced similar increases. Prices of both fine and coarse grades of U.S. wool rose about $0.70 per pound compared with prices received last January. Similarly, domestic prices of Australian raw wool have increased about $1.00 per pound for all grades. Higher prices, worldwide, appear to be caused by reduced supplies rather than demand-related. For example, Australia, the world’s largest producer, had the smallest wool clip in nearly 50 years. This, coupled with the disposal of the Reserve Price Scheme stockpile in August 2001, has pressured prices. Higher U.S. wool prices have occurred despite contracting mill use. During the first half of 2002, consumption totaled 25.2 million pounds, down 34 percent from the corresponding period during 2001. Noncellulosic Fiber Industry Improves The U.S. noncellulosic fiber industry improved somewhat in the January-June 2002 period when compared with the first half of 2001. Total shipments during the first 2 quarters of 2002, at 4.44 billion pounds, were less than 3 percent below the similar 2001 period. In contrast, total shipments during calendar 2001, at 8.64 billion pounds, were 12 percent below the previous year. Total noncellulosic fiber production during January-June 2002, at 4.5 billion pounds, remained unchanged from a year earlier while the annual 2001 production of 8.53 billion pounds was 15 percent below 2000. Noncellulosic stocks at fiber producers’ plants were 0.55 billion pounds at the end of August 2002, 20 percent below a year earlier. Stocks at the end of 2001, at 0.56 billion pounds, were 25 percent below the 2000 level. Domestic shipments of noncellulosic fibers during January-June 2002 (the latest data available) were 4.22 billion pounds, 1 percent below a year earlier. Domestic shipments for calendar 2001 were 8.17 billion pounds, 12 percent below 2000. Filament fiber domestic shipments during the first 6 months of 2002 totaled 2.52 billion pounds, about 2 percent below a year earlier. Filament fiber domestic shipments in 2001, at 4.92 billion pounds, were 11 percent less than in 2000. Domestic shipments were dominated by olefin fibers, constituting about 45 percent since 2001; nylon accounted for nearly one-third of these shipments while polyester contributed about 23 percent. Noncellulosic staple domestic shipments during the first 6 months of 2002 totaled 1.70 billion pounds, slightly less than a year earlier. Staple fiber domestic shipments in 2001, at 3.25 billion pounds, were 13 percent below 2000. Staple fiber domestic shipments since 2000 have, on average, consisted of 53 percent polyester, 21 percent olefin, 19 percent nylon, and 7 percent acrylic. The carpet market continues to consume more fibers in facing and backing uses than any other fiber market (appendix table 43). During January-June 2002, the carpet market used 1.93 billion pounds of fiber, 5.7 percent above a year ago. Noncellulosic carpet use amounted to 46 percent of total noncellulosic fiber domestic shipments during the first 6 months of 2002 and 3.57 billion pounds in 2001, 12 percent below 2000. Nylon dominated the carpet market, amounting to 51 percent of the total use of noncellulosic carpet fibers. Nylon staple carpet fibers accounted for 95 percent of nylon staple domestic shipments, while nylon filament carpet fibers averaged 78 to 81 percent of total nylon filament. The use of olefin in facing and backing during the first half of 2002 was 0.80 billion pounds, slightly less than a year earlier. In 2001, the quantity was 1.54 billion pounds, 14 percent below 2000. Olefin fibers constituted 41 percent of the noncellulosic fibers used in carpets during January-June 2002 compared with 43 percent in 2001. Carpeting was the most important use of olefins, at 54 percent. Woven textile production remained the second largest outlet for noncellulosic fibers, taking 19 percent or 0.78 billion pounds of the January-June 2002 domestic shipments. However, this was 9 percent below the comparable period in 2001. The woven textile market consumed 20 percent, 1.61 billion pounds, of all noncellulosic fibers during calendar 2001, 10 percent less than in 2000. Two fibers made up almost 90 percent of this market: polyester accounted for 66 percent while olefin contributed 23 percent. Similarly, the knit market used 0.39 billion pounds during January-June 2002, 9 percent below last year. In 2001, this market consumed 0.78 billion pounds, 16 percent below the previous year. Three fibers dominate the knit market: polyester, at 67 percent; nylon, at 16 percent; and acrylic, at 17 percent.