Cotton & Wool YEARBOOK -- SUMMARY November 24, 2003 November 2003, ERS-CWS-2003 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 text of the yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------- 2003/04 World Cotton Stocks Projected Lowest in 9 Years World cotton stocks in 2003/04 (August/July marketing year) are forecast at only 31.7 million bales, more than 5 million bales below a year earlier and the lowest level since 1994/95. The significant decline from 1998/99’s record of 48.1 million bales has been attributable to global demand outpacing world production during four of the last five seasons. Foreign cotton stocks are also expected to be the lowest since 1994/95 with the largest reduction occurring in China. Stocks in the United States are likewise expected to decline from last season but are only the lowest in 4 years. Global cotton production in 2003/04 is projected at 92.1 million bales, nearly 5-percent above last season. Production is estimated higher in most major-producing countries this season, with the largest increases expected in India (1.9 million bales higher), Brazil (1.1 million), and the United States (1 million). In contrast, 2003/04 cotton production in China--the world’s largest producer--is forecast 600,000 bales lower than a year ago as unfavorable weather reduced the crop from earlier expectations. Foreign cotton production in 2003/04 is forecast about 4.5 percent above last season at 73.9 million bales. World cotton consumption is projected at 97.7 million bales in 2003/04, slightly below last season’s record. However, foreign consumption is expected to be a record 91.5-million bales, as U.S. mill use continues to move overseas. Among foreign consumers, small changes are anticipated in 2003/04 with the exception of China, where mill consumption is forecast to rise 700,000 bales to 30.2 million--almost one-third of the world’s cotton consumption. As a result of increased foreign consumption, global trade in raw cotton is expected to increase more than 5 percent in 2003/04 to 32.3 million bales, the highest since 1988/89. Foreign cotton exports are projected to rise 2 percent from 2002/03 to 19.1 million bales, or 59 percent of world trade in 2003/04. The United States is expected to account for the remainder, as exportable supplies have expanded with the considerable reduction in the domestic industry over the past several years. U.S. cotton production in 2003/04 is forecast at 18.2 million bales, nearly 6 percent above last season but well below the 2001/02 record of 20.3 million bales. This season's cotton output is based on smaller area but a record national yield. U.S. cotton planted area declined 2 percent from 2002 to 13.6 million acres this season, the lowest in 5 years. Generally favorable conditions throughout most of the growing season permitted a better-than-average U.S. cotton crop. Inclement weather delayed planting, particularly in the eastern half of the Cotton Belt and in California, but crop development, and subsequently harvest, progressed normally albeit behind the typical pace. Abandonment, expected near 11 percent this year, is similar to 2002/03, while harvested cotton area, estimated at 12.1 million acres, is 300,000 acres below last season and the lowest since 1998/99. However, the national yield is projected at a record 722 pounds per harvested acre. U.S. cotton exports in 2003/04 are projected to reach a record for the second consecutive season. Exports are forecast at 13.2 million bales, up from 11.9 million in 2002/03. Large U.S. supplies of exportable cotton remain this season despite total supplies being 1 million bales below 2002/03. In addition, projections of record foreign consumption are expected to benefit U.S. exports and push world trade higher. With prospects for world cotton exports rising modestly in 2003/04, the U.S. share of global trade is expected to surpass 40 percent, slightly above last season. In contrast, U.S. cotton mill consumption is forecast at only 6.2 million bales in 2003/04, 1.1 million below the previous season and the lowest since 1984/85. The dramatic growth of U.S. cotton textile and apparel imports, which have doubled since 1996, has forced the U.S. textile manufacturing industry to significantly reduce its capacity. 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 2003/04 were estimated at 5.4 million bales. Despite a higher crop forecast this season, total U.S. cotton supply in 2003/04 is projected 4 percent lower at 23.7 million bales. Meanwhile, U.S. cotton demand is forecast to exceed production for the second consecutive season with total demand projected at 19.4 million bales, slightly above 2002/03. As a result, based on these supply and demand estimates, U.S. ending stocks for 2003/04 are estimated to continue their decline, decreasing to 4.3 million bales and the lowest in four seasons.