Cotton & Wool YEARBOOK -- SUMMARY November 29, 2005 November 2005, ERS-CWS-2005 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. ----------------------------------------------------------------------------- Record Foreign Cotton Mill Use and Larger U.S. Exports Projected for 2005/06 World cotton ending stocks for 2005/06 (August/July marketing year) are forecast at nearly 50.2 million bales, 600,000 bales below a year earlier and nearly 2 million bales below 2001/02’s record of 52.1 million. The estimated reduction this season is attributable to the continued growth in global consumption and the reduction in world production from 2004/05’s record crop. Foreign cotton stocks are also expected to decline in 2005/06, with reductions in a number of countries, including China. In contrast, stocks in the United States are forecast to rise 1 million bales in 2005/06 and are expected to be at their highest since 2001/02. Global cotton production in 2005/06 is projected at 111.7 million bales, 7 percent below last season’s record output of 120.4 million. Production is forecast lower in most of the major-producing countries, including China (4.5 million bales lower), Pakistan (1.8 million), and Brazil (1.2 million). These three countries are forecast to account for over 85 percent of the output reduction in 2005/06. Meanwhile, India and the United States are expected to produce crops similar in size to those of 2004/05. Total foreign cotton production in 2005/06 is estimated at nearly 88.6 million bales, or about 9 percent below last season. World consumption of cotton is forecast at a record 114.4 million bales, 5 percent above last season. Foreign cotton consumption is expected to reach a high of 108.4 million bales, while U.S. mill use declines further. Foreign mill use is expected to rise for the seventh consecutive season. Among foreign consumers, the largest gains are anticipated in China (4 million bales higher), India (1.8 million), and Pakistan (1 million). China is expected to account for 70 percent of the 2005/06 global consumption increase and, at 42.5 million bales, China’s share of world cotton consumption will surpass 37 percent. With foreign consumption exceeding production once again in 2005/06, global trade in raw cotton is forecast to rise significantly (17 percent) this season to a record 40.8 million bales. Both the United States and other major- producing countries are expected to benefit from the gap between foreign production and consumption. Foreign exports are projected to rise 20 percent to 24.6 million bales, or 60 percent of global trade in 2005/06. Foreign imports are forecast at nearly 41.4 million bales, 26 percent above a year earlier. U.S. cotton production in 2005/06 is projected at 23.2 million bales, slightly below the 2004/05 record of approximately 23.3 million. This season’s near-record crop is the result of very good growing conditions and an increase in area of nearly 4 percent. U.S. cotton planted area rose to nearly 14.2 million acres this season, and with abandonment projected at a relatively low 3.6 percent, harvested area is estimated at nearly 13.7 million acres, the highest since 2001/02. And although the national yield is below 2004/05’s record of 855 pounds per harvested acre, this season’s 813-pound-yield is the second highest and well above average. U.S. cotton exports in 2005/06 are projected to reach a remarkable 16.2 million bales, 1.8 million above 2004/05 and a record. With record foreign cotton imports expected this season, the United States--with back-to-back 23-million-bale crops--has large exportable supplies of cotton again this season to help supply the foreign import demand associated with rising global cotton consumption. Despite the expectation of record shipments, the U.S. share of global trade is forecast to decline slightly to below 40 percent, similar to the 2002/03 level. U.S. cotton mill consumption is forecast at only 6 million bales in 2005/06, 500,000 bales below the previous sea son and the lowest since 1984/85. The complete removal of the Multifiber Arrangement quotas at the beginning of 2005 have led to increased imports of cotton textile and apparel products into the United States. The additional competition from these imports is expected to further reduce raw cotton demand in the United States. U.S. cotton stocks at the beginning of 2005/06 were estimated at 5.5 million bales, similar to 2003/04. And with a large crop for the second consecutive year, total U.S. cotton supply in 2005/06 is projected to rise 7 percent from last season to 28.7 million bales, the largest U.S. cotton supply since 1965/66. Meanwhile, U.S. cotton demand is expected to reach 22.2 million bales, 6 percent above 2004/05 and the largest on record. Consequently, based on these supply and demand estimates, U.S. stocks for 2005/06 are forecast to rise 1 million bales to 6.5 million by season’s end, resulting in a stocks-to-use ratio of 29 percent and the highest in 4 years.