COTTON & WOOL YEARBOOK -- SUMMARY November 28, 2007 November 2007, ERS-CWS-2007 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 and tables of the yearbook will be available electronically about 1 week following this summary release. ------------------------------------------------------------------------------- Robust Global Cotton Mill Demand Draws Down Stocks in 2007/08 World cotton ending stocks for 2007/08 (August/July marketing year) are forecast at 54.8 million bales, 6 million below last season and the lowest since 2003/04. This season’s reduction in stocks is attributable to the above- average growth expected in global cotton mill use and a decrease in 2007/08 world cotton production. The global stock decline is largely accounted for by a handful of countries, including the United States, China, Australia, and Pakistan. These countries account for nearly 80 percent of the world stock reduction in 2007/08. Stocks in the United States are forecast to fall 1.9 million bales to 7.6 million but remain the second largest since 1985/86. Global cotton production in 2007/08 is projected at 119.4 million bales, 2 percent below last season’s output of 121.9 million bales and the third largest cotton crop on record. Production is mixed among the major producing countries this season. China—the world’s largest producing country—is forecast to match last season’s crop of 35.5 million bales. India is expected to produce 1.7 million bales more in 2007/08, while the U.S. crop is forecast to decline 2.7 million. Total foreign cotton production in 2007/08, however, is estimated at 100.5 million bales, slightly above last season and a record. World cotton mill use is projected to continue its rapid rise to a record 129.2 million bales in 2007/08, nearly 5 percent (6 million bales) above 2006/07. Foreign cotton mill use is expected to reach a high and approach 125 million bales, while U.S. mill use declines further. Foreign cotton mill use is forecast to increase for the ninth consecutive season. Among foreign mill users, the largest gains in 2007/08 are seen in the major producing countries of China (5 million bales higher) and India (1.1 million). China is expected to contribute over 80 percent of the global increase in cotton mill use in 2007/08 and, at 55 million bales, China will account for nearly 43 percent of world cotton mill use. As foreign mill use exceeds production by more than 10 million bales, 2007/08 global trade in raw cotton is forecast to increase from last season. World cotton trade is projected at 41.1 million bales this season, compared with 37.6 million in 2006/07. With major foreign producers also major spinners of raw cotton, the United States is projected to supply most of the increase in global trade in 2007/08. Foreign shipments are expected to rise 1 percent to 24.9 million bales, or 61 percent of world trade in 2007/08. Foreign imports are forecast at 41.4 million bales, 11 percent above 2006/07. U.S. cotton production in 2007/08 is forecast at nearly 18.9 million bales, 13 percent below 2006/07 but greater than earlier anticipated. Planted area was reduced nearly 30 percent from 2006/07 due to competing crop price expectations at planting time. U.S. cotton plantings were at their lowest since 1989/90. However, abandonment was at a 60-year low this season due to favorable growing conditions across much of the Cotton Belt, particularly in the Southwest. U.S. harvested area reached only 10.5 million acres in 2007/08, but a record yield of 859 pounds per harvested acre pushed cotton production higher.