COTTON AND WOOL OUTLOOK United States Department of Agriculture CWS-0895 Economic Research Service ----------------------------------------------------------------------------- Approved by the World Agricultural Outlook Board August 11, 1995 ----------------------------------------------------------------------------- Record U.S. Cotton Crop Forecast Based on August 1 conditions, the initial survey-based USDA forecast of 1995 cotton production is a record 21.81 million bales. Upland production is projected at 21.45 million bales, while the extra-long staple crop is estimated at 358,000. During the past 10 years the August forecast has been above final production 5 times and below 5 times. Past differences between the August forecast and final production estimate indicate that chances are two out of three that the 1995 crop will range between 20.1 and 23.5 million bales. USDA's production forecast was within the range of private forecasters (20.7 to 22.6 million bales), and equal to the average estimate. Upland production is expected to rise in each region in 1995, with the Southeast providing the largest gain. Southeastern States' production is forecast at 4.6 million bales, 27 percent above last season. Delta production is projected at nearly 7.5 million bales, 8 percent above 1994. In the Southwest and West, a 7-percent increase is forecast with the crop at 5.5 and 3.8 million bales, respectively. Recent hot weather across the cotton belt has allowed the 1995 crop to advance rapidly from a slow start. Cotton boll setting was 82 percent complete as of August 6, up 10 percentage points from the week prior and 1 point ahead of the 5-year average. Similarly, cotton boll openings, at 7 percent, equaled last season and were 1 percent ahead of average. However, the overall condition of the crop remains below last year, with several States accounting for much of the decline. Thirty-two percent of Arizona acreage and 20 percent of the Texas and Alabama crops were rated poor or very poor. Only 56 percent of the U.S. crop was rated good or excellent. With the record cotton crop forecast and carryin stocks at nearly 2.5 million bales, total supply for the 1995 marketing year is projected at 24.3 million, 5 percent above last year and the largest since 1966. Total use, however, is projected to decline 8 percent from 1994 to 19.2 million bales. Domestic mill use is likely to continue expanding as demand for denim remains strong and cotton textile exports are expected to achieve a new record in 1995. Raw cotton exports, on the other hand, are projected to return to a more "normal" level this season as foreign competition will likely be more intense. Overall, U.S. stocks are expected to more than double by season's end to 5.2 million bales. However, the stocks-to-use ratio of 27 percent remains below the target. Foreign Production, Consumption, and Trade The forecasts for foreign consumption and trade in 1995/96 were raised slightly this month, while production was reduced. With improved prospects overseas and increased supplies expected at home, the forecast for U.S. exports in 1995/96 was raised 200,000 bales to 7.7 million. U.S. 1994/95 exports were revised down 200,000 bales to 9.6 million. Foreign consumption for 1995/96 was raised marginally as better prospects in Indonesia and the Czech Republic offset a reduction in Russia. In total, foreign consumption was raised 100,000 bales to 75 million. Estimated 1994/95 consumption was increased almost 200,000 bales, to 72.7 million. Expected production for 1995/96 was lower as the outlook weakened for crops in Central Asia. Difficulties with weather, irrigation supplies, and chemical inputs are among the reasons for lower forecasts for Uzbekistan, Tajikistan, and Turkmenistan this month. With largely offsetting changes among the Franc Zone countries, total foreign production was revised down nearly 300,000 bales to 69 million. Estimated 1994/95 production was revised up less than 100,000 bales to 65.7 million. Forecasts for foreign trade changed even less with both 1995/96 imports and exports revised slightly up this month. Upward revisions in imports for Brazil, Indonesia, and elsewhere were partly offset by a 100,000-bale decline in China's imports. China's imports were cut for 1995/96 as government customs data revealed higher imports than expected for 1994/95. China built stocks through imports at an unprecedented pace during 1994/95, and a significant deceleration is expected. The forecast for foreign exports was raised slightly with higher exports for the Ivory Coast, Mali, and elsewhere largely offset by declines in Benin and Central Asia. With a weaker outlook for foreign production, a stronger outlook for foreign consumption, and increased expected U.S. supplies, the export forecast was raised to 7.7 million bales. The United States is expected to garner a 28- percent share of world trade in 1995/96, well below the phenomenal 33 percent estimated for 1994/95. However, the U.S. trade share is still forecast well above the average of the last 10 years--22 percent--and would be one of the highest shares in the last 30 years. Two major factors this year are favorable to U.S. exports. One of them, surprisingly enough, is total world trade. With China, India, Pakistan, Mexico, and Turkey importing less in 1995/96, world trade is contracting. However, excluding these countries, world imports are expected to increase about 2 percent. The other favorable development is smaller exports from the former Soviet Union. Net exports from the FSU are expected to drop 865,000 bales in 1995/96, the first decline since 1990/91, as production and beginning stocks there drop and consumption rises. However, while lower in 1995/96, the FSU's 6 million bales of net exports will still exceed the 5.6 million shipped in 1992/93, a very poor year for U.S. exports. The major negative changes facing U.S. exports compared with last year include much lower imports by our largest customer, China, and higher exports by an array of competitors, including West Africa, Pakistan, Argentina, India, Turkey, Paraguay, Australia, and Greece. Also, the United States is unlikely to see a repeat of 1994/95's 400,000 bales of shipments to India and Pakistan, and can expect to ship several 100,000 bales less to Mexico and Turkey as their crops rise. Daily Mill Use Continues Lower The daily average cotton mill consumption eased for the fourth consecutive month in June to its lowest since December 1994. Cotton mill use averaged 41,300 480-pound bales per day in June, down from a season high of 45,600 bales in February. For the month of June, consumption totaled a preliminary 907,500 bales, down from over 1 million bales used in calendar-month May. For the first 11 months (August-June) of 1994/95, cotton mill use totaled 10.45 million bales, compared with 9.60 million a year earlier. During this period, cotton's share of fiber use on the cotton system averaged 76.9 percent, compared with 1993/94's 76 percent. On a seasonally adjusted annual rate (SAAR) basis, the mill slowdown is evident as the SAAR declined to 10.79 million bales in June, the lowest since May 1994. For the season, however, the SAAR has averaged near the current USDA mill use estimate of 11.25 million bales. Similarly, manmade fiber use also declined in June to 138 million pounds, compared with 149 million in May. June's manmade consumption was also slightly below a year ago. During the first 11 months of 1994/95, the seasonally adjusted daily use averaged 6.2 million pounds. Total manmade fiber use for August through June reached 1.5 billion pounds, 3 percent above a year earlier. Textile Trade Expanding Similar to mill use, U.S. textile trade continues to expand. According to the latest available data, total textile imports reached 3.1 billion pounds during the first 5 months of 1995, while exports totaled more than 1.2 billion. These trade levels are 14 and 13 percent, respectively, above a year ago. By fiber, cotton and manmade textiles dominate trade, accounting for a combined 85 percent of all textile imports and 93 percent of textile exports. Cotton imports for January through May 1995 totaled 1.6 billion pounds, 16 percent above last year, while textile exports reached 537 million pounds, 26 percent above a year ago. Cumulative manmade textile imports were 1 billion pounds and exports were 620 million. Overall, the calendar year textile trade deficit continues to climb, surpassing 1.8 billion pounds by May 1995. Cotton accounts for the largest share (58 percent) as the cotton textile deficit totaled nearly 1.1 billion pounds, or the equivalent of more than 2 million bales of raw cotton. With the rise in cotton textile imports outpacing exports and mill use remaining strong, total domestic consumption of cotton is likely to surpass calendar year 1994's 7.9 billion pounds. In 1994, per capita domestic consumption exceeded 30 pounds, the largest since 1946. Fiber Prices Mixed Through mid-July, the average price received by upland producers slid to 80.5 cents per pound, compared with a revised June price of 86.3 cents. During July 1994, the average price was only 58.7 cents. Upland spot prices fell in July to 93.3 cents per pound, the first decline since last October. In contrast, the ELS spot price continued to climb, reaching nearly $1.37 per pound, up from $1.33 in June and reflecting the tight stock situation of ELS cotton in the United States. Although upland cotton prices have declined recently, producers have forward contracted a large share of their crop. As of August 1, 36 percent of the acreage had been contracted, compared with 30 percent in 1994 and only 7 percent in 1993. By region, the West had contracted half of its acreage; the Southeast, 44 percent; the Delta, 41 percent; and the Southwest, 25 percent. All percentages, except for the Southeast, are above a year ago. Upland mill-delivered cotton prices decreased in July, the first decline since October 1994. During July, the average price was $1.00 per pound, compared with $1.18 a month earlier and 76 cents a year ago. Polyester staple prices remained at 92 cents per pound for the second consecutive month. Polyester prices are at their highest level since January 1965. Meanwhile, rayon prices were revised upward back to January 1995. In July, mill-delivered rayon staple prices reached $1.25 per pound, up from the revised June figure of $1.19. The July average is well above the $1.02 posted a year ago. With all three fibers priced relatively high, cotton remains very competitive and will likely benefit from further anticipated increases in manmade fiber prices. As the new marketing year gets under way, 1995/96 northern Europe cotton prices continue lower. For the week ending August 10, the A Index averaged 83.5 cents per pound. Six quotes are currently offered on the A Index with the U.S. Memphis Territory quote the cheapest offering. Central Asia was the second lowest with the California/Arizona quote the fifth cheapest in the Index. Prior to August 1, less than the required three quotes on the B Index were offering 1995/96-crop cotton and therefore an Index was not available. Since August 1, however, the B Index has averaged below 80 cents per pound. Three quotes are currently offered, with the Orleans/Texas quote the cheapest. In addition, the adjusted world price (AWP) continued its decline in early August. For the week of August 11-17, the AWP equaled 68.93 cents per pound, the lowest since early December. A year ago, however, the AWP was near 65 cents. The next issue of the Cotton and Wool Outlook will be released on September 12, 1995. For further information, contact Leslie Meyer at (202) 501-8528, Robert Skinner at (202) 219-0836, John Lawler at (202) 501-7162, or Steve MacDonald at (202) 219-1179. U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ---------------------------- Item 1994/95 Jun Jul Aug ---------------------------------------------------------------------- Upland: Million acres Planted 13.55 16.01 16.42 16.46 Program 11.62 11.36 11.36 11.36 Harvested 13.16 14.97 15.30 15.61 Pounds Yield/harvested acre 705 661 661 660 Million 480-lb. bales Beginning stocks 3.30 1.63 2.20 2.42 Production 19.32 20.61 21.11 21.45 Total supply 1/ 22.64 22.26 23.33 23.87 Mill use 11.15 11.52 11.32 11.42 Exports 9.18 8.18 7.19 7.42 Total use 20.33 19.70 18.50 18.84 Ending stocks 2.42 2.65 4.96 5.17 Percent Stocks-to-use ratio 11.9 13.4 26.8 27.5 Extra-long staple: 1,000 acres Planted 169 188 189 190 Program 84 32 32 32 Harvested 166 186 187 188 Pounds Yield/harvested acre 974 1,000 1,000 916 1,000 480-lb. bales Beginning stocks 227 75 55 34 Production 338 388 390 358 Total supply 1/ 568 468 450 402 Mill use 100 85 85 85 Exports 424 330 315 280 Total use 524 415 400 365 Ending stocks 34 43 40 27 Percent Stocks-to-use ratio 6.5 10.4 10.0 7.4 ---------------------------------------------------------------------- Based on USDA estimates. 1/ Includes imports. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ---------------------------- Item 1994/95 Jun Jul Aug ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 27.29 28.61 29.45 29.84 Foreign 23.76 26.91 27.20 27.39 Production World 85.32 89.00 90.79 90.83 Foreign 65.66 68.00 69.29 69.01 Imports World 30.50 27.70 27.73 27.85 Foreign 30.48 27.67 27.70 27.83 Use: Mill use World 83.92 86.80 86.27 86.45 Foreign 72.67 75.20 74.87 74.95 Exports World 29.17 27.20 27.72 27.97 Foreign 19.57 18.70 20.22 20.27 Ending stocks World 29.84 31.10 33.90 34.01 Foreign 27.39 28.40 28.90 28.81 Stocks-to-use ratio Percent World 35.6 35.8 39.3 39.3 Foreign 37.7 37.8 38.6 38.4 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1995 1994 ------------------------- Item Apr May Jun Jun ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 0 0 0 0 Imports since August 1 12.4 14.7 NA 5.1 Stocks, beginning 8,640 6,658 4,971 6,689 At mills 736 794 787 687 Public storage 6,258 4,883 3,625 5,399 CCC stocks 1,318 862 613 797 Manmade: Million pounds Production 823.1 864.9 841.3 828.1 Noncellulosic 782.8 823.2 796.3 787.1 Cellulosic 40.3 41.7 45.0 41.0 Total since January 1 3,244.7 4,104.5 4,945.8 4,907.9 1995 1994 ------------------------ Mar Apr May May ---------------------------------------------------------------------- Million pounds Raw fiber imports 103.3 88.6 97.5 97.4 Noncellulosic 96.7 81.8 90.8 89.0 Cellulosic 6.6 6.8 6.7 8.4 Total since January 1 287.3 376.1 473.5 426.5 Wool and Mohair: 1,000 pounds Raw wool imports, clean 10,772 5,962 11,450 7,549 48's-and-finer 7,929 4,327 8,028 6,001 Not-finer-than-46's 2,843 1,635 3,422 1,411 Total since January 1 28,935 34,897 46,348 45,423 Wool top imports 605 330 305 214 Total since January 1 1,556 1,886 2,191 1,638 Mohair imports, clean 7 0 0 0 Total since January 1 10 10 10 1 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1995 1994 --------------------------- Item Apr May Jun Jun ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 879 1,006 908 945 Total since August 1 1/ 8,540 9,546 10,453 9,601 SA annual rate 2/ 11,231 10,984 10,790 11,013 SA daily rate 2/ 43.2 42.2 41.5 42.4 Daily rate 43.9 43.7 41.3 42.9 Upland consumed by mills 1/ 869 996 898 938 Total since August 1 1/ 8,465 9,461 10,359 9,535 SA annual rate 2/ 11,109 10,875 10,681 10,933 SA daily rate 2/ 42.7 41.8 41.1 42.1 Daily rate 43.5 43.3 40.8 42.6 Spindles in place 7,238 7,157 7,129 7,690 Active spindles 6,741 6,690 6,665 7,206 100 percent cotton 2,954 2,922 2,887 3,071 100 percent manmade 1,110 1,121 1,132 1,242 Blends 2,677 2,647 2,646 2,893 Percent Cotton's share of fibers 76.8 76.5 76.0 76.5 Manmade: 1,000 pounds Total consumed by mills 1/ 127,269 148,517 137,716 139,293 Total since August 1 1/ 1,219,676 1,368,193 1,505,909 1,457,383 Daily rate 6,363 6,457 6,260 6,332 Noncellulosic staple 5,473 5,635 5,439 5,515 Cellulosic staple 890 822 821 817 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1995 1994 ------------------------ Item Mar Apr May May ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 1,310 1,048 639 831 Total since August 1 6,646 7,694 8,333 5,196 Sales for next season 217 116 179 89 Total since August 1 3,104 3,220 3,399 253 ELS exports 81.9 56.5 45.7 23.5 Total since August 1 255.7 312.2 357.8 269.7 Sales for next season 75.4 14.1 8.3 31.2 Total since August 1 133.9 147.9 156.2 73.2 Manmade: Million pounds Raw fiber exports 95.3 90.6 76.8 74.4 Noncellulosic 87.8 83.1 72.3 71.5 Cellulosic 7.5 7.5 4.5 2.9 Total since January 1 247.4 338.0 414.7 348.2 Wool and Mohair: 1,000 pounds Raw wool exports, clean 423.7 979.3 964.6 311.3 Total since January 1 966.5 1,945.8 2,910.3 1,541.4 Wool top exports 888.9 1,009.1 1,111.6 1,161.1 Total since January 1 2,707.5 3,716.6 4,828.1 4,291.3 Mohair exports, clean 289.4 313.7 216.9 531.2 Total since January 1 1,773.8 2,087.6 2,304.4 2,396.1 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1995 1994 --------------------------- Item May Jun Jul Jul ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 87.04 76.22 73.02 65.62 Oct'95 futures 86.56 87.27 78.42 71.29 Dec'95 futures 81.01 80.49 75.20 70.98 Upland spot 41-34 105.38 106.96 93.28 71.71 Pima spot 03-46 127.77 132.73 136.50 95.13 Avg. price received by: Upland producers 82.60 86.30 80.50 58.70 Mill delivered: Cotton Actual 113.94 117.65 100.04 75.93 Raw fiber equivalent 126.60 130.72 111.16 84.37 Rayon staple Actual 119.00 119.00 125.00 102.00 Raw fiber equivalent 123.96 123.96 130.21 106.25 Polyester staple Actual 86.00 92.00 92.00 76.00 Raw fiber equivalent 89.58 95.83 95.83 79.17 Price ratios Percent Cotton/rayon 102.1 105.5 85.4 79.4 Cotton/polyester 141.3 136.4 116.0 106.6 Northern Europe cotton quotes: Cents per pound A Index 115.13 NQ NQ 81.68 Memphis Territory 121.75 129.00 NQ 79.94 California/Arizona 124.17 NQ NQ 79.94 B Index 108.96 101.53 92.79 80.30 Orleans/Texas 116.13 121.00 NQ 79.38 Wool prices (clean): Dollars per pound U.S. 56's 1.88 1.77 1.75 1.28 Australian 56's 1/ 2.51 2.50 2.45 1.83 U.S. 60's 2.29 2.12 2.08 1.60 Australian 60's 1/ 2.71 2.73 2.61 1.95 U.S. 64's 2.95 2.85 2.61 2.30 Australian 64's 1/ 3.07 3.08 2.92 2.43 ---------------------------------------------------------------------- NA = Not available. NQ = No quote. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1995 1994 ----------------------------- Item Mar Apr May May ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 205,476 169,789 190,550 174,462 Cotton 81,711 72,595 84,068 71,163 Linen 47,675 27,596 29,708 31,112 Wool 3,787 3,990 3,998 4,906 Silk 685 599 742 811 Manmade 71,618 65,009 72,029 66,470 Apparel 381,936 311,642 391,331 329,408 Cotton 224,816 183,812 228,180 182,683 Linen 10,858 8,091 11,449 11,822 Wool 10,880 9,046 13,644 11,384 Silk 10,936 8,560 8,520 11,207 Manmade 124,446 102,133 129,539 112,312 House furnishings 32,114 26,552 31,162 27,652 Cotton 23,439 19,381 22,959 20,428 Linen 269 177 372 159 Wool 147 103 113 96 Silk 20 16 17 18 Manmade 8,238 6,875 7,700 6,951 Floor covering 25,402 24,705 24,918 19,953 Cotton 4,459 4,015 4,755 4,809 Linen 3,034 3,029 3,169 2,526 Wool 9,253 8,758 7,768 6,026 Silk 437 326 510 335 Manmade 8,219 8,578 8,716 6,257 Total imports 2/ 652,042 538,774 644,966 557,572 Cotton 338,263 282,622 343,117 281,938 Linen 61,940 38,991 44,799 45,748 Wool 24,239 22,115 25,785 22,697 Silk 12,078 9,501 9,790 12,373 Manmade 215,522 185,545 221,476 194,816 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 130,267 122,366 128,585 124,632 Cotton 44,774 41,364 44,506 38,404 Linen 3,194 3,116 3,126 3,307 Wool 3,388 3,527 3,463 3,565 Silk 1,509 1,531 1,416 2,011 Manmade 77,402 72,828 76,074 77,345 Apparel 109,166 98,562 109,922 81,202 Cotton 68,573 59,893 66,491 50,049 Linen 2,164 2,094 1,828 1,652 Wool 4,079 4,351 4,808 3,472 Silk 1,919 1,900 1,518 1,438 Manmade 32,431 30,324 35,277 24,591 House furnishings 6,124 5,027 5,239 6,500 Cotton 3,677 2,900 3,048 4,107 Linen 284 241 258 203 Wool 44 90 55 52 Silk 165 159 171 87 Manmade 1,954 1,636 1,708 2,051 Floor covering 27,136 27,403 26,594 29,079 Cotton 3,288 3,363 2,437 3,473 Linen 1,136 1,140 1,214 1,218 Wool 1,540 1,462 1,174 1,626 Silk 3/ --- --- --- --- Manmade 21,173 21,438 21,768 22,762 Total exports 2/ 273,022 253,688 270,586 241,740 Cotton 120,363 107,566 116,521 96,081 Linen 6,789 6,601 6,433 6,390 Wool 9,073 9,455 9,520 8,738 Silk 3,593 3,590 3,106 3,536 Manmade 133,204 126,476 135,006 126,995 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. 2/ Includes headgear. 3/ Absence of trade. 1995 ACREAGE, YIELD, AND PRODUCTION ESTIMATES ------------------------------------------------------------------- State/ Region Planted Harvested Yield Production ------------------------------------------------------------------- Lbs./ 1,000 1,000 acres harvested acre bales Upland: Alabama 620 615 550 705 Florida 110 109 691 157 Georgia 1,500 1,490 677 2,100 N. Carolina 800 780 615 1,000 S. Carolina 340 335 759 530 Virginia 107 107 700 156 Southeast 3,477 3,436 649 4,648 Arkansas 1,060 1,000 826 1,720 Louisiana 1,020 1,010 808 1,700 Mississippi 1,500 1,460 819 2,490 Missouri 420 415 729 630 Tennessee 700 665 664 920 Delta 4,700 4,550 787 7,460 Kansas 3 2 408 2 Oklahoma 370 325 325 220 Texas 6,300 5,700 446 5,300 Southwest 6,673 6,027 440 5,522 Arizona 355 354 1,139 840 California 1,200 1,195 1,165 2,900 New Mexico 55 51 781 83 West 1,610 1,600 1,147 3,823 Total Upland 16,460 15,613 660 21,453 Pima: Arizona 48 48 788 78 California 95 95 1,036 205 New Mexico 15 15 800 25 Texas 32 30 800 50 Total Pima 190 188 916 358 Total All 16,650 15,801 663 21,811 ------------------------------------------------------------------- Based on the August Crop Production report.