COTTON AND WOOL OUTLOOK April 11, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- COTTON AND WOOL OUTLOOK is published monthly (except January) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. CWS-0396. ----------------------------------------------------------------------------- Smaller Acreage Projected in 1996 Farmers intend to plant 15.25 million acres of cotton in 1996 according to USDA's Prospective Plantings report released March 29. While strong price competition from competing crops is resulting in a 10-percent decline in prospective upland acreage, this season's high prices for extra-long staple (ELS) cotton are boosting its indicated plantings by 23 percent. Upland area is expected to slip below 15 million acres in 1996, while ELS area is forecast to climb to 265,000 acres, the second highest on record. Upland acreage in the Southwest is expected to reach nearly 5.9 million acres, down 14 percent from 1995. Similarly, the Delta is projected to fall 11 percent to 4.4 million acres. In the Southeast, indications place acreage near 3.3 million acres, only 5 percent below 1995, and in the West, a 7-percent decline in upland area to 1.5 million acres is projected. While upland area is projected down in each region, the relative share of the total acreage remains similar to 1995. The share in the Delta and West regions remains unchanged, accounting for 29 and 10 percent, respectively. In contrast, the Southwest slipped to 39 percent of the U.S. upland total, with the Southeast's share rising to about 22 percent. Plantings Underway, Carryin To Remain Tight As of April 7, 5 percent of the cotton crop had been planted, compared with 6 percent last year. Only four States were reported as having cotton planted: Arizona, at 32 percent; California and Texas, each at 10 percent; and Alabama, at 1 percent. Compared with their 5-year averages, Arizona is above its average, Texas and Alabama are near their averages, while California is lagging. Although the first official USDA cotton supply and demand projections for 1996/97 will not be released until May 10, the carryin stocks are estimated at a relatively tight 2.9 million bales. This projection is based on the latest 1995/96 supply and use estimates. The 1995 U.S. cotton production estimate was revised down slightly to reflect the latest Cotton Ginnings data. USDA's current production estimate is 17.92 million bales (17.56 million for upland and 367,000 for ELS). Final 1995 ginnings and production will also be released next month. In addition to the production adjustment, 1995/96 imports are now projected at 300,000 bales, the highest since 1945/46. Total U.S. cotton supplies are estimated at 20.9 million bales. Meanwhile, total U.S. cotton use is estimated at 18 million bales, leaving the ending stocks-to-use ratio at only 16 percent. Mill Demand Sluggish Preliminary February cotton mill consumption, according to the latest U.S. Commerce Department data, was slightly below the revised January data. On a seasonally adjusted daily rate basis, mill use in February averaged 38,400 bales per day, compared with 38,600 bales in January and 44,100 bales a year earlier. On a seasonally adjusted annual rate (SAAR) basis, February's mill consumption was slightly below January's revised 10.1-million-bale rate. In addition, cotton's share of fiber use on the cotton system slipped to 77.7 percent, tying with last August for the lowest share of the season. Cotton mill use during the first 7 months of 1995/96 totaled 6.0 million bales, compared with 6.6 million last season. Similarly, the SAAR has averaged about 10.4 million bales through February. Although mill use is expected to improve during the next several months, the USDA estimate for the season was lowered 100,000 bales to 10.4 million this month. U.S. Export Forecast Raised, Foreign Production Cut The forecast for U.S. exports in 1995/96 is raised this month by 200,000 bales to 7.6 million. There is little net change in the outlook for foreign imports or exports, but China's import forecast is raised 200,000 bales, Mexico's is raised 125,000 bales, and Taiwan's 75,000 bales. Import forecasts are lower for Russia (down 200,000 bales), Indonesia (100,000 bales), and Egypt (50,000 bales). In general, the countries with higher import forecasts this month favor U.S. cotton more than the countries whose import forecasts are down. This, combined with continued growth in U.S. export commitments and strong export pace, suggests better prospects for U.S. cotton compared with a month earlier. The foreign production forecast for 1995/96 is lowered slightly this month, down 180,000 bales to 70.9 million. A 500,000-bale drop in Pakistan's crop more than offsets a 200,000-bale increase for India. For Pakistan, the 1994/95 crop is also lower--down 250,000 bales to 6.25 million. The 1994/95 change and much of the 1995/96 change represents an adjusted USDA interpretation of the impact of a tax Pakistan introduced on cotton last year. For much of the last year, USDA's estimates have in part been based on the assumption that efforts to evade taxes drove a larger than normal share of the cotton crop outside of normal marketing channels this year and last. Based on new information from USDA's attache in Pakistan, this assumption is dropped, bringing the USDA estimate for Pakistan's recent production closer to the arrivals figure reported by the Pakistan Cotton Ginners' Association. A slowdown in arrivals this year is also a factor in reducing the 1995/96 production estimate. Foreign consumption for 1995/96 is virtually unchanged this month, at 75.4 million bales. While recent data on Russian cloth production suggest a 200,000-bale decline in the 1995/96 consumption forecast, this is offset by a more positive reassessment of consumption in Turkmenistan, Taiwan, and Iran. Foreign exports for 1995/96 are also virtually unchanged this month at 20.9 million bales. The forecast for China is reduced 200,000 bales due to a slow export rate reported for the early season, and Australia's is reduced 100,000 bales in line with a report from ABARE. Offsetting these changes are a 200,000-bale increase for Pakistan, and smaller increases for Mexico and Iran. Finally, foreign ending stocks for 1995/96 are also little changed this month, at 28.9 million bales. A substantial downward revision for Pakistan is offset by gains for China, India, and Turkmenistan. Old Crop Prices Down, New Crop Up The average price received by upland producers for the first half of March declined to 75.1 cents per pound from the revised February price of 76.5 cents. Last March, this price equaled 82.6 cents per pound. The upland spot price also slipped from a month earlier to 81.1 cents per pound, the lowest since November 1994. Meanwhile, the ELS spot price remains twice that of upland cotton. This price ratio encouraged the healthy rise seen in the Prospective Plantings report for 1996 ELS acreage. Mill-delivered upland prices also decreased slightly in March to about 89 cents per pound. However, with no change in manmade fiber prices, cotton prices remain marginally above those for polyester. A year ago, cotton was priced at $1.12 per pound, rayon at $1.09, and polyester at 86 cents. On the other hand, new crop cotton prices have seen a steady rise over the last several months. In January, the December 1996 futures averaged 77.3 cents per pound. By March, this futures contract price averaged nearly 80 cents per pound, and in early April, the December contract averaged above 80 cents. Despite these relatively high cotton prices, competing crop prices are also very strong for the 1996 season. Textile Trade Rises in January Preliminary textile trade data for January 1996 indicate an increase in both textile imports and exports from December. U.S. textile imports totaled 611 million (raw-fiber equivalent) pounds in January, up 25 percent from last December but 7 percent below January 1995. Total imports of each fiber type increased from a month earlier. In particular, cotton textile imports reached 323 million pounds during January 1996, 27 percent above December 1995 but also below a year earlier; they were also up in each major end-use category. Manmade imports increased 30 million pounds, with the January gain largely attributed to apparel products. January textile exports reached nearly 242 million pounds, 3 percent above December 1995 and 11 percent above a year earlier. All fibers, except linen, experienced gains. By category, a large jump in apparel products more than offset declines observed in the other three categories. For cotton, textile exports rose 8 percent during January 1996 to 105 million pounds; this is also nearly 16 percent above a year earlier. On the other hand, January manmade fiber textile exports were virtually unchanged from a month earlier but 6 percent above January 1995. Overall, the January textile trade deficit was 370 million pounds, with cotton accounting for 59 percent (218 million) of the total. The textile deficit increased 113 million pounds from December 1995, but declined 68 million from a year earlier. Meanwhile, the monthly cotton textile deficit was the highest in 3 months, however, it was 11 percent below January 1995. Wool and Mohair Production Down in 1995 Shorn wool production in the United States totaled 63.3 million pounds in 1995, down 8 percent from 1994. In addition, the number of sheep and lambs shorn declined 9 percent to 8.1 million head. However, the 1995 average price paid for wool rose 26 cents to $1.04 per pound for a total value of $64.1 million, 22 percent above 1994. Similarly, U.S. mohair production during 1995 was 12.1 million pounds, 4 percent below 1994. The number of goats and kids clipped fell 8 percent from a year earlier to 1.6 million head. In contrast to wool, the 1995 average price decreased 72 cents to $1.84 per pound for a total value of $22.2 million, 32 percent below 1994. Special Notice: With the recent passage of the 1996 farm legislation, existing legislation which specified the release of monthly cotton crop reports at 3:00 p.m. EST was repealed. This action will allow all reports to be released simultaneously before the commodity markets open. Therefore, USDA cotton supply and demand reports will be released at 8:30 a.m. EST beginning next month. The new release dates will be as follows: May 10, June 12, July 12, August 12, September 11, October 11, November 12, and December 12. Consequently, the originally scheduled release dates for the Cotton and Wool Outlook will also be altered. This report will be released one business day after the dates listed above. The 1995 Cotton and Wool Situation and Outlook Yearbook (CWS-1995) is available for purchase. For information, call 1-800-999-6779. The next Cotton and Wool Outlook (CWS-0496) will be released on May 13. For further information, contact Leslie Meyer at (202) 501-8528 (U.S. Cotton), or Steve MacDonald at (202) 219-1179 (Foreign Cotton). U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ---------------------------- Item 1994/95 Feb Mar Apr ---------------------------------------------------------------------- Upland: Million acres Planted 13.55 16.72 16.72 16.72 Program 11.62 11.02 11.02 11.02 Harvested 13.16 15.78 15.78 15.78 Pounds Yield/harvested acre 705 536 536 536 Million 480-lb. bales Beginning stocks 3.30 2.59 2.59 2.59 Production 19.32 17.61 17.61 17.56 Total supply 1/ 22.65 20.29 20.39 20.44 Mill use 11.10 10.41 10.41 10.31 Exports 8.98 6.89 7.09 7.29 Total use 20.07 17.30 17.50 17.59 Ending stocks 2.59 2.98 2.88 2.87 Percent Stocks-to-use ratio 12.9 17.2 16.4 16.3 Extra-long staple: 1,000 acres Planted 169 215 215 215 Program 84 26 26 26 Harvested 166 211 211 211 Pounds Yield/harvested acre 974 821 821 821 1,000 480-lb. bales Beginning stocks 227 59 59 59 Production 338 361 361 367 Total supply 1/ 567 430 430 436 Mill use 102 95 95 95 Exports 424 310 310 315 Total use 526 405 405 410 Ending stocks 59 25 25 26 Percent Stocks-to-use ratio 11.2 6.2 6.2 6.3 ---------------------------------------------------------------------- Based on USDA estimates. 1/ Includes imports. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1995/96 ------------------------------ Item 1994/95 Feb Mar Apr ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 26.31 28.92 28.75 28.87 Foreign 22.78 26.27 26.10 26.22 Production World 85.67 88.63 89.05 88.83 Foreign 66.01 70.65 71.08 70.90 Imports World 30.53 28.12 28.37 28.57 Foreign 30.51 28.02 28.17 28.27 Use: Mill use World 84.84 85.71 85.91 85.78 Foreign 73.65 75.21 75.41 75.38 Exports World 28.60 27.93 28.27 28.51 Foreign 19.20 20.73 20.87 20.91 Ending stocks World 28.87 31.77 31.73 31.79 Foreign 26.22 28.77 28.83 28.89 Stocks-to-use ratio Percent World 34.0 37.1 36.9 37.1 Foreign 35.6 38.3 38.2 38.3 ---------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1995 1996 1995 ---------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 2,916 411 44 121 Imports since August 1 2.2 5.2 NA 9.1 Stocks, beginning 11,803 12,821 11,089 13,250 At mills 543 569 638 663 Public storage 9,415 10,074 8,597 10,508 CCC stocks 1,499 2,054 2,142 3,111 Manmade: Million pounds Production 787.5 799.3 767.3 813.0 Noncellulosic 741.1 761.4 730.1 772.6 Cellulosic 46.4 37.9 37.2 40.4 Total since January 1 9,948.3 799.3 1,566.6 1,577.7 1995 1996 1995 -------------- Nov Dec Jan Jan ---------------------------------------------------------------------- Million pounds Raw fiber imports 94.1 82.2 NA 91.8 Noncellulosic 85.5 77.3 NA 85.4 Cellulosic 8.6 4.9 NA 6.4 Total since January 1 1,011.3 1,093.5 NA 84.9 Wool and Mohair: 1,000 pounds Raw wool imports, clean 7,656 4,084 9,624 10,441 48's-and-finer 5,172 2,536 7,248 8,903 Not-finer-than-46's 2,484 1,548 2,376 1,538 Total since January 1 84,736 88,820 9,624 10,441 Wool top imports 177 298 629 360 Total since January 1 4,232 4,530 629 360 Mohair imports, clean 19 0 2 4 Total since January 1 143 143 2 4 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1995 1996 1995 --------------- Item Dec Jan Feb Feb ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 669 884 840 912 Total since August 1 1/ 4,324 5,208 6,048 6,613 SA annual rate 2/ 10,334 10,105 10,074 11,517 SA daily rate 2/ 39.4 38.6 38.4 44.1 Daily rate 31.8 38.4 40.0 45.6 Upland consumed by mills 1/ 662 873 830 902 Total since August 1 1/ 4,282 5,155 5,985 6,559 SA annual rate 2/ 10,250 9,984 9,949 11,393 SA daily rate 2/ 39.1 38.1 38.0 43.7 Daily rate 31.5 38.0 39.5 45.1 Spindles in place 6,627 6,520 6,493 7,274 Active spindles 6,079 6,054 6,003 6,850 100 percent cotton 2,745 2,768 2,728 2,972 100 percent manmade 1,019 1,008 1,003 1,118 Blends 2,315 2,278 2,272 2,760 Percent Cotton's share of fibers 78.3 78.4 77.7 76.9 Manmade: 1,000 pounds Total consumed by mills 1/ 88,801 116,727 115,486 131,299 Total since August 1 1/ 578,284 695,012 810,498 939,637 Daily rate 4,229 5,075 5,499 6,565 Noncellulosic staple 3,555 4,369 4,653 5,690 Cellulosic staple 674 706 846 875 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1995 1996 1995 ------------- Item Nov Dec Jan Jan ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 719 1,198 1,204 1,068 Total since August 1 1,684 2,881 4,085 4,006 Sales for next season -9 119 87 8 Total since August 1 47 166 253 2,695 ELS exports 14.1 32.0 58.6 47.0 Total since August 1 61.8 93.9 152.4 122.4 Sales for next season 13.4 32.2 17.4 20.1 Total since August 1 45.8 78.0 95.6 34.1 Manmade: Million pounds Raw fiber exports 87.5 86.1 NA 79.9 Noncellulosic 80.7 79.4 NA 74.2 Cellulosic 6.8 6.7 NA 5.7 Total since January 1 961.9 1,048.0 NA 89.2 Wool and Mohair: 1,000 pounds Raw wool exports, clean 434.7 113.2 336.5 190.8 Total since January 1 5,928.5 6,041.7 336.5 190.8 Wool top exports 1,148.2 940.0 822.2 636.5 Total since January 1 12,902.1 13,842.1 822.2 636.5 Mohair exports, clean 367.8 687.2 1,236.8 874.1 Total since January 1 4,166.4 4,853.6 1,236.8 874.1 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1996 1995 ----------------------------- Item Jan Feb Mar Mar ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 70.99 70.42 68.26 95.83 May'96 futures 83.71 85.12 83.92 78.91 Dec'96 futures 77.30 78.58 79.88 NA Upland spot 41-34 81.81 81.56 81.13 104.20 Pima spot 03-46 167.61 162.63 162.11 115.02 Avg. price received by: Upland producers 76.80 76.50 75.10 82.60 Mill delivered: Cotton Actual 88.86 89.76 88.79 111.91 Raw fiber equivalent 98.73 99.73 98.66 124.34 Rayon staple Actual 125.00 125.00 125.00 109.00 Raw fiber equivalent 130.21 130.21 130.21 113.54 Polyester staple Actual 88.00 88.00 88.00 86.00 Raw fiber equivalent 91.67 91.67 91.67 89.58 Price ratios Percent Cotton/rayon 75.8 76.6 75.8 109.5 Cotton/polyester 107.7 108.8 107.6 138.8 Northern Europe cotton quotes: Cents per pound A Index 86.04 84.99 83.18 110.63 Memphis Territory 94.13 94.70 94.13 116.65 California/Arizona 100.56 100.20 98.31 121.30 B Index 81.03 78.98 77.76 108.67 Orleans/Texas 89.38 90.40 89.88 113.30 Wool prices (clean): Dollars per pound U.S. 56's 1.35 1.35 1.35 1.63 Australian 56's 1/ 1.91 1.92 1.90 2.62 U.S. 60's 1.55 1.56 1.57 1.99 Australian 60's 1/ 2.08 2.05 2.03 2.70 U.S. 64's 1.88 1.92 1.97 2.65 Australian 64's 1/ 2.40 2.37 2.38 3.02 ---------------------------------------------------------------------- NA = Not available. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1995 1996 1995 ----------------- Item Nov Dec Jan Jan ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 158,583 145,724 165,841 207,274 Cotton 58,169 58,969 65,330 83,322 Linen 29,123 26,438 35,821 49,785 Wool 2,765 2,465 3,002 3,768 Silk 649 542 708 698 Manmade 67,877 57,311 60,980 69,700 Apparel 364,303 296,216 389,768 389,977 Cotton 211,833 172,364 226,847 219,992 Linen 11,266 7,780 12,753 15,729 Wool 13,821 8,636 11,170 11,028 Silk 8,863 8,018 12,506 14,211 Manmade 118,518 99,418 126,492 129,017 House furnishings 28,701 23,938 31,545 31,796 Cotton 19,914 16,434 22,892 24,130 Linen 193 167 154 195 Wool 84 122 127 127 Silk 15 34 10 6 Manmade 8,494 7,181 8,362 7,338 Floor covering 19,357 18,305 16,729 19,593 Cotton 3,583 3,709 4,177 3,791 Linen 2,884 2,281 2,746 2,866 Wool 4,394 4,785 4,432 5,733 Silk 327 570 479 367 Manmade 8,170 6,959 4,896 6,835 Total imports 2/ 576,110 489,739 611,224 655,998 Cotton 295,738 254,050 323,250 334,758 Linen 43,496 36,688 51,509 69,037 Wool 21,177 16,084 18,790 20,798 Silk 9,855 9,165 13,704 15,285 Manmade 205,844 173,752 203,972 216,119 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 121,299 106,926 105,961 112,118 Cotton 42,501 35,297 38,190 37,305 Linen 2,775 2,935 2,734 2,673 Wool 3,007 3,231 2,572 3,332 Silk 1,287 1,145 1,296 887 Manmade 71,730 64,318 61,170 67,921 Apparel 106,302 73,141 105,420 75,380 Cotton 62,846 55,063 61,697 47,827 Linen 2,056 2,010 1,813 2,087 Wool 4,354 4,062 4,801 2,554 Silk 1,735 1,505 1,769 1,225 Manmade 35,312 30,502 35,340 21,688 House furnishings 6,873 5,767 4,781 4,096 Cotton 3,933 3,339 2,838 2,498 Linen 258 289 174 163 Wool 101 121 65 40 Silk 114 125 111 73 Manmade 2,466 1,894 1,592 1,322 Floor covering 27,764 27,197 25,181 26,558 Cotton 2,943 3,102 2,250 3,166 Linen 1,169 1,103 1,053 1,240 Wool 1,396 1,313 1,340 1,322 Silk 3/ --- --- --- --- Manmade 22,257 21,679 20,538 20,830 Total exports 2/ 262,557 233,458 241,613 218,453 Cotton 112,255 96,851 105,019 90,827 Linen 6,264 6,347 5,782 6,171 Wool 8,875 8,742 8,796 7,259 Silk 3,135 2,775 3,176 2,184 Manmade 132,027 118,743 118,841 112,011 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. 1996 data are subject to revision. 2/ Includes headgear. 3/ Absence of trade. ACTUAL AND PROJECTED COTTON ACREAGE ------------------------------------------------------------------- State/ Actual Actual Projected Region 1994 1995 1996 1/ 1996/1995 ------------------------------------------------------------------- 1,000 acres Percent Upland: Alabama 463 590 580 98 Florida 69 110 120 109 Georgia 885 1,500 1,380 92 N. Carolina 486 810 780 96 S. Carolina 225 345 310 90 Virginia 42 107 115 107 Southeast 2,170 3,462 3,285 95 Arkansas 980 1,170 1,100 94 Louisiana 900 1,085 970 89 Mississippi 1,280 1,460 1,200 82 Missouri 352 461 460 100 Tennessee 590 700 630 90 Delta 4,102 4,876 4,360 89 Kansas 1 4 2 39 Oklahoma 360 380 350 92 Texas 5,450 6,400 5,500 86 Southwest 5,811 6,784 5,852 86 Arizona 313 365 325 89 California 1,100 1,170 1,100 94 New Mexico 55 61 60 98 West 1,468 1,596 1,485 93 Total Upland 13,552 16,718 14,982 90 Pima: Arizona 48 49 40 82 California 81 115 165 143 New Mexico 11 15 18 120 Texas 29 36 42 117 Total Pima 169 215 265 123 Total All 13,720 16,932 15,247 90 ------------------------------------------------------------------- 1/ Planting intentions as indicated by reports from farmers. End end end