COTTON AND WOOL OUTLOOK August 13, 1997 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- COTTON AND WOOL OUTLOOK is issued electronically 11 months a year (no January issue) by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. No printed copies available. CWS-0797. ----------------------------------------------------------------------------- U.S. Production Lowered for 1997/98 Based on this season's initial USDA survey, 1997 U.S. cotton production is forecast at 17.78 million bales, 1 percent below July's projection and 6 percent below 1996. Upland production is forecast at 17.23 million bales while the extra-long staple (ELS) crop is projected at 554,000. During the past 10 years, the August forecast has been below final production 6 times and above 4 times. Past differences between the August forecast and the final production estimate indicate that chances are two out of three that the 1997 cotton crop will range between 16.3 and 19.3 million bales. Compared with 1996, upland production is expected to decline in each region except the Southwest, where above average rainfall this spring helped the crop's development and progress. In the Southwest, where abandonment is forecast at a relatively low 5 percent, production is projected to improve 16 percent above 1996 to 5.2 million bales, the highest since 1993. In the Delta, however, cotton production is estimated at 4.7 million bales, 22 percent below 1996 and the lowest since 1993. Meanwhile, the Southeast is forecast to produce 4.2 million bales. Although 9 percent below last season, it remains one of the largest crops on record there. In the West, lower area has led to a 3.1-million-bale estimate, which is 5 percent beneath 1996 and the smallest since 1986. In contrast to upland, ELS production is forecast 5 percent above 1996, with over 80 percent of the ELS crop produced in California. Although total area planted to cotton (13.9 million acres) was 95,000 acres below the June Acreage report, a projected lower-than-average abandonment places the harvested area estimate at 13.4 million acres, which is 4 percent above 1996. Based on this harvested area, the national yield is placed at only 637 pounds per acre, 70 pounds below last season but near the 5-year average. While the U.S. crop progress and condition have improved recently, both are lagging last season. As of August 10, 88 percent of the area was setting bolls, compared with 94 percent in 1996. Likewise, only 7 percent of the area had bolls opening, compared with 11 percent last year. In both cases, however, 1997 is near the 5-year average. Similarly, 59 percent of the crop area was in "good" or "excellent" condition, compared with 61 percent in 1996. Additional indications of the lateness of the crop are ginnings prior to August 1. This season, only 2,200 bales were ginned by August 1. This compares with more than 48,000 bales in 1996 and nearly 17,000 bales in 1995. Based on the August production forecast and carryin stocks of 4.1 million bales, total supply for the 1997/98 marketing year is projected at 21.9 million bales, almost identical to the previous season. Total use, however, is estimated to increase 1.5 percent to 18.1 million bales. Cotton mill use and exports for 1997/98 were left unchanged from last month; both are projected slightly above their respective 1996/97 levels. U.S. mill use is estimated at 11 million bales, while exports are forecast at 7.1 million. The higher shipments, represent a slightly reduced share of world trade. However, the share is expected to remain between 25 and 26 percent. With these supply and demand estimates, U.S. ending stocks for 1997/98 are projected to fall 300,000 bales from the beginning level to 3.8 million. Thus, the implied stocks-to-use ratio would decline slightly to 21 percent from 23 percent in 1996/97. India Leads Foreign Supply and Demand Changes in August The largest changes in the 1997/98 foreign cotton supply and demand came in production and ending stocks this month. Foreign production was estimated 650,000 bales higher than in July, at 69.6 million, while projected 1997/98 foreign ending stocks rose 860,000 bales to 32.1 million. The forecast for foreign consumption was also raised slightly (380,000 bales) to 77.5 million. India accounted for at least half of the total increase in each case. Expected 1997/98 cotton area in India was raised 200,000 hectares (ha) to 9 million following a widespread reassessment of grower's response to last year's declining cotton prices in India. Favorable progress of the monsoon may have also helped increase planted area, and raised yield prospects. India's 1997/98 crop is now forecast at 12.5 million bales, 500,000 bales above the July forecast. Uzbekistan's 1997/98 crop is now forecast at 5.8 million bales, 200,000 bales above the July forecast. Weather through late June is now seen to have been particularly favorable for plant development. Rains earlier in the season necessitated a relatively large amount of replanting, but within normal ranges. During June, average maximum temperatures were slightly higher than normal, and well above 1996's extraordinary lows. While temperatures this June equaled levels associated with Uzbekistan's highest yields of the last decade, the forecast yield of 842 kg/ha is only the fourth highest of that period. With planted area much lower than the 1987/88-96/97 average, expected production remains far below average. Mexico's historical production estimates were revised to make USDA data more closely aligned with Mexico's official estimates, but all the production changes preceded 1995/96. On average, the new estimates were higher, and estimated 1997/98 beginning stocks for Mexico were revised upward 130,000 bales. Consumption and imports in 1997/98 were raised by 150,000 bales and 300,000 bales, respectively, as evidence emerged of higher consumption and imports in 1996/97 as well as in 1997/98. Mill Use Unchanged Despite a slight improvement in the June mill consumption report released by the U.S. Commerce department, the 1996/97 estimate was left unchanged. The preliminary July estimate released later this month will provide 12 months of data which will be used to adjust the estimate. In June, mills used on average a seasonally adjusted 42,000 480-pound bales per day, similar to the previous 2 months. On a seasonally adjusted annual rate basis, however, June consumption improved from May to over 10.95 million bales. Actual cotton mill use during the first 11 months of 1996/97 approached 10 million bales, compared with 9.8 million for the same period a year earlier. Based on the recent mill consumption report, the 1996/97 mill use may be marginally above the current 10.85-million-bale estimate. Cotton Prices Up Slightly in July The average price received by upland producers for the first half of July rose to 68.1 cents per pound from the revised June price of 66.8 cents. During July 1996, the average price was 73.6 cents. While upland spot prices rose about a penny in July to 71.8 cents per pound, the ELS spot price increased 2.5 cents to nearly $1.11 per pound. Upland mill-delivered cotton prices were also higher in July, while manmade fiber prices remained steady. Cotton prices averaged 78.5 cents per pound in July, the highest since last December. On the other hand, polyester staple prices are unchanged at 68 cents per pound for the fourth month in a row. As cotton prices have risen recently, mill-delivered cotton has become less competitive. In fact, cotton's (price) competitive position with polyester in July 1997 was the weakest in 2 years. In addition, world cotton prices also rose in July. The A Index averaged nearly 81.5 cents per pound, up slightly from both the previous month and a year earlier. Similarly, the U.S. Northern Europe quotes averaged higher. However, for the 1996/97 season, the A Index averaged 7 cents below 1995/96 at 78.6 cents per pound, reflecting the rise in world stocks during the season. * * * The next Cotton and Wool Outlook (CWS-0897) will be released on September 15. For further information, contact Leslie Meyer at (202) 501-8528 (U.S. Cotton), Steve MacDonald at (202) 219-1179 (Foreign Cotton), or Robert Skinner at (202) 219-0767 (Textiles and Wool). U.S. COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1997/98 ---------------------------- Item 1996/97 Jun Jul Aug ---------------------------------------------------------------------- Upland: Million acres Planted 14.38 14.24 13.75 13.66 Harvested 12.61 13.00 12.63 13.16 Pounds Yield/harvested acre 701 665 665 628 Million 480-lb. bales Beginning stocks 2.54 3.91 4.01 4.07 Production 18.41 17.99 17.49 17.23 Total supply 1/ 21.36 21.93 21.52 21.32 Mill use 10.75 10.89 10.89 10.89 Exports 6.53 6.91 6.71 6.68 Total use 17.28 17.80 17.60 17.57 Ending stocks 4.07 4.09 3.89 3.74 Percent Stocks-to-use ratio 23.6 23.0 22.1 21.3 Extra-long staple: 1,000 acres Planted 258 245 250 250 Harvested 256 243 247 249 Pounds Yield/harvested acre 991 1,000 995 1,068 1,000 480-lb. bales Beginning stocks 66 40 40 30 Production 529 506 512 554 Total supply 1/ 595 546 552 584 Mill use 105 110 110 110 Exports 470 390 390 425 Total use 575 500 500 535 Ending stocks 30 56 62 59 Percent Stocks-to-use ratio 5.2 11.2 12.4 11.0 ---------------------------------------------------------------------- Based on USDA estimates. 1/ Includes imports. WORLD COTTON SUPPLY AND USE ESTIMATES ---------------------------------------------------------------------- 1997/98 ------------------------------ Item 1996/97 Jun Jul Aug ---------------------------------------------------------------------- Supply: Million 480-lb. bales Beginning stocks World 33.57 36.31 36.55 36.96 Foreign 30.96 32.36 32.50 32.86 Production World 88.49 87.50 86.91 87.34 Foreign 69.55 69.00 68.91 69.56 Imports World 28.38 27.50 27.84 28.18 Foreign 27.98 27.47 27.81 28.15 Use: Mill use World 86.58 88.50 88.11 88.49 Foreign 75.73 77.50 77.11 77.49 Exports World 26.60 27.20 27.53 27.76 Foreign 19.60 19.90 20.43 20.66 Ending stocks World 36.96 35.31 35.24 35.90 Foreign 32.86 31.16 31.29 32.10 Stocks-to-use ratio Percent World 42.7 39.9 40.0 40.6 Foreign 43.4 40.2 40.6 41.4 --------------------------------------------------------------------- Based on USDA estimates. FIBER SUPPLY ---------------------------------------------------------------------- 1997 1996 --------------------------- Item Apr May Jun Jun ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Ginnings 0 0 0 0 Imports since August 1 401.6 402.0 NA 205.1 Stocks, beginning 10,353 8,689 7,098 4,492 At mills 695 698 702 660 Public storage 7,876 6,409 5,138 3,513 CCC stocks 1,834 1,495 1,298 752 Manmade: Million pounds Production 921.0 823.0 814.0 828.7 Noncellulosic 875.1 778.9 779.0 787.4 Cellulosic 45.9 44.1 35.0 41.3 Total since January 1 3,495.5 4,318.5 5,132.5 4,580.3 1997 1996 ----------------------------- Mar Apr May May ---------------------------------------------------------------------- Million pounds Raw fiber imports 113.0 107.5 110.3 93.7 Noncellulosic 105.2 100.0 101.9 88.3 Cellulosic 7.8 7.5 8.4 5.4 Total since January 1 341.5 449.0 559.3 440.8 Wool and Mohair: 1,000 pounds Raw wool imports, clean 6,112 6,633 5,780 7,011 48's-and-finer 3,331 4,608 3,852 5,232 Not-finer-than-46's 2,781 2,026 1,928 1,779 Total since January 1 21,581 28,215 33,995 40,163 Wool top imports 249 167 163 429 Total since January 1 401 568 731 830 Mohair imports, clean 3 0 0 2 Total since January 1 3 3 3 4 ---------------------------------------------------------------------- NA = Not available. COTTON SYSTEM FIBER CONSUMPTION ---------------------------------------------------------------------- 1997 1996 --------------------------- Item Apr May Jun Jun ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales All consumed by mills 1/ 955 959 895 860 Total since August 1 1/ 8,135 9,095 9,989 9,780 SA annual rate 2/ 10,975 10,924 10,958 11,105 SA daily rate 2/ 42.1 41.9 42.0 42.4 Daily rate 43.4 43.6 42.6 43.0 Upland consumed by mills 1/ 945 950 888 851 Total since August 1 1/ 8,056 9,006 9,894 9,679 SA annual rate 2/ 10,859 10,814 10,865 10,984 SA daily rate 2/ 41.6 41.4 41.6 41.9 Daily rate 43.0 43.2 42.3 42.5 Spindles in place 5,699 5,593 5,560 6,272 Active spindles 5,373 5,294 5,297 5,737 100 percent cotton 2,546 2,570 2,580 2,674 100 percent manmade 935 896 896 1,033 Blends 1,892 1,828 1,821 2,030 Percent Cotton's share of fibers 77.5 77.4 78.2 77.4 Manmade: 1,000 pounds Total consumed by mills 1/ 132,934 134,570 119,578 120,932 Total since August 1 1/ 1,118,548 1,253,118 1,372,696 1,309,367 Daily rate 6,042 6,117 5,694 6,047 Noncellulosic staple 5,377 5,477 5,216 5,161 Cellulosic staple 665 640 478 886 ---------------------------------------------------------------------- 1/ Adjusted to calendar month. 2/ SA = seasonally adjusted. FIBER EXPORTS ---------------------------------------------------------------------- 1997 1996 -------------------------- Item Mar Apr May May ---------------------------------------------------------------------- Cotton: 1,000 480-lb. bales Upland exports 772 676 600 329 Total since August 1 4,059 4,735 5,335 6,962 Sales for next season 161 166 284 48 Total since August 1 456 622 907 461 ELS exports 75.7 35.0 31.1 13.2 Total since August 1 359.0 394.0 425.1 266.6 Sales for next season 30.8 18.6 25.6 10.5 Total since August 1 53.9 72.5 98.2 162.2 Manmade: Million pounds Raw fiber exports 104.5 96.3 98.8 93.0 Noncellulosic 90.4 83.5 89.6 84.5 Cellulosic 14.1 12.8 9.2 8.5 Total since January 1 301.5 397.8 496.6 451.1 Wool and Mohair: 1,000 pounds Raw wool exports, clean 481.9 385.1 1,032.4 506.9 Total since January 1 921.9 1,307.0 2,339.4 911.8 Wool top exports 845.1 444.4 802.5 739.9 Total since January 1 1,812.4 2,256.8 3,059.3 1,339.2 Mohair exports, clean 223.6 146.4 64.5 130.0 Total since January 1 446.3 592.7 657.3 344.2 ---------------------------------------------------------------------- FIBER PRICES ---------------------------------------------------------------------- 1997 1996 -------------------------- Item May Jun Jul Jul ---------------------------------------------------------------------- Domestic cotton prices: Cents per pound Adjusted World Price 65.92 66.66 66.80 64.39 Oct'97 futures 73.96 75.23 74.66 76.60 Dec'97 futures 74.84 75.92 74.83 75.95 Upland spot 41-34 69.30 71.03 71.83 76.84 Pima spot 03-46 114.83 108.07 110.50 133.74 Avg. price received by: Upland producers 68.10 66.80 68.10 73.60 Mill delivered: Cotton Actual 75.54 77.09 78.47 82.18 Raw fiber equivalent 83.93 85.66 87.19 91.31 Rayon staple Actual 115.00 115.00 115.00 115.00 Raw fiber equivalent 119.79 119.79 119.79 119.79 Polyester staple Actual 68.00 68.00 68.00 78.00 Raw fiber equivalent 70.83 70.83 70.83 81.25 Price ratios Percent Cotton/rayon 70.1 71.5 72.8 76.2 Cotton/polyester 118.5 120.9 123.1 112.4 Northern Europe cotton quotes: Cents per pound A Index 79.38 80.84 81.47 79.68 Memphis Territory 80.75 82.50 83.70 NQ California/Arizona 82.15 84.63 85.95 83.50 B Index 75.64 79.54 80.00 74.04 Orleans/Texas 76.65 78.25 79.75 81.19 Wool prices (clean): Dollars per pound U.S. 56's 1.47 1.50 1.50 1.30 Australian 56's 1/ 1.95 2.05 NQ 1.82 U.S. 60's 1.89 1.85 1.85 1.55 Australian 60's 1/ 2.09 2.18 2.10 1.94 U.S. 64's 2.48 2.55 2.55 1.92 Australian 64's 1/ 2.79 2.87 NQ 2.36 ---------------------------------------------------------------------- NQ = No quotes. 1/ In bond, Charleston, SC. TEXTILE TRADE ---------------------------------------------------------------------- 1997 1996 ------------------------------- Item Mar Apr May May ---------------------------------------------------------------------- Imports: 1,000 pounds 1/ Yarn, thread, and fabric 200,932 209,167 NA 173,257 Cotton 71,723 89,822 NA 72,479 Linen 34,713 20,995 NA 22,557 Wool 4,503 5,295 NA 3,804 Silk 687 649 NA 709 Manmade 89,307 92,406 NA 73,709 Apparel 398,442 413,179 NA 380,229 Cotton 242,258 245,923 NA 225,891 Linen 8,237 8,435 NA 8,845 Wool 10,797 12,898 NA 13,788 Silk 10,163 11,810 NA 8,679 Manmade 126,988 134,113 NA 123,027 House furnishings 30,912 34,168 NA 27,740 Cotton 23,490 25,146 NA 20,585 Linen 120 131 NA 152 Wool 105 144 NA 88 Silk 43 33 NA 8 Manmade 7,153 8,714 NA 6,907 Floor covering 23,551 24,451 NA 21,444 Cotton 4,876 4,108 NA 2,888 Linen 2,826 2,916 NA 2,406 Wool 5,657 6,720 NA 6,253 Silk 413 348 NA 266 Manmade 9,779 10,358 NA 9,630 Total imports 2/ 659,455 687,867 NA 609,833 Cotton 346,311 368,579 NA 325,790 Linen 45,942 32,504 NA 34,002 Wool 21,105 25,130 NA 24,072 Silk 11,306 12,840 NA 9,663 Manmade 235,791 248,815 NA 216,305 Exports: 1,000 pounds 1/ Yarn, thread, and fabric 130,603 133,208 NA 126,650 Cotton 42,232 41,560 NA 45,324 Linen 3,857 4,261 NA 3,482 Wool 4,379 4,111 NA 3,687 Silk 1,787 1,753 NA 1,455 Manmade 78,347 81,524 NA 72,703 Apparel 149,728 153,478 NA 137,203 Cotton 92,337 93,872 NA 84,450 Linen 2,668 2,556 NA 2,303 Wool 6,576 7,878 NA 6,788 Silk 2,525 3,197 NA 2,387 Manmade 45,622 45,976 NA 41,275 House furnishings 7,594 5,913 NA 5,869 Cotton 4,491 3,464 NA 3,499 Linen 404 248 NA 275 Wool 150 121 NA 102 Silk 251 205 NA 160 Manmade 2,298 1,876 NA 1,832 Floor covering 34,229 33,076 NA 29,986 Cotton 3,700 3,065 NA 3,347 Linen 1,450 1,384 NA 1,242 Wool 1,918 1,656 NA 1,504 Silk 3/ --- --- NA --- Manmade 27,161 26,970 NA 23,892 Total exports 2/ 322,575 326,070 NA 299,971 Cotton 142,833 142,021 NA 136,669 Linen 8,394 8,462 NA 7,312 Wool 13,052 13,791 NA 12,103 Silk 11,621 16,775 NA 4,001 Manmade 153,733 156,641 NA 139,886 ---------------------------------------------------------------------- 1/ Raw fiber equivalent. Data for 1997 will be revised. 2/ Includes headgear. 3/ Absence of trade. 1997 ACREAGE, YIELD, AND PRODUCTION ESTIMATES ------------------------------------------------------------------- State/ Region Planted Harvested Yield Production ------------------------------------------------------------------- Lbs./ 1,000 1,000 acres harvested acre bales Upland: Alabama 520 420 503 440 Florida 100 100 720 150 Georgia 1,440 1,435 736 2,200 N. Carolina 690 688 590 845 S. Carolina 290 285 758 450 Virginia 100 99 601 124 Southeast 3,140 3,027 667 4,209 Arkansas 950 930 692 1,340 Louisiana 590 585 673 820 Mississippi 980 960 750 1,500 Missouri 370 365 618 470 Tennessee 510 500 566 590 Delta 3,400 3,340 678 4,720 Kansas 15 14 480 14 Oklahoma 220 210 434 190 Texas 5,600 5,300 453 5,000 Southwest 5,835 5,524 452 5,204 Arizona 330 329 1,167 800 California 880 875 1,207 2,200 New Mexico 70 66 698 96 West 1,280 1,270 1,170 3,096 Total Upland 13,655 13,161 628 17,229 Pima: Arizona 20 20 792 33 California 185 184 1,174 450 New Mexico 13 13 665 18 Texas 32 32 795 53 Total Pima 250 249 1,068 554 Total All 13,905 13,410 637 17,783 ------------------------------------------------------------------- Based on the August Crop Production report. END_OF_FILE