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February, 1997
This report provides the text and analysis from the current COTTON: WORLD MARKETS AND TRADE publication. This report draws on information from USDA's global network of agricultural attaches and counselors, official statistics of foreign governments, other foreign source materials, and results of office analysis. Estimates of U.S. acreage, yield and production are from the USDA Agricultural Statistics Board, except where noted. This report is based on unrounded data; numbers may not add to totals because of rounding. The report reflects official USDA estimates released in the World Agricultural Supply Estimates (WASDE number 323, February 12, 1997.)
The report was prepared by the Tobacco, Cotton and Seeds Division, FAS, AGBOX 1051, 14th and Independence Ave., Washington, DC 20250-1000. Further information may be obtained by writing to the division, or by calling (202) 720-9516, or by FAX (202) 690-1171.
The next issue of the Cotton circular will be available electronically after 3:30 pm local time on March 12, 1997.
Further Information Contact:
U.S. Department of Agriculture
Foreign Agricultural Service
Cotton, Oilseeds, Tobacco, and Seeds Division
Stop 1051
1400 Independence Ave. SW
Washington, D.C. 20250-1051
Telephone -- (202) 720-9516
Fax -- (202) 690-1171
Lynn Abbott, Acting Director
Lana Bennett, Deputy Director for Analysis
Abdullah A. Saleh, Group Leader, Cotton, Tobacco, and Seeds
Analysis
Principal Contributors
Anita Regmi Cotton Analyst for Asia, Latin America & Oceania
Jon Ann Flemings Cotton Analyst for Africa, FSU, Middle East & Europe
Ada Arrington Electronic Word Processor
Ron Roberson Chairperson for Foreign Area and Production, PECAD
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Department of Agriculture, Washington, D.C., 20250, or call (1-800)
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employment opportunity employer.
Summary
World cotton production for crop year 1996/97 is forecast at 86.2
million bales, down 155,000 bales from last month's forecast. The
U.S. cotton production forecast is 19.0 million bales, unchanged
from last month's forecast.
World cotton production for crop year 1995/96 is estimated at 92.0
million bales, up 196,000 bales from last month's estimate. U.S.
cotton production in 1995/96 totaled 17.9 million bales.
World cotton consumption for MY 1996/97 is forecast at 85.8
million bales, up 405,000 from last month's forecast. U.S.
consumption is forecast at 11.0 million bales, unchanged from last
month's forecast.
World cotton consumption for MY 1995/96 is estimated at 84.5
million bales, up 184,000 from last month's estimate. U.S. cotton
consumption in 1995/96 totaled 10.6 million bales.
World cotton exports for MY 1996/97 are forecast at 26.9 million
bales, basically unchanged from last month's forecast. U.S.
exports are forecast at 6.5 million bales, up 200,000 bales from
last month's forecast.
World cotton exports for MY 1995/96 are estimated at 27.4 million
bales, up 197,000 bales from last month's estimate. U.S. exports
in 1995/96 totaled 7.7 million bales.
World cotton ending stocks for MY 1996/97 are forecast at 36.8
million bales, slightly down from last month's forecast. U.S.
ending stocks are forecast at 4.5 million bales, down 250,000
bales from last month's forecast.
World cotton ending stocks for MY 1995/96 are estimated at 36.3
million bales, up 162,000 bales from last month's estimate. U.S.
ending stocks totaled 2.6 million bales.World Situation
World cotton production for 1996/97 is forecast at 86.2 million
bales, down 155,000 bales from last month's estimate. Major
adjustments include the following:
- Turkey's production forecast was increased by 150,000 bales
due to an increase in harvested area.
- Sudan's production forecast was decreased by 200,000 bales due
to reductions in yield and area.
World cotton production in 1995/96 is estimated at 92.0 million
bales, increased 196,000 from last month's estimate, mainly due to
a 130,000 bale increase in Argentina's production estimate.
World cotton consumption in 1996/97 is forecast at 85.8 million
bales, up 405,000 from last month's forecast, mainly due to
increases in the consumption forecasts for China, Mexico, and
Turkey.
World cotton consumption in 1995/96 is estimated at 84.5 million
bales, up 184,000 bales from last month's estimate, mainly due to
183,000 bale increase in Turkey's consumption estimate.
World cotton exports for MY 1996/97 are forecast at 26.9 million
bales, basically unchanged from last month's forecast. Export
forecast decreases for Argentina, Sudan and Turkmenistan were
offset by increases in the export forecasts the United States and
Greece.
World cotton exports for MY 1995/96 are estimated at 27.4 million
bales, up 197,000 bales from last month's estimate, mainly due to
222,000 bales increase in the estimate for Argentina.
World cotton ending stocks for MY 1996/97 are forecast at about
36.8 million bales, slightly down from last month's forecast. The
increase in the ending stocks forecast for Turkey and Thailand
were more than offset by decreases in the ending stocks forecasts
for the United States and Argentina.
World cotton ending stocks for MY 1995/96 are estimated at 36.3
million bales, up 162,000 from last month's estimate. Increased
ending stocks estimate for Thailand and Turkey more than offset
the decrease in Argentina's ending stocks.
Cotton Prices
The 1996/97 Cotlook A-Index averaged 79.88 cents/lb. during
January, up from December's average of 79.06 cents/lb. The
A-Index which began the month at 84.00 cents/lb. ended January 30 at
84.25 cents/lb. The Central Asian quote was the lowest in the
Index, averaging 75.10 cents/lb. During January, the
California/Arizona and Memphis Territory quotes were above the A-index
by an average of 4.11 cents/lb. and 4.38 cents/lb.,
respectively. With the January 21 withdrawal of the Greek quote
from the A-Index, the Memphis Territory quotes have been included
in the A-Index along with the California/Arizona quotes which have
remained since the withdrawal of the Mexican quotes in November.
March 97 futures prices on the New York Cotton Exchange remained
relatively range bound in January. The March contract began the
month at 75.38 cents/lb. and fluctuated within a narrow range
reaching its lowest point of 73.00 cents/lb. on January 21.
However, large weekly export sales registration reports and
uncertainty regarding the magnitude of southern hemisphere crop
caused a price upswing and the March 97 futures closed January 31
at 75.26 cents/lb.
U.S. Highlights
The seasonally adjusted daily rate of U.S. cotton consumption in
December amounted to 41,729 bales (480-lb), below November's level
of 42,502 bales. A total of 877,463 bales were consumed during 5
weeks in December, compared with 843,413 bales in November (4
weeks). The seasonally adjusted annualized consumption rate for
the month of December was 10.89 million bales, down from
November's 11.09 million bales. Domestic mill purchases, light
during the first half, were moderately active during the second
half of December. Interest in cotton from the Delta and
southeastern growth areas was good for prompt and nearby delivery.
Mills continued to purchase a moderate volume of cotton for
deliveries scheduled from second quarter 1997 through fourth
quarter 1997. Consumer interest in cotton products continued
steady. Demand for denims, housewares and apparel fabrics
remained good. Interest in sales yarn was fair, while interest in
gray cloth, fleece and industrial fabrics was lackluster. Many
mills did not operate during the Christmas week.
Cotton stocks on hand in consuming establishments during December
totaled 583,350 bales (480-lb), up from 578,769 bales in November.
Stocks held in public storage and at compresses totaled 11.2
million bales, up from 10.2 million in November. Active spindles
in place in December 1996 totaled 5.9 million, of which 2.6
million were dedicated to 100-percent cotton, compared with 6.7
million and 2.7 million, respectively, during the same period in
1995. Cotton's share on the cotton spindle system was 78 percent.
U.S. cotton exports for November totaled 573,000 bales, more than
double the 277,000 bales in October, but 22 percent below November
1995 exports, according to the U.S. Bureau of the Census. The
leading markets in November were China, Indonesia, Korea, Japan,
and Mexico.
U.S. cotton imports for November totaled 19,000 bales, down from
24,000 bales in October, according to the U.S. Bureau of the
Census. The leading sources for U.S. cotton imports in November
were Uzbekistan, Argentina, and Mexico.
International Highlights
African Franc Zone's Share of World Exports Increases as
Production Continues to Climb
Cotton exports from the Franc Zone African countries continue to
increase as the level of cotton production in the region rises.
Total Franc Zone cotton production increased by an estimated 48
percent between MY 1990/91 and MY 1996/97. Along with the overall
increase in production, some changes have also occurred in the
production levels of the individual countries. Within the last
six years, Benin has more than tripled its cotton production and
its share of total Franc Zone production jumped from 8.2 percent
in 1990/91 to a projected 20.6 percent in 1996/97. During the
same period, cotton production increased by 100 percent in
Cameroon, 61.3 percent in Mali, and 27.7 percent in Chad. Growth
in cotton production was spurred by the devaluation of the CFA
franc in 1994, which has made exports from the region more
competitive. Cotton crop area increased by an estimated 50
percent between MY 1990/91 and MY 1996/97. Improved varieties,
higher cotton prices, and favorable weather conditions contributed
to the increased production. Production is expected to continue
increasing with the privatization of many parastatal cotton
marketing companies.
The Franc Zone cotton exports have increased 60 percent from 2.1
million in MY 1990/91 to a projected 3.3 million in MY 1996/97.
Increased exports from the region have raised Franc Zone's share
of total world exports from 6.9 percent in MY 1990/91 to an
estimated high of 12.2 percent for MY 1996/97. Exports from the
Franc Zone have met import demands in many countries where the
market share of other traditional suppliers, especially Central
Asian countries, has been declining. Exports from Uzbekistan, the
second largest exporter, declined 20.7 percent during the last
four years. Other exporting countries, such as India and
Pakistan, are erratic exporters with export levels varying, based
on their domestic supplies. However, exports from the Franc Zone
African countries are on a consistent upward trend and compete
directly with U.S. cotton exports to Western Europe and Asia.
India
The government of India (GOI) granted an additional export quota
of 165,000 bales (170 kg-bales) for the 1996/97 season, of which
the Cotton Corporation of India (CCI) has been authorized to
export 100,000 bales and the Andhra Pradesh Cooperative Marketing
Federation the remaining 65,000 bales. India's 1996/97 cotton
export quota now totals 1.22 million 170-kg bales (940,000 480-lb
bales). Including the 1995/96 quota spillover, India's 1996/97
cotton exports are expected to reach 1.2 million 480-lb bales,
almost double last year's level.
Turkmenistan
In hopes of reviving the declining cotton sector, the government
of Turkmenistan (GOT) has decided to reform its current
centralized production system by privatizing state agricultural
holdings. Under the plan, individual farmers will be given the
option to receive temporary title to an estimated two hectares to
grow cotton or ten hectares to grow wheat. All production from
these plots will be under 100 percent state order at the previous
year's procurement price. Farmers will receive 30-50 percent of
the procurement price prior to planting and the remainder will be
paid after harvest. It is expected that farmers will be allowed
to retain 80 percent of the revenues, while the remainder will be
paid to peasant organizations for infrastructure and inputs.
After two years, productive farmers will be given permanent title
to the land (which may be inherited but not sold). Officials
expect the distribution of land to be complete by the start of
cotton planting this April.
Due to the lack of adequate incentives for farmers to plant, grow,
and harvest cotton, Turkmenistan's cotton production declined from
over 1.8 million bales in 1993/94 to an estimated 600,000 bales in
1996/97. The GOT, reportedly, was forced to resort to mass
mobilization of population to harvest the 1996/97 crop, a
significant portion of which is generally believed to have been
left unharvested. It is believed that the provision of incentives
to those who actually farm the land will revive the declining
trend in Turkmenistan's cotton production.
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