The following research report contains market research, analysis, statistics and business intelligence relating to research on U.S.Cotton Outlook.

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ABSTRACT
The 1998/99 U.S. outlook this month remains unchanged from
last month's forecast. U.S. cotton production for 1998/99 is
forecast at 13.92 million bales. Domestic mill use is forecast at
10.5 million bales, exports remain at 4.1 million bales, and
imports are forecast at 400,000 bales. Stocks are forecast to end
the year at 3.6 million bales.

For 1999/2000, no changes were made in the U.S. forecast from
last month. U.S. cotton production is forecast to total about 18
million bales in 1999/00. Imports are forecast to reach about
50,000 bales, while domestic mill use is expected to total 10.6
million bales. Exports are projected to total about 5.5 million
bales, while ending stocks next year are expected to reach about
5.5 million bales.

World Cotton Outlook

The 1998/99 world outlook this month features lower beginning
stocks, higher production and slightly lower trade and ending
stocks, due to adjustments in the estimates for several
countries. The world production forecast this month is slightly
higher at 84.35 million bales. The production forecast was raised
for China and Brazil, but reduced for Argentina, India and
Turkey. World consumption is forecast slightly lower at 84.7
million bales as increases in India, Pakistan, Turkey and
Uzbekistan are more than offset by reductions for Nigeria, the
Philippines and others.

The 1999/00 world outlook this month includes slightly higher
beginning and ending stocks due to changes for the current
marketing year from last month’s forecast. No changes were
made in the 1999/00 production, consumption and trade forecast
from last month. World production for 1999/00 is forecast to
increase from this year to about 87 million bales, while
consumption is forecast to rise to about 86.5 million bales on
improved economic conditions, especially in Asia and Brazil.

Cotton Prices

A Index: The A Index is a principle measure of
international cotton prices and represents an average of the five
lowest quotes of cotton for delivery to Northern European ports.
Quotes currently included in the A-Index are Uzbekistan, African,
Greek, Syrian, and Calif/Ariz. The 1998/99 Cotlook A-Index
averaged 59.88 cents per pound during May, a 2.0-cent increase
from April’s 57.88 cents per pound average. On May 4th,
the A-Index was 59.90 cents per pound and by May 28th
it decreased to 59.80 cents per pound. The Uzbekistan quote was
the lowest in the Index over the four week period, averaging
55.00 cents per pound for the month, while the Calif/Ariz quote,
the highest in the Index, averaged 65.83 cents per pound.

Futures Prices: U.S. cotton futures prices represent
the current price of U.S. cotton for delivery at a future date.
U.S. cotton futures prices settled lower on Wednesday, June 9th
with the July ‘99 cotton contract closing at 57.42 cents per
pound, and the December ‘99 ending at 57.28 cents per pound.
Friday’s upcoming supply-demand report from the USDA has
sparked little curiosity with preliminary estimates expecting
little change in the numbers. The overall market remained weak,
with little activity. Prices in recent weeks have been bearish
due to sluggish export sales and to reports of good planting
progress in the U.S. and around the world.

U.S. Cotton Highlights

Cotton Consumption: The seasonally adjusted daily rate
of U.S. cotton consumption in April amounted to 39,490 bales
(480-lb), compared with March’s level of 39,782 bales.
A total of 807,464 million bales were consumed during five weeks
in April, compared with 1,021,487 bales in March (5 weeks). The
seasonally adjusted annualized consumption rate for the month of
April was 10.31 million bales, down from March’s rate of
10.38 million bales. Domestic mills purchased a very light volume
of cotton for prompt and nearby, and a light volume for fourth
quarter 1999 through second quarter 2000 delivery. Mill
production of sales yarns continued to increase and sales were
moderate. Mill sales of specialty yarn were moderate to good;
industrial fabrics and upholstery were light to moderate; gray
cloth were light; and print cloth were very light. Most mills
operated on a four-day work week.

Cotton Stocks: U.S. cotton stocks on hand in consuming
establishments at the end of April totaled 596,306 bales
(480-lb), up from 570,258 bales in March. Stocks held in public
storage and at compresses in April totaled 5.84 million bales,
down from 6.79 million in March. Active spindles in place in
April totaled 4.79 million, of which 2.55 million were dedicated
to 100-percent cotton, compared with 5.40 million and 2.6
million, respectively, during the same period in 1998. Cotton's
share on the cotton spindle system exceeded 79 percent in April.
Cotton Exports: For March 1999, U.S. cotton exports
totaled 221,000 480-lb bales, up 21 percent from the previous
month’s exports of 182,000 bales, but over 300 percent lower
than March 1998 exports of 888,000 bales. The leading markets in
March were Mexico, Japan, Taiwan, Canada, the European Union, and
South Korea.

Cotton Imports: U.S. cotton imports in March totaled
43,600 bales, up from last month when 12,180 bales were imported,
and up from March 1998 when 0 bales were imported. The leading
suppliers of U.S. cotton imports in March were Greece,
Uzbekistan, Argentina, Mexico, and Turkmenistan.

World Cotton Highlights

Colombia: The USDA estimate of cotton production in
1998/99 is lowered to 168,000 bales, close to last years'
production level, and considerably less than the 1991/92 record
of 724,000 bales. The sharp decline in recent years resulted from
poor fiber prices to the grower and mounting guerrilla activity
in the countryside. According to reports from the U.S.
Agricultural Attaché in Bogota, a significant amount of land
previously planted to cotton is now idle due to the deteriorating
security situation in Colombia's rural areas. Cotton producers,
especially the larger ones, face extortion, kidnapping, and death
threats if they do not meet the financial demands of the guerilla
groups. As a result, many large commercial farmers have moved out
of cotton, leaving most cotton production to relatively small
producers. A decade ago, the average farm was 15 hectares,
currently it is only 8 hectares.

Cote d'Ivoire: USDA's Agricultural Attaché in Cote
d'Ivoire reports that the country is expected to experience
record production of 780,000 bales in marketing year 1998/99, and
that this trend may continue into next year. The combinations of
well-distributed rainfall, expanded area, high yields, farmers'
expertise, and timely inputs are considered driving factors for
the successful production. Consumption is also expected to
increase next year partly due to the government's ongoing efforts
to restructure its textile industry. The government initiated the
privatization of la Compagnie Ivoirienne pour le Developpment des
Textiles (CIDT) in 1998, utilizing World Bank agricultural
adjustment loan programs. This year Cote d'Ivoire's cotton
exports are expected to reach nearly 600,000 bales. Cote d'Ivoire
is the third largest cotton producer in West Africa.

France: After a sharp decline in imports between
marketing years 1996/97 and 1997/98, French imports of cotton are
expected to remain relatively stable in 1998/99. Current USDA
estimates show French cotton imports reaching 540,000 bales this
year, down slightly from 551,000 bales in 1997/98. Much of the
decline in French cotton imports is due to large stock levels on
account of a surge in imports in 1996/97. Imports that year rose
by nearly 11 percent. The bulk of France’s cotton imports
come from Uzbekistan and Tajikistan. Although the United States
only accounts for a small percent of the French raw cotton
market, French imports of U.S. cotton textile products reached
nearly $93 million in 1997, and accounted for over 50 percent of
the French cotton textile import market valued at $1.5 billion.

India: The U.S. Agricultural Attaché in India reports
that for 1998/99, cotton area is forecast to reach a record 9.2
million hectares, up from 8.8 million hectares last year. Much of
this increase is due to higher prices in 1997/98. However, late
season rains in the north have led to heavy pest infestation and
some crop damage. Rains also affected the quality of early
pickings in most cotton growing areas. Production losses in the
north were largely offset by increased plantings in Gujarat and
Maharashtra. USDA currently estimates India’s crop size at
12.8 million bales for 1998/99. The Indian government is
preparing to launch a "Cotton Technology Mission" aimed
at raising cotton yields to world levels and enhancing cotton
quality. Also, a "Technology Up Gradation Fund" to
support modernization of the textile sector through subsidized
credit has been established.

Korea: The U.S. Agricultural Attaché in Seoul reports
that Korea’s overall consumption of raw cotton is on the
rebound as domestic and regional demand recovers from the decline
caused by the region’s economic downturn in 1998. USDA
currently forecasts that Korea’s consumption of raw cotton
for marketing year 1998/99 will reach 1.37 million bales
(480-lb.), up from 1.35 million bales last year. Much of the
increase in consumption is due to the fashion industry’s
move toward products made with natural fibers which is partially
offsetting the use of synthetics. The report indicates that this
trend is likely to continue again next year. The United States is
the principle supplier of raw cotton to Korea. In 1997/98, the
U.S. accounted for a 59-percent share of Korea’s cotton
imports. Other key cotton suppliers to Korea include Uzbekistan
and Australia.

Textile Highlights

Argentina: The domestic textile industry continues to
go through difficult times. Fierce competition from less
expensive textile and clothing imports have caused the local
textile industry to cut back. Significant investments were made
in the industry in recent years designed to improve domestic
textile quality, increase volume and make the industry more
efficient. However, the Argentine economic recession suffered
since the mid-80's continues to have a depressing effect on the
local textile sector. The Argentine textile market is estimated
to be valued at $8 billion, with jeans accounting for nearly 20
percent of these sales. Approximately 50 percent of Argentine
textile sales are made in stores and boutiques, while 33 percent
are made in outlets.

Germany: Total sales of textiles rose 1.4 percent in
1998 to $18.24 billion. Textile orders increased by nearly 1
percent, pushing textile production up by a corresponding 1
percent relative to 1997. Producer prices rose slightly in 1998.
Domestic sales of textiles increased only slightly to $12.56
billion, while export sales rose by 4.0 percent to $5.68 billion.
Growth in Germany’s textile industry depends mainly on
growth in export markets. Most of Germany’s textile exports
are to other EU member nations. Employment in the textile
industry declined by 2.0 percent in 1998 to 128,987. Economic
indicators for January/February show a downsizing of activities,
for 1999. In the first two months, orders decreased by 11.5
percent compared to the same period in 1998, and total sales are
8.0 percent lower.

Thailand: The textile industry depends on cotton
imports to meet their cotton needs. USDA’s attaché report
in Bangkok forecasts that the country’s production for
cotton yarn and fabric will increase by 2-3 percent in 1999 due
mainly to an improved economic environment. Consumption of cotton
products is also forecast to rebound slightly this year although
a trend in replacing value-added cotton products with less
expensive man-made products still exists. Cotton yarn exports in
1998 dropped by 19 percent, despite a relatively weakened local
currency (Baht) compared to 1997. Exports of cotton fabric also
dropped by one percent from 1997 to 31,808 tons. The United
States, Germany and Hong Kong were major buyers of Thai
value-added cotton in 1997 and 1998.

United States: Cotton textile and apparel imports so
far in 1999 (Jan-Mar) were 3.20 billion square meters (m2),
up 12 percent from one year ago, and representing 48 percent of
all textile and apparel imports. By comparison, man-made textile
and apparel imports were nearly identical at 3.19 billion m2,
up 8 percent from one year ago, also representing 48 percent of
all imports.

The major regional source for U.S. cotton textile and apparel
imports was CBI countries, which comprised 17 percent of imports,
up 15 percent from one year ago. The principal country sources
continue to be Mexico (12 percent of total imports), Pakistan (9
percent), India (8 percent) and China (7 percent). The greatest
change occurred with Mexico, in which cotton product imports
increased 32 percent from a comparable period one year ago. In
contrast, imports from Pakistan decreased by 8 percent from a
comparable period one year ago.

Department of Commerce, Office of Textiles and Apparel data
indicates that cotton’s share of total fiber imports has
grown from 42 percent in 1990 to 46 percent in 1998. During this
time, man-made’s share of total fiber imports dropped by 2
percent to 50 percent in 1998.

U.S. Textile and Apparel Imports
(Million Square Meters)

 
1990
1991
1992
1992
1994
1995
1996
1997
1998
 
 
 
 
 
 
 
 
 
 
Cotton
5,232
5,664
6,799
7,369
7,864
8,430
8,630
10,234
11,965
Wool
163
170
196
223
264
276
293
336
352
Silk and Veg.
449
472
542
582
663
584
524
573
649
Man-Made
6,351
6,494
6,984
7,674
8,487
9,017
9,615
11,751
12,978
 
 
 
 
 
 
 
 
 
 
Total
12,195
12,800
14,521
15,848
17,278
18,308
19,063
22,895
25,944

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

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Published: 2000 August
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