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USDA Cotton & Wool Outlook


12 March 2014

USDA Cotton & Wool Outlook - 12 March 2014USDA Cotton & Wool Outlook - 12 March 2014


USDA Cotton & Wool Outlook

U.S. net textile and apparel fiber imports rose in calendar year 2013, a first in 3 years as improved economic conditions pushed consumer demand higher. Total fiber product imports approached 17.6 billion raw-fiber-equivalent pounds in 2013, 4 percent above 2012 and the highest since 2010. Total product exports also increased 4 percent in 2013 to nearly 3.7 billion pounds, the largest in 2 years. As a result, U.S. net textile and apparel product imports reached 13.9 billion pounds in 2013, compared with 13.4 billion pounds in 2012 and a record 15.1 billion pounds in 2007 (fig. 1).

U.S. net product imports continue to consist largely of cotton fiber, but cotton’s share has declined in recent years as manmade fiber use has grown steadily. In 2013, cotton textile and apparel products accounted for about 48.5 percent of the total, while manmade fibers contributed nearly 45.5 percent. However, just 5 years ago, cotton contributed nearly 57 percent of the total compared with manmade fibers’ share of 36 percent.

Domestic

U.S. Cotton Supply Unchanged; Demand Revised Slightly

The U.S. cotton crop for 2013/14 remains estimated at nearly 13.2 million bales (upland at 12.55 million bales and extra-long staple at 636,000 bales), compared with last season’s 17.3-million-bale crop. USDA will release its next Cotton Ginnings report on March 25th and the final U.S. cotton production estimate for the 2013 crop on May 9th. Based on the current crop estimate and beginning stocks of 3.9 million bales, the 2013/14 cotton supply totaled 17.1 million bales, 17 percent below a year ago and the lowest in nearly 3 decades.

Total U.S. cotton demand was raised in March to an estimated 14.3 million bales, 13 percent below 2012/13. The U.S. mill use estimate was unchanged for 2013/14 at 3.6 million bales, 100,000 bales above last season. In contrast, exports were raised 200,000 bales and are now projected at 10.7 million bales, which is still 2.3 million bales below a year ago.

Through the first 6 months of 2013/14, U.S. textile mills used 1.8 million bales of cotton (according to data collected by USDA’s Farm Service Agency), compared with 1.7 million bales used during the first half of 2012/13. U.S. cotton mill use is expected to continue ahead of year-ago levels and reach its highest in 3 years. U.S. cotton exports are forecast nearly 18 percent below last season, as the lower

U.S. supply and reduced import demand from China keep U.S. cotton shipments at their lowest since 2000/01. Despite foreign import demand at a 3-year low, the U.S. share of global trade is forecast similar to last season’s 28 percent (fig. 2).

U.S. cotton export commitments through the first 7 months of 2013/14 have reached 9.6 million bales. Shipments, however, have only reached 5.9 million bales, or 47 percent of the current forecast. A year ago, shipments of 7 million bales accounted for 54 percent of the final 2012/13 export estimate. Shipments typically decrease toward the end of the season, especially with ending stocks estimated below 3 million bales. To reach the 10.7 million-bale estimate, shipments need to average 218,000 bales per week for the remainder of the season, compared with an average of about 350,000 bales shipped during the past 4 weeks.

Stocks Decline in 2013/14; Average Farm Price Higher

With U.S. cotton demand exceeding production in 2013/14, ending stocks are forecast to decline for the second consecutive season. For 2013/14, U.S. stocks are projected at 2.8 million bales, 28 percent below last season and the lowest since 2010/11. Based on the latest supply and demand estimates, the 2013/14 stocks-touse ratio is expected to dip below 20 percent, despite lower demand.

The average price received by U.S. upland producers is expected to increase from last season’s 72.5 cents per pound. Higher prices are prevailing this season, with the 2013/14 upland price projected to range between 75 and 78 cents per pound. At the midpoint of 76.5 cents per pound, prices would be 4 cents above 2012/13.

U.S. Retail Cotton Consumption Expands in 2013

U.S. domestic cotton consumption (mill use plus net textile imports) experienced a rebound in calendar year 2013, surpassing 8.4 billion (raw-fiber-equivalent) pounds, or nearly 17.6 million bale-equivalents (fig. 3). The 2013 level represented a 3- percent increase from 2012 but was similar to 2011. However, the current level was 22 percent below the 2006 peak, when retail cotton consumption was estimated at approximately 10.9 billion pounds, or 22.6 million bale-equivalents.

Cotton product trade, as well as mill use of cotton, rose during calendar year 2013. U.S. cotton product imports approached 8.5 billion pounds in 2013, 3 percent above the 2012 level, which was the lowest since 2002. Cotton product exports were estimated at 1.7 billion pounds, 6 percent above 2012; U.S. cotton mill use rose similarly in 2013. As a result, the per capita estimate of retail cotton consumption increased slightly in 2013 to nearly 27 pounds, with mill use of cotton contributing more than 5 pounds of the total.

International Outlook 

World 2013/14 Cotton Production Virtually Unchanged in March

Global cotton production remains estimated at 116.7 million bales, 5 percent below 2012/13 due largely to lower harvested area. World area in 2013/14 is estimated at 33.1 million hectares, 1.2 million hectares below the previous season and the lowest since 2009/10.

Production in China, the world’s largest producer, is estimated at 32 million bales in 2013/14, 9 percent below last season as farmers in eastern China sought to grow more attractive alternative crops. A lower yield is also contributing to the smallest crop in China since 2010/11. India’s crop is expected to reach 29 million bales this season, slightly above 2012/13, as higher yields more than offset lower harvested area. Pakistan is projected to produce 9.5 million bales in 2013/14, 2 percent above the previous season on improved yields.

In the Southern Hemisphere, Brazil is expected to produce a larger crop while dry conditions in Australia are forecast to reduce the crop there. Brazil’s crop is forecast to rise 23 percent to 7.4 million bales, resulting from increased area and yield. In contrast, Australia is projected to produce only 4.1 million bales, the smallest crop there since 2009/10, as dry conditions at planting and depleted irrigation supplies limit production.

Global Cotton Trade Dramatically Lower in 2013/14

Global cotton trade is expected to be significantly lower this season as reduced raw cotton import demand by China affects trade around the world. Global cotton exports are forecast at nearly 38.5 million bales this season, 8.3 million bales (18 percent) below 2012/13. All major exporting countries, including the United States, are projected to experience a decline this season. India remains the largest foreign exporter in 2013/14, with shipments of 7.5 million bales forecast.

World cotton imports are forecast at 38.4 million bales in 2013/14, down from 46 million bales in 2012/13. While China is projected to account for the bulk of imports—11 million bales—the level is well below the 20-plus million bales imported during the previous two seasons. Offsetting a portion of this decline is the growth of other major importing countries, including Turkey, Bangladesh, Vietnam, and Indonesia.

World Mill Use and Ending Stocks to Rise

World cotton consumption in 2013/14 is estimated at 109.2 million bales, down slightly from last month’s forecast but up nearly 3 percent from the previous year. China remains the world’s leading spinner of cotton despite a declining trend that began several years ago. For 2013/14, China is expected to consume 35.5 million bales of cotton, the lowest in a decade and considerably below the record of 51 million bales used in 2007/08. However, the recent declines have been offset somewhat by China’s growth of imported cotton yarn; in 2013/14, for example, China could import 10 million bale-equivalents of raw fiber in the form of cotton yarn, nearly double the level of 2011/12.

Published by USDA Economic Research Service

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