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USDA Cotton & Wool Outlook

12 December 2013

USDA Cotton & Wool Outlook - December 2013USDA Cotton & Wool Outlook - December 2013

USDA Cotton & Wool Outlook

The latest U.S. Department of Agriculture (USDA) projections for 2013/14 indicate that global cotton stocks are expected to rise for the fourth consecutive season, reaching an alltime high. World ending stocks are projected at 96.4 million bales in 2013/14, 8 percent (or nearly 7.3 million bales) above 2012/13 and double the 2009/10 level (fig. 1).

World cotton stocks have risen significantly over the last several seasons as production has exceeded consumption. Relatively high cotton prices led to the higher production but also limited growth in cotton mill use. Global stock growth has been largely attributable to China, where policies have supported prices and taken a large supply of cotton out of the marketplace with the Government’s national reserve purchases. At the end of 2011/12, stocks in China were 31.1 million bales, or 42 percent of global stocks. For 2013/14, the latest projection indicates that stocks in China will reach 57.3 million bales, or 59 percent of the total world stocks.



 U.S. Cotton Crop Reduced Slightly in December

The USDA December forecast of the 2013 U.S. cotton crop was lowered marginally this month to approximately 13.1 million bales; the estimate is nearly 25 percent below the 2012 season, however. Lower area and a third consecutive year of drought in the Southwest region produced the smallest crop since 2009’s 12.2 million bales.

The harvested area estimate was unchanged in December at 7.8 million acres, the lowest in 4 years. The 2013 national yield is projected at 806 pounds per harvested acre, well below last season’s record of 887 pounds. Upland production is estimated at 12.4 million bales, 4.1 million bales below 2012, while the extra-long staple (ELS) crop is forecast at 626,000 bales, 20 percent below last season. For current production estimates by State and region, see table 10.

Upland cotton production is expected to decline in each of the Cotton Belt regions this season as a result of lower area (fig. 2). The Southeast will likely be the largest producing region for the third consecutive season as a result of the drought in the Southwest, which has reduced harvested area and production there considerably. In the Southeast, cotton production in 2013 is estimated at 4.5 million bales, 24 percent below last season; the lower cotton crop is largely due to a yield (825 pounds per harvested acre) that is well below the record of 1,033 pounds per harvested acre achieved in 2012.

For the Southwest, the upland crop is forecast at 4.3 million bales, 17 percent below 2012’s 5.2 million bales. While the abandonment rate was similar to last season’s 41 percent, a lower 2013 area and yield (595 pounds per harvested acre) were responsible for the reduced crop that is 2 million bales below the 10-year average.



 In the Delta, production is only expected to approach 2.8 million bales this season as area was reduced to 1.2 million acres in 2013; the Delta crop would be the second smallest in three decades. However, the latest yield estimate of 1,104 pounds per harvested acre would be the second consecutive record for the region, if realized. In the West, upland production is forecast at 870,000 bales, down from last season and the 5-year average of 1.1 million bales. Area shifted out of upland cotton this season as only 286,000 acres were planted, compared with a 5-year average of 359,000 acres.

U.S. Demand and Stocks Forecast Unchanged; Farm Price Range Narrowed

U.S. cotton demand for the 2013/14 season is forecast at 14.0 million bales, unchanged from last month but 15 percent below 2012/13. U.S. cotton mill use— based on data collected by USDA’s Farm Service Agency—remains forecast at 3.6 million bales, up from last season’s 3.5-million-bale estimate. In contrast, U.S. cotton exports are forecast at only 10.4 million bales in 2013/14. Lower U.S. supply and reduced foreign import demand—mainly due to lower projected imports by China—are expected to keep U.S. cotton exports at their lowest since 2000/01. The U.S. share of world trade is projected at only 27 percent, compared with the 5- year average of 34 percent.

With only minor changes to production this month, U.S. ending stocks remain forecast at 3.0 million bales, 900,000 bales below the beginning level. Both the stock level and the stocks-to-use ratio—estimated at 21 percent—would be the lowest in 3 years. Based on the latest supply and demand outlook for 2013/14, the average upland cotton farm price is now forecast to range between 70 and 78 cents per pound, compared with the final 2012/13 price of 72.5 cents per pound.

International Outlook

Global Cotton Production To Decrease in 2013/14

World cotton production in 2013/14 is forecast at 116.8 million bales, 5 percent below the previous season as more profitable alternative crops reduced cotton area under cultivation (fig. 3). Global cotton area harvested is forecast at 33.0 million hectares, a decline of 4 percent from 2012/13. Considerable production declines for the United States and China more than offset smaller increases in a number of countries which are the result of improved yield expectations. The world cotton yield is forecast at 770 kg/hectare, similar to the previous 3-year average.

For China, the world’s leading producer, cotton production is forecast to reach only 32 million bales in 2013/14, 3 million bales (9 percent) below 2012/13 and its smallest crop in 3 years. China’s cotton area is estimated 5 percent lower this season and, at about 5.1 million hectares, would fall to its lowest since 2002/03. Yield is forecast at 1,380 kg/hectare, which is between the yield estimates of the previous two seasons.

India and Pakistan are forecast to produce 29.0 million bales and 10.0 million bales, respectively, up approximately 2 percent and 8 percent from the previous year; yield is expected to rise in both countries in 2013/14 but remain below the world average. Cotton area is estimated lower this season in India while projected unchanged for Pakistan. Meanwhile, the cotton crop in Brazil that is planted in December and January is forecast to rise 23 percent to 7.4 million bales, the result of increased area and higher yield expectations. 



World Cotton Mill Use Continues Slow Rebound in 2013/14

spinning countries, only China is forecast to remain at the 2012/13 level; all other leading spinners are projected to rise between 2 percent and 6 percent in 2013/14.

For China—the world’s largest spinner—cotton mill use has declined considerably over the last several seasons, although it is forecast to be stable at 36 million bales in 2013/14. Policies in China have provided a price advantage for manufacturers to import cotton yarn versus spinning it within the country. In 2012/13, China imported an estimated 8.3 million (raw-cotton equivalent) bales in the form of yarn. And, for the current season, cotton yarn imports by China could surpass 10-millionbale equivalents of raw fiber.

Cotton mill consumption in 2013/14 is forecast to rise 6 percent in India and Pakistan, both benefactors of China’s yarn imports in recent years. India’s mill use is forecast at a record 23.0 million bales, up from 21.8 million bales used a year ago. Mill use in Pakistan is projected to rise to 11.7 million bales in 2013/14 from 11.0 million bales a year earlier; while not at a record yet, Pakistan is moving toward their 12-million-bale high achieved in the mid-2000s.

Turkey, Brazil, Bangladesh, and Vietnam—in addition to the United States—are also expected to contribute further to the rising cotton mill demand around the world in 2013/14.

Global Cotton Trade To Decline

World cotton imports are forecast at 38.5 million bales in 2013/14, 16 percent or 7.6 million bales below a year ago and the lowest in 3 years. The decline is attributable to China, as import demand there is forecast to drop by 46 percent this season as their stocks have grown considerably. In recent years, global cotton trade has been supported by China’s cotton import demand.

As a share of world cotton consumption, global cotton imports are projected to decrease this season and move toward the long-term average. For the 2011 and 2012 marketing years, the import share of consumption reached 43 percent as a result of China importing more than 20 million bales per year. In 2013/14, China is forecast to import only 11 million bales of raw cotton, contributing to a global import share of consumption of about 35 percent; however, this share remains above the 2006-10 seasons when imports averaged only 31 percent of consumption. If these trends continue, global cotton trade—including U.S. exports—may be constrained until global cotton consumption expands further.

Published by USDA Economic Research Service

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