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2011 Agricultural Outlook Forum
Friday, February 25
Stephen MacDonald. World consumption is projected at 120 million bales.5 million bales. The current severe world cotton shortage has driven prices far above the early-season expectations of cotton traders and analysts. 2010/11 world cotton consumption is forecast to decline nearly 2 percent. the 14-million bale increase has proven inadequate to meet demand. James Kiawu. However. 2011 THE UNITED STATES AND WORLD COTTON OUTLOOK James Johnson. however. below both the 2006/07 record of 124 million bales and the level supported by expected world GDP growth. As a result. and world cotton situation reflects extremely tight supplies relative to demand. Eugene Rosera.Agricultural Outlook Forum 2011 Presented Friday. as textile producers adjust their use of cotton in response to higher prices. In 2010/11. and Prices 2006/07 through 2011/12 projection Production Consumption A-index (FE) 140 130 120 200 180 160 140 120 100 80 60 40 20 0 mil. the A-index has more than doubled since the marketing year began on August 1. Consumption. 110 . World cotton production declined an estimated 17 percent between 2006/07 and 2009/10. which is well above the level indicated by statistical relationships between estimated supply and demand.S. Uncertainty about current market developments increases the difficulty of making projections for the upcoming season.5 percent 2 cents/lbs. this short-term inelasticity of demand may not account for all of the recent price increase. World ending stocks are projected to rise 17. Department of Agriculture Introduction World Production. primarily because increases in cotton prices lagged those of grains and oilseeds. despite strong growth in world GDP. The sharp run-up in prices is due partly to a lack of flexibility on the part of textile manufacturers to curtail production for retail orders placed several months ago. The 2010/11 U. a 13-year low. bales 100 90 80 70 60 2006/07 2007/08 2008/09 2009/10 2010/11 est. USDA’s first 2011/12 cotton projections include an 11-percent increase in world production to a record 127. global production has risen an estimated 13. combined with a more modest increase in world consumption. reducing stocks to 44 million bales.5 percent. Leslie Meyer.S. and Carol Skelly U. resulting in prices which have surpassed historical records. 2011/12 proj. 2010. Global demand rose sharply in 2009/10 in response to worldwide economic recovery. February 25.
farm price is projected to rise from $.0 million hectares. up 12 percent from the previous year. the lowest area harvested in eight years. bales . Maharashtra. as producers have increased cotton area in response to favorable weather conditions and strong market prices. China’s 2010/11 harvested area is estimated to decline 4 percent from the preceding year to 5. While the stocks-to-consumption ratio would be above the two preceding seasons.0 million bales. 2010/11 Estimated Changes in World Production. improved global credit availability. and Andhra Pradesh. due to unfavorable weather in some areas.1 million hectares. China’s 2010/11 crop is estimated at 30. representing the third consecutive year of decline. the world’s second largest cotton producer.35 in 2011/12. India. and higher yields. is estimated to grow a record 26. The 2010/11 rebound is a response to more favorable market prices. as several major cotton-producing countries have expanded area. when output declined to a six-year low. up 13. Producers have reduced cotton area. and growing concerns about high market volatility. government policies favoring grain production. and the U. despite higher prices. 2010/11 compared with 2009/10 8 6 4 2 0 -2 -4 Global cotton production in 2010/11 is estimated at 115. due to labor shortages. World harvested cotton area in 2010/11 is estimated at 33.S. However. up 10 percent from the previous year and the largest acreage in four years.3 million bales. producers are expected to realize higher prices for the upcoming season. up 7 percent from the preceding year.to about 50 million bales.10. India’s harvested area in 2010/11 is estimated at a record 11. The 2010/11 China cotton yield is estimated at 1. Area increases are estimated in Gujarat. World Cotton Situation.815 per pound to $1.0 million bales in 2010/11. World cotton yield in 2010/11 is estimated to improve 3 percent to 754 kg/ha.5 percent from a year ago.281 kg/ha. the leading cotton 3 mil.75 in 2010/11 to $1.3 million hectares. The A-index is expected to fall from $1. 2010/11 World Cotton Production. it is still low relative to recent averages.S. down 3 percent from a year ago. U.
stocks Production Imports Total Supply Consumption Exports Total Use Residual Ending stocks Stocks-to-Consumption (%) A-Index (FE) per lb.0 198. as unusually heavy rain has replenished irrigation supplies and supported increased dryland cotton area.4 -1. Australia’s 2010/11 production is forecast at a record 4. India’s cotton yield in 2010/11 is estimated at 515 kg/ha.5 35. (mil. Harvested area in 2010/11 is estimated to increase nearly 2 percent to 2.6 38.3 38. Brazil’s 2010/11 cotton area is estimated at 1. 2009/10 and 2010/11 est. up 45 percent from the previous year and the highest since the early 1990’s. Harvested area declined 3 percent to 2. 2009/10 60. bales) Item Beg.0 37. as growers in the southern hemisphere country respond strongly to record cotton futures prices.469 kg/ha from a year ago.0 million bales.75 Change (%) -27. 2010/11 World Cotton Supply and Demand.8 36. Excessive rainfall and flooding resulted in both abandonment of planted area and lower yields. down 8 percent from the preceding year.0 115. as weather conditions have improved.4 0 -2. Pakistan’s 2010/11 cotton production is estimated at 8. USDA analysis of historical world 4 . Prices. Central Asia’s 2010/11 production is estimated at 7.000 hectares.6 154.6 +0.1 $.6 +9.0 118. more than double 2009/10.8 -0.9 million hectares.775 2010/11 44.5 101. but only slightly below the three-year average.7 -0. Australia’s overall 2010/11 cotton yield—which until now was the world’s highest—is estimated to decline due to a higher proportion of lower-yielding dryland area.1 42. Harvested area is estimated at a record 560.5 percent.7 -0. Yield is estimated at 688 kg/ha. At 4.0 million bales.2 million hectares.1 197.2 million hectares from a year earlier.8 million bales.8 +13. while yield is estimated to have fallen 5 percent to 661 kg/ha.6 +5.3 116. due to significant improvement in water supplies and favorable market prices.8 +125.5 36. Yield in 2010/11 is estimated to grow 4 percent to 1. up 5 percent from the previous year.producing states.7 $1. up 15 percent from the previous year. and Ending Stocks. due to a favorable monsoon and improved inputs.0 million bales. World Cotton Consumption. Brazil’s production in 2010/11 is estimated to rebound 50 percent to a record 8.1 154. Australia’s share of world cotton production would be 3.8 World cotton consumption and prices in 2010/11 are being driven by the contradictory forces of strong consumer demand and severe limitations on supply. the highest since 2000/01.1 0 44. up 17 percent from the previous year.2 million bales.
As it became evident early in the marketing year that supplies would be tight. the relationship of cotton to polyester prices. the run-up in 2010/11 cotton prices is supported by recovery in global industrial production. U. Considering that world GDP growth is expected to exceed 4 percent in both 2010 and 2011(IMF). buyers rushed to secure cotton and world cotton prices soared. with a consumer price index increase of 1. and exchange rates. However. In addition to cotton supply and demand fundamentals. Near-term cotton demand proved relatively unresponsive to rising prices. including a response to lagged cotton prices. The problem of mill coverage has been exacerbated by India’s decision to limit cotton exports beginning in April 2010. cotton 8 Cotton GDP 7 6 4 Percent. moderated by other variables. World 2010/11 cotton supplies were reduced owing to very tight beginning stocks. inflation remained low. With world cotton supplies committed relatively early in the season. At the same time. World Cotton Consumption and Economic Growth 15 10 Percent. The A-index rose above $2. spinning mills lacking coverage through the end of 2011 find themselves in the very difficult position of having to default on contracts or pay double to triple the raw material price contemplated at the time the contracts were made. increases in world prices beginning in 2008/09 have moderated consumption growth.6 percent. recovering from widespread deflation in 2009 due to the financial crisis. due to prior commitments made by spinners to supply their downstream textile customers.consumption patterns indicates a close correlation of changes in cotton consumption with growth in world GDP. 5 . which is boosting prices for all commodities. The Commodity Research Bureau’s (CRB) index rose 25 percent from January 2010 to January 2011. which were only partly mitigated by increased production.3 percent) and India (12 percent).00 per pound in early February as the market attempted to ration available supplies. and Global Insight . Inflation rebounded in 2010. with the largest gains for industrial materials. GDP 5 0 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 5 3 2 1 0 -1 -2 -5 -10 -15 Sources: USDA. International Monetary Fund. but was higher in China (3. world cotton consumption might have been expected to rise 5 percent in 2010/11.S. driving prices higher. however. approaching the pre-recession peak levels achieved in 2006/07 and 2007/08. India’s export restrictions have raised demand for cotton stocks elsewhere in the world. cotton prices rose more than other commodities due to supply concerns.
the indicated stocks-to-use ratio of 36.0 0 47. Higher imports by China are expected to be partially offset by lower imports for several other major importing countries.2 -7. South Korea. Vietnam and Japan. Turkey. (mil.0 15.0 0 50. And China’s ability to make up the supply shortfall with imports is constrained by the availability of foreign exportable supplies.75. Taiwan.37 per pound for the first half of the marketing year.8 -6.S. consumption in China in 2010/11 is forecast to decline by 6 percent to 47 million bales from the previous year. 2009/10 and 2010/11 est.0 0 13.0 0 -13. and thus is not a significant factor accounting for higher cotton prices. dollar (USD) on foreign exchange markets is another variable determining commodity prices in USD terms. In this situation. a decline of nearly 2 percent from last season. the lowest in 16 years.2 30. access to supplies. ending stocks are forecast at about 43 million bales. however.The value of the U.1 Change (%) -32.2 30. but its 5-percent (inflation-adjusted) depreciation during 2010 was much smaller than the average commodity price gains. 2010/11 China and World Trade China Cotton Supply and Demand. 6 . Thailand. which largely depleted stocks in the government-held reserve.9 65. Consumption in individual countries will be a function of yarn margins. The A-index. At this consumption level.3 +37.9 China faces restricted supplies from all sources in 2010/11.0 0 -6.5 2010/11 15.0 million bales to 13. which averaged $1.0 60. and ending stocks to decline by 2.0 million. and availability of credit. could reach or exceed $1. including Indonesia.4 32.1 -6. large current account deficits of the United States have been cited for years as driving expectations of future USD depreciation.3 50.6 -7. Declining area and weather-related problems reduced production to 30 million bales. stagnant or declining consumption will limit import demand.2 47. large depreciations are not expected in the near-term. stocks Production Imports Total Supply Consumption Exports Total Use Residual Ending stocks Stocks-to-Use (%) 2009/10 22. and significantly short of early season expectations.0 10. Beginning stocks fell to a 15-year low as a result of a surge in consumption in 2009/10. In the latter countries. a 5-year low.2 28.7 percent would be the smallest since 1993/94 and would allow for minimally adequate supplies to keep mills operating through the fall of 2011. As a result.0 0 15. about double the projected increase in world imports. The persistent. world consumption has been constrained to just under 117 million bales. China’s 2010/11 imports are forecast to rise 4 million bales to 15. bales) Item Beg.2 million.
Yield. The ELS crop is also larger at 498. Upland production is currently estimated at 17. However.000 bales. acres mil.5 17. Abandonment./acre mil.3 million bales. improved irrigation. such as Australia and Brazil. and Production 2006/07 2007/08 2008/09 2009/10 Planted acres Harvested acres Abandonment rate Yield/harvested acre Production mil. due to a rebound in planted area and favorable crop conditions which reduced abandonment to near historic lows and supported yields.0 10.3 12. the late season harvest limits these countries’ ability to export the larger production before the end of the 2010/11 marketing year on July 31.8 9. Southern hemisphere producers. will have significantly larger crops in response to higher prices.S. acres % lbs. despite a 4-year low yield. southern hemisphere stocks are forecast to rise by more than 3 million bales from the beginning level.7 16.2 9.7 2.6 10. In addition to the better crop conditions.World Ending Stocks World ending stocks in 2010/11 are forecast to decrease about 1 million bales to about 43 million. thus. recent technological advances—including new varieties. Cotton Situation.S.6 814 21. bales 15.2 million bales. and precision farming techniques—helped push the U.4 821 18.8 10.2 2010/11 11. 2010/11 Area and Production U.8 million bales.2 7.5 3.1 813 12. yield to 821 pounds per harvested acre.S. the highest since 2007/08.3 7 . U.1 879 19.7 777 12. Declining stocks in nearly all other countries will more than offset the southern hemisphere increase.5 7. cotton production in 2010/11 is estimated at 18. the fourth highest on record. Cotton Area. U.S. with an average yield of 814 pounds. 50 percent larger than last season’s 12.6 20.
ELS production approached 500.9 million acres. In addition. where cotton area has accounted for over half of the plantings the last three seasons.S.478 pounds per harvested acre—the third highest on record—upland production in the West increased to 1. And. In the Southwest.000 bales in 2010/11. the data indicate that mills have been running at an average annual pace of 3. area approached 5.000 acres.7 million bales for the first five months of 2010/11. well below average but a significant rebound from last season.5 million bales in 2010/11. the third highest on record. The ELS crop remains concentrated in the West region. Domestic Mill Use Domestic cotton mill use is forecast at 3. With below average abandonment. planted area increased in 2010/11 to 1. The Southwest upland crop exceeded 8. mills during the early 2000s. cotton planted area rose for the first time since 2006/07. 2010/11 upland area increased for the first time in 6 seasons to 366. with an above average yield of 1. U. but less than half the level of cotton consumed by U. cotton mill use has improved 14 percent compared with the corresponding period in 2009.U. 2010/11 upland cotton production was higher in each of the four Cotton Belt regions. Commerce Department’s monthly cotton mill use (MP313) reports for August through December 2010.S. In the West. coupled with the second highest yield on record. and accounted for a record 48 percent of the U. In the Southeast and Delta.3 million bales. the highest in 4 years. However.S. For the Southeast. as upland area there reversed the downward trend which began in the early 1980s. a first since 2000/01.8 million bales in 2010/11. Based on the recent U.S. 4 percent above the 2009/10 estimate. with limited cotton 8 . cotton crop.S. A lower than normal abandonment and an above average yield produced a 2010/11 crop of 4. slightly below the 5-year average. acreage approached 2. For the Delta.6 million bales. With higher area and lower yields.9 million acres in 2010/11. the Delta crop surpassed 3. Cotton Regional Production 2006/07 to 2010/11 2006 10 2007 2008 2009 2010 8 million bales 6 4 2 0 Southeast Delta Southwest West Compared with last season.6 million bales for 2010/11.6 million acres in 2010/11. The current mill use projection is similar to that of 2008/09.1 million bales. bringing total cotton production in the region to 1.
U. and Mexico and Bangladesh each accounted for nearly 6. In calendar 2010. textile mills are expected to moderate their use of cotton during the second half of the season. is expected to rise in 2010/11. but their 19-percent increase was the first for U. In 2010.5 million bale-equivalents. accounting for about 19 percent of the 2005 total. In calendar year 2005. The U. imports rose to nearly 34 percent.S.S. U. U. Estimated U. U. cotton textile and apparel product trade.S. In comparison. The trend of lower U. cotton product exports were only 3.7 million baleequivalents.S.S. U. compared with 18. U. textile exports since 2004. particularly from Asia.S. as the volume from China increased about 20 percent from 2009.S. so too did U. China’s share of U.S. domestic consumption of cotton increased to an estimated 20.S.S.5 percent of the total import volume.S. but their shares remained similar to those in 2009. cotton textile and apparel imports reached an estimated equivalent of 20. mill use plus net textile trade. economy rebounded in calendar year 2010.5 million bales of raw cotton.S. nearly 12 percent above 2009. household consumption of cotton.8 million bale-equivalents—to the third highest on record. cotton mill use over the past decade is the result of increased competition from imported textile and apparel products. import volume also rose from the other leading suppliers. per capita cotton consumption approached an estimated 32 pounds in calendar 2010. Similarly. Vietnam and Honduras are also important suppliers to the U. As the general U. China replaced Mexico as the leading supplier of cotton textile and apparel products to the United States. 3 pounds above a year earlier.6 million in 2009. India contributed 8 percent. market in 2010.S. Pakistan accounted for about 10 percent of the U.S.S.S. Domestic Cotton Consumption: Total and Per Capita 9 . textile and apparel market. cotton textile trade deficit increased for the first time in three years—reaching 16.supplies and the recent record cotton prices. as measured by U.
480-lb. The combination of increased 2010-crop upland and cottonseed production. the lowest level since 1924. exports are forecast at 15. The prices reported to date are indicative of the significant portion of the 2010 crop which was sold by producers before futures prices reached record levels in recent months. accounting for an estimated 41 percent of world trade. and representing a record-low 10 percent of total disappearance. the largest in five years and the second-highest on record.6 billion. about 10 times the level of earlier seasons. and higher prices for both. U. but are projected to fall to about 8 percent for 2010. Export Commitments as of Week 26 2006/07 through 2010/11 Current Year 16 14 mil.S.2 million bales. In addition. and loan deficiency payments for the 2010 crop.0 million bales to 1. U. reaching over 15 million bales at the end of week 26. 10 .S. export sales commitments soared to record levels early in the season. stocks are forecast to fall 1. This season’s exports are driven by world demand that far exceeds supply.S. indicating that available supplies are nearly exhausted.75 million bales for 2010/11. Prices and Farm Income USDA's forecast of the 2010 upland marketing year average price received by producers is 81. and the highest price since 1864.Exports and Ending Stocks U. up sharply from the $5. reaching 3. marketing loan gain. 2011.9 cents for the 2009 crop and 47.0 billion estimated for the 2009 crop. The elevated prices have eliminated countercyclical. early season commitments for next season have shown remarkable strength. but are still limited by the need to maintain a minimal level of ending stocks. are estimated to boost 2010-upland cotton gross farm income to an estimated $8.S. bales Outyear 12 10 8 6 4 2 0 2006/07 2007/08 2008/09 2009/10 2010/11 U. Program payments to producers have averaged about 30 percent of total upland cotton gross income for the 2005-2009 crop years.5 cents per pound. up from 62.9 million bales by July 31.8 cents for 2008.
consistent with the January survey by the China Cotton Association. a 13percent rebound from the previous year and the highest expected output in three years. In light of last season’s reduction in area. 2011/12 Estimated Changes in World Production. and widely diverging estimates by entities in China. there is a high degree of uncertainty about China’s cotton crop prospects. the world’s top cotton grower. USDA’s preliminary projection is that cotton area will rise 10 percent.0 million bales in 2011/12.000 Program milion $ 6.000 1.000 8. Brazil. Central Asia. the projected 2011/12 yield would be the second highest on record. All of the world’s major cotton producers—including China.000 7. is projected to produce 34.0 million hectares while yields are projected to increase 2 percent to 771 kg/ha. Global cotton area is projected to increase 8 percent to a record 36.000 3.6 million hectares. China. up nearly11 percent from the previous year as growers respond to an unprecedented spike in cotton prices. the United States.5 million bales.000 4. 2011/12 compared with 2010/11 4 3 World cotton production in 2011/12 is projected at a record 127.000 5. 2011/12 World Cotton Production. and Australia—are expected to increase cotton production in 2011/12.Gross Cotton Farm Income for 1999/2000 through 2010/11 Crops Market 10. India. If realized. Pakistan.000 9. At this level. area devoted to cotton 11 mil. raising planted area to 5. bales 2 1 0 .000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 World Cotton Outlook.000 2.
Australia’s 2011/12 crop is forecast to increase 12. and yield is expected to rebound 5 percent. Brazilian growers have more flexibility to raise area because of a growing land base and the ability to follow soybeans with cotton in the same season—area devoted to the second-crop safrinha cotton has expanded in recent years without detriment to yields. If realized. and the largest in nearly 20 years. is projected to produce about 9.000 hectares. Central Asia is projected to grow 7. Brazilian producers are expected to put more area under cotton cultivation due to the continuing record-high cotton futures prices. up 11 percent from the previous season’s weather-damaged crop. The African Franc Zone (AFZ) is forecast to produce 3. this will be the largest crop in six years.2 million bales in 2011/12. Harvested area is projected at a record 600. the world’s fourth largest cotton producer. up 10 percent from the previous year. up 14 percent from the preceding year.4 million hectares from a year earlier and yields to decline slightly. As in other countries.0 million bales in 2011/12. up 15 percent from a year earlier. a 12-percent increase from the 2010/11 record. Harvested area in 2011/12 is forecast at 1. India’s 2011/12 crop is projected at a record 28. but below 2006. Adoption of Bt cotton and other improvements in production practices will continue to boost yields.8 million bales in 2011/12. up 7 percent from the previous year. The yield is projected to decline slightly. Yield is projected to increase nearly 3 percent from the preceding year. and yields are expected to recover average levels. Area harvested is projected to increase 7 percent to about 2.5 million bales. a 6-percent production increase from the previous year. However. harvested area is likely to rise with the return of normal weather.8 million hectares. China’s 2011/12 cotton yield is estimated to rise 3 percent from last season’s 5-year low. Harvested area is forecast at 1. Area harvested is projected to increase 7 percent to about 11. up 10 percent from a year earlier and the fourth consecutive annual increase in production. 12 . Expectations of continued strong demand and high prices will give Indian growers the incentive to allocate more area to cotton. Pakistan. With planted area stable or higher.would be above the two preceding years.5 percent from a year ago to 4. Producers are expected to expand area under cultivation in response to favorable prices. a 20-percent increase from the previous year as strong world demand and high prices will improve the availability of inputs and raise prospective cash returns to farmers.4 million bales in 2011/12.2 million hectares.4 million hectares. Area harvested is projected at 3.5 million bales. Brazil is forecast to grow a record 9.8 million hectares from the previous year.
3 116.1 110. and 2011/12 proj.7 $1. As a result.0 115. a lagged response to the current record prices.0 42.6 38.5 42. Consumers in these countries—like China and India—have higher income elasticities for clothing than do consumers in the United States and Europe. World Consumption 2004/05 through 2011/12 projection 130 120 116.8 123.7 0 +17. and industry desire to hold more stocks. but are also more price responsive 13 . During the 5 years before the recent global financial crisis.3 118.5-percent expansion in the world economy in 2012. world consumption is forecast to rise 3 percent to 120 million bales.1 123.2 -22.8 127.8 109.2 +4.1 42. Lagged prices will affect consumption as textile producers reconsider profitable fiber shares in textile production and retailers adjust expected sales volumes in response to apparel price increases.0 116.5 120. (mil.9 World Cotton Consumption. consumption levels will continue to be affected by supply limitations. However.7 -0. bales) Item Beg.2 +7.7 +10.1 197.9 $1.0 162.75 2011/12 42. and global cotton consumption grew at an average rate of 4.0 211.1 +3.6 percent. The IMF forecasts a 4.8 36.0 0 50.35 Change (%) -2.7 percent.6 +10.3 41.5 +14. 2011/12 World cotton consumption in 2011/12 will benefit from higher production and continued strong world economic growth.3 120. bales 110 100 90 80 World economic growth in 2012 will continue to be skewed in favor of emerging economies.3 38.World Cotton Supply and Demand.1 154. world economic growth averaged 4. the third consecutive year of growth between 4 and 5 percent.0 +10. 2010/11 44.6 mil. stocks Production Imports Total supply Consumption Exports Total Use Residual Ending stocks Stocks-to-Consumption (%) A-Index (FE) per lb. 2010/11 est.
0 +8.1 2011/12 13. and 2011/12 proj.3 0 +5.3 +20. 2010/11 est.5 0 49.0 60.7 31. The projected level of 49. In markets and products where price sensitivity is important. China’s Supply and Demand China Cotton Supply and Demand.0 0 13.2 49. Finally.2 0 2006/07 2007/08 2008/09 2009/10 2010/11 Aug-Dec. bales) Item Beg. stocks Production Imports Total Supply Consumption Exports Total Use Residual Ending stocks Stocks-to-Use (%) 2010/11 15. (mil.2 +13. especially a shift in fiber share away from cotton.6 Ratio of Cotlook A-Index to PCI World Synthetic Fiber Index 0. 14 .5 million bales is still slightly below 2009/10. Cotton-to-Synthetic Price Ratio Rises 0. despite rising consumer incomes and textile exports.5 0 15. the 2010 price shock may induce some restocking in 2011 as a means of managing supply and price risk. but have not kept pace with cotton prices.2 28.7 Change (%) -13. Polyester prices have risen over the past several months.4 0.0 15.3 0 +18.and purchase goods which have much smaller mark-ups over fiber costs.0 0 47.3 +5.9 +12.2 30. and thus implies adjustments in manufacturing processes.2 34. there is a strong incentive to consider shifts in fiber composition to synthetics.0 65.0 million bales.0 18.8 Larger production and import availability are expected to support a 5-percent increase in China’s consumption in 2011/12. China’s ending stocks are projected to recover to nearly 16.2 47. mainly polyester. above last season’s level but still well below the recent average.
0 11. (mil.S.) Total production 2010/11 11. and Production 2010/11 and 2011/12 proj. Outlook for 2011/12 Area.6 11. Cotton Area. 10 percent above 2010/11.6 15 . as indicated by forward A-index prices approaching $1. World Stocks-to-Consumption Ratios Projected through 2011/12 60 50 percent 40 30 U. acres) Abandonment rate (%) Yield per harv.35 per pound in 2011/12.0 10. Yield.4 +466.7 -1. Production. Higher stocks-to-use ratios suggest that the A-index will fall from the current record levels. acre (lbs.2 +8.50 as of mid-February. representing 42 percent of total consumption. USDA projects an A-index average of about $1. however.3 +6. the stocks-to-consumption ratio is projected to rise from the extremely tight levels of the previous two seasons. limited supplies and high prices early in the season. Thus. and Supply U.World Trade.S. World stocks also are expected to rise 17 percent to about 50 million bales. will prevent it from falling to the 2010/11 average. bales) Item Planted area (mil.4 821 18.2 810 19. Ending Stocks.5 Change (%) +18. but will remain low relative to the recent average.7 2. acres) Harvested area (mil.3 2011/12 13. and A-Index A recovery in world production and very tight beginning stocks in consuming countries will support world trade in 2011/12 at a projected level of 42 million bales.
Although new-crop corn and soybeans have also shown price strength since the start of the year. Some wheat acreage in Kansas and Oklahoma will be planted to cotton in 2011. Western States that increase plantings will be replacing feed and specialty crops. Ratios 10 0. which are the principal competing commodities for acreage in the Southeast and Delta States. which could favor cotton plantings. The NCC forecast is based on producer surveys conducted between mid-December and mid-January. price increases for cotton have surpassed those for corn and soybeans in early 2011. The robust acreage increase for cotton is anticipated because of the unprecedented. and Tennessee. when nearly 15. The forecast of 13. released on February 5. Ratios of Upland Cotton to Corn and Soybean Prices and Planted Acres. 2011. Final planting decisions may impacted by weather conditions. 2004-2011 (Feb-Mar avg.2 .0 million acres. supporting a higher forecast. and continuing. Georgia and West Texas both continue to experience drought. with some corn acreage reduced in Missouri.5 million acres.1 5 0 2004 2005 2006 2007 2008 2009 2010 2011 0 Respondents to the NCC survey reported that their increased cotton acreage will replace corn and soybeans in the Carolinas and some peanut acreage in Georgia. USDA’s survey of producer planting intentions—Prospective Plantings—will be published on March 31. USDA’s 2011-crop planted acreage projection is slightly above that of the National Cotton Council’s (NCC’s) survey forecast of 12. and soybean futures price ratios. Remaining 2010-crop stocks are extremely low. 16 mil. and Alabama. acres 0. corn.3 Cotton to Soybeans Cotton Planted Acres 15 2011 ratios based on futures prices for Feb. Florida. Cotton price gains are higher than those of corn and soybeans. acreage planted to cotton in 2011 will increase nearly 19 percent over last year to 13. suggesting that prices will remain at a premium until the 2011-crop production becomes available.S. Mississippi.3 million acres were planted. increases in world and domestic cotton prices. the highest area since 2006.USDA projects that U. of fall futures prices) Cotton to Corn 0. As of midFebruary. according to the NCC survey.0 million planted acres is consistent with regression analysis of upland planted acres as a function of cotton. 1-15. Most Delta States will also increase cotton at the expense of soybeans. The regression used price ratios from the 2002-2010 period calculated from averages of fall futures prices for the February-March period preceding planting each year.
5 -2. exports are projected at 15.4 1. U.S.1 -4. a reduction of 5 percent. mills are realizing greater efficiencies resulting from consolidation and new investment. Continued relatively tight stocks.8 19.6 million acres. the estimated 2010/11 farm price of $0. total supply for 2011/12—21. with U.6 +60. U.7 110.9 million bales. The 2011/12 marketing year average price received by producers is projected at $1.0 18.9 15.5 2.S. marginally below 2010/11 and similar to the preceding three years.5 0 21. (mil.0 U. the current record prices and supply challenges are likely to constrain activity for at least the first half of the season. exceeding the 2010/11 price by 35 percent. The projected ending stock level of 2. based on a historical abandonment rate of 11 percent. stocks Production Imports Total Supply Consumption Exports Total Use Ending stocks Stocks-to-use (%) Farm price (cents/lb.10 per pound.4 3.Cotton plantings of 13 million acres are estimated to result in harvested acreage of about 11. This stocks-to-use ratio. about 6.3 0 21.5 2011/12 1. is the still the second-lowest since 1995/96. at the same time.0 Change (%) -34. due to lower import demand resulting from the slight easing of the world supply-demand situation.5 percent for the 2010 crop to 20 percent in 2008.3 3. As noted previously. are likely to support producer prices. With early February prices for December 2011 futures ranging 17 .S.5 15. while above 2010/11. and Farm Price With little change in the projected total 2011/12 supply.9 9. 2011 crop production is projected at 19.6 0 +0.S.S.2 +35.8 81.S. combined with high prices at the beginning of the season. a slight decline from the 821 pounds estimated for the 2010 crop. and 2011/12 proj. U. Domestic mill use is projected at 3.4 million bales—would increase only marginally from 2010/11.815 per pound has lagged the recent sharp upturn in futures prices and the A-index because most producers contracted their cotton relatively early in the season. Based on these assumptions. U.9 19.) 2010/11 2. carry-in stocks at an extremely low 1. bales) Item Beg. domestic mill use and exports are projected slightly lower and stocks higher compared with 2010/11. Abandonment rates have been highly variable recently—ranging from 2.5 percent above 2010.5 +6. However.6 15. Disappearance.8 -5.9 million bales would constitute about 15 percent of total disappearance.6 +52.9 18. Ending Stocks. Cotton Supply and Demand. USDA is forecasting a national average yield of 810 pounds per harvested acre.5 million bales. 2010/11 est.5 million bales.0 million bales.
30 per pound.15 to $1.from $1. 18 . the same pattern of early pricing is expected to result in a significantly higher average for the season. and world supplies likely to remain very tight at least until availability of the 2011-crop northern hemisphere harvest.
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