Based on the December production forecast and carry-in stocks estimated at 3.9 million bales, total U.S. cotton supplies for 1999-2000 are projected to rise 14% to 20.9 million bales, says the U.S. Department of Agriculture.
Although total use of U.S. cotton also is projected to increase this season, the gains in production have been greater, as strong foreign competition continues in the raw fiber and textile sectors. In 1999-2000, total U.S. cotton demand is forecast to reach 16.4 million bales, 11% above last season, but still below the five-year average of 18 million bales.
For 1999-2000, U.S. raw cotton exports are projected to rebound, but remain well below the level experienced as recently as 1997-1998. The current forecast--at 6.2 million bales--is 1.9 million above 1998-1999. Although formidable competition from foreign exporters is likely most of the season, the refunding of the Step 2 program in October, has boosted sales and commitments over the last two months.
As of early December, the Export Sales Report indicates that 4.9 million bales have been committed this season, with 1.2 million shipped. This compares with commitments of only 3.9 million bales a year ago, but shipments of 1.7 million. The larger shipments at this time last season were the result of the race for Step 2 funds which ended in mid-December.
In addition, the larger U.S. supplies-particularly of short-staple cotton--and a boost in foreign import demand also are aiding this season's expectations for U.S. cotton exports.
As of Dec. 1 short-staple (one-inch and below) cotton accounted for about 14% of the cotton classed this season, the largest share since 1990. Based on the current projections of U.S. and world trade, the U.S. share of global exports is estimated at nearly 24%, up from 18.4% in 1998-99.
For 1999-2000, U.S. cotton mill use is projected to decline slightly. Mill use is estimated at 10.2 million bales, 2% below the final 1998-1999 estimate of 10.4 million. Although abundant cotton supply projections have produced a more competitive price situation with polyester staple fibers, mill demand for all fibers is expected to grow slowly this year.
In addition, the continued importation of foreign-produced textile and apparel products, and a slowdown in the "exceptional" growth seen in the U.S. economy over the last three years, is expected to play a crucial role in the amount of raw cotton consumed by U.S. mills.
While the North American Free Trade Agreement has increased cotton textile trade over the past five years, the strength of the dollar also has encouraged extensive foreign shipments to the United States, leading to the second consecutive year in which the raw-fiber equivalent of cotton textile imports exceeds the quantity consumed by domestic mills.
For calendar 1999, cotton textile imports could reach the equivalent of 13.5 million bales.
Based on these U.S. cotton supply and demand projections, ending stocks for 1999-2000 are projected to expand about half a million bales from the beginning level to 4.5 million. As a result, the implied stocks-to-use ratio for the season is near 27%, similar to last season, but the largest since 1992-1993.