Cotton and Wool Outlook

Transcription

1 Economic Research Service Situation and Outlook CWS-15f Release Date June 12, 2015 Cotton and Wool Outlook Leslie Meyer Stephen MacDonald Global Cotton Ending Stocks Lower in 2015/16 Cotton and Wool Chart Gallery will be updated on June 16, The next release is July 14, Approved by the World Agricultural Outlook Board The latest U.S. Department of Agriculture (USDA) projections for 2015/16 indicate that global cotton stocks are expected to decrease for the first time since 2009/10 as mill use exceeds production. World ending stocks are projected at million bales for 2015/16, 3.5 percent (3.9 million bales) below 2014/15. Global cotton stocks have risen dramatically over the last several seasons, largely the result of growth in China s stocks (fig. 1). Government policies in China supported national reserve purchases of domestic cotton and, at the same time, significant raw cotton imports; these policies strengthened global cotton prices by keeping China s supplies out of the marketplace and encouraged production in other foreign countries. Stocks in China at the end of 2014/15 are estimated at a record 65.6 million bales, or 60 percent of global stocks. For 2015/16, policy adjustments in China are expected to reduce stocks but only slightly to 62.6 million bales, with its share of world stocks remaining mostly unchanged. Figure 1 U.S. and world cotton ending stocks Million bales 120 China India U.S. Rest of world Proj. Marketing year Source: USDA, World Agricultural Supply and Demand Estimates reports.

2 Domestic U.S Cotton Production Projection Unchanged in June USDA s 2015 U.S. cotton crop projection remains at 14.5 million bales this month and is 11 percent below the final 2014 crop. While the Southwest precipitation that occurred in May was generally beneficial, uncertainty remains as to its effect on area and yield as planting was delayed and is still in progress. The planting estimate of 9.55 million acres will be updated in USDA s Acreage report, which will be released June 30th. This report will include actual plantings as of early June, as well as estimates for any remaining cotton to be planted. As of June 7th, 81 percent of the expected cotton area had been planted, below last season s 87 percent and the average of 89 percent. Crop development has followed similarly, with 7 percent of the cotton area squaring by June 7th, compared with 8 percent last season and a 5-year average of 10 percent. Based on current projections, U.S. cotton harvested area is forecast at 8.6 million acres for 2015, reflecting a below-average abandonment rate of 10 percent. Last season s abandonment rate was 15 percent. The 2015 U.S. cotton yield is forecast at 809 pounds per harvested acre, compared with 838 pounds per harvested acre in USDA s National Agricultural Statistics Service will begin in field production surveys in August. Demand, Stocks, and Price Range for 2015/16 Unchanged U.S. cotton demand for 2015/16 remains projected at 14.5 million bales, slightly above the previous season s estimate. Exports account for 10.7 million bales while mill use contributes the remaining 3.8 million bales. With expected U.S. supplies and world import demand similar to a year earlier, U.S. cotton exports are also forecast at the same level. As a result, the U.S. share of world trade is projected at about 32 percent for 2015/16, slightly above 2014/15 and the highest in 5 seasons. U.S. cotton mill use is forecast to rise 4 percent in 2015/16, the highest since 2010/11; the U.S. textile industry has realized additional capacity and is expected to remain very competitive in 2015/16, pushing cotton mill use growth above the world average. Based on these supply and demand estimates, U.S. cotton ending stocks for 2015/16 remain projected at 4.4 million bales, unchanged from the beginning level but the highest since 2008/09. The implied stocks-to-use ratio is estimated at 30 percent, marginally below 2014/15. The forecast for the 2015/16 U.S. average farm price is projected to range between 50 and 70 cents per pound, with the midpoint of this range slightly below 2014/15 s revised estimate of 60.5 cents per pound. 2

3 International Outlook World Cotton Production to Decrease for Fourth Consecutive Season Global 2015/16 cotton production is projected to decline 6 percent from the previous season to million bales. Lower crops are forecast for most major cotton-producing countries in 2015/16, with India and Uzbekistan production level with 2014/15. India expected to be the leading producer in 2015/16 is forecast to produce 29.5 million bales, or 26.5 percent of global cotton production. Lower area and higher yields, compared with 2014/15, are expected to keep production in India unchanged. China s production is projected to decrease 10 percent in 2015/16 to 27 million bales as area continues to trend lower; China s area is expected to be only 3.7 million hectares in 2015/16, 16 percent below 2014/15. The national yield, however, is projected to rise to a record as area continues to shift to the higher yielding Xinjiang region. Production for Pakistan in 2015/16 is forecast at 10 million bales, about 6 percent below the previous year with a return to normal yields. Brazil s crop is expected to approach 6.8 million bales, nearly 4 percent lower as both area and yield are projected below 2014/15. World area harvested in 2015/16 is forecast at 31.8 million hectares, 2 million hectares (6 percent) below the previous season. The global cotton yield is forecast at 763 kg/hectare in 2015/16, slightly below 2014/15. Global Cotton Mill Use to Increase in 2015/16; Trade Reduced World cotton mill use is forecast at million bales, 3 percent higher than the million bales expected to be consumed in 2014/15, as lower cotton prices and economic growth stimulate demand. If realized, mill use would be the highest since 2010/11 s million bales. China and India remain the largest consuming countries, with a combined cotton mill use of about 62 million bales, or more than 53 percent of the global total. China s cotton consumption is projected at 36 million bales in 2015/16, up from 35 million bales but equal to 2012/13. China s mill use is expected to benefit from domestic prices that are more in line with world prices; however, mill use growth of about 3 percent may be constrained by cotton yarn imports as in previous years. In 2014/15, China is likely to import more than 9.5 million bale-equivalents of cotton yarn. Pakistan, India, and Vietnam are the leading suppliers of cotton yarn to China and will account for over 80 percent of the total in 2014/15 (fig. 2). Mill use in India is projected at nearly 25.8 million bales, 5 percent above 2014/15 and a record; India s growth is being supported in part by expanding textile product exports. Pakistan s cotton mill use is also expected to expand to near the global average in 2015/16, reaching 11.1 million bales. In addition to gains in the United States, cotton mill consumption is also expected to increase in Turkey, Bangladesh, and Vietnam. Global cotton trade, in contrast, is forecast to reach only 33.8 million bales in 2015/16, 400,000 bales below a year earlier and the lowest since 2008/09, when only 30 million bales were traded. The recent downward trend is the result of 3

4 China s raw cotton import demand, which is projected to decline for the fourth consecutive season in 2015/16. China is expected to import only 6 million bales in 2015/16, compared with an estimated 8 million bales in 2014/15, due to an expected decline in import quotas. Offsetting a portion of China s decline are increases for a number of countries, including Vietnam, Turkey, and Indonesia. Meanwhile, exports in 2014/15 are expected to decrease mainly from the Southern Hemisphere, most notably Brazil and Australia, where exports are currently forecast at 3.6 million bales and 2 million bales, respectively, in 2015/16. Global ending stocks are forecast at million bales by the end of 2015/16, nearly 4 million bales below 2014/15. While stocks are expected to decline for the first time in 6 years from last season s record, they remain more than double the level in 2010/11. Despite a rise in cotton consumption, the world stocks-to-use ratio is estimated to decrease only slightly to 92 percent. As a result, the 2015/16 world cotton price is projected to remain near the current season s average; in 2014/15, the world price is expected to average near 71 cents per pound, the lowest in 6 years. Figure 2 China's cotton yarn imports Million bale-equivalents 10 8 Total (less re-imports) Pakistan, India, and Vietnam's share Proj. Marketing year Source: USDA, ERS calculations based on World Trade Atlas data for HTS

5 Contacts and Links Contact Information Leslie Meyer (U.S. cotton & textiles) (202) Stephen MacDonald (foreign cotton) (202) Carolyn Liggon (web publishing) (202) Subscription Information Subscribe to ERS notification service at -e-newsletters.aspx to receive timely notification of newsletter availability. Printed copies can be purchased from the USDA Order Desk by calling (specify the issue number). To order printed copies of the five field crop newsletters cotton and wool, feed, rice, oil crops, and wheat as a series, specify series SUB-COR Data Cotton and Wool Monthly Tables ( Cotton and Wool Chart Gallery ( Related Websites WASDE Cotton Topics Notification Readers of ERS outlook reports have two ways they can receive an notice about release of reports and associated data. Receive timely notification (soon after the report is posted on the web) via USDA s Economics, Statistics, and Market Information System (which is housed at Cornell University s Mann Library). Go to Usda/about Service.do and follow the instructions to receive notices about ERS, Agricultural Marketing Service, National Agricultural Statistics Service, and World Agricultural Outlook Board products. Receive weekly notification (on Friday afternoon) via the ERS website. Go to and follow the instructions to receive notices about ERS outlook reports, Amber Waves magazine, and other reports and data products on specific topics. ERS also offers RSS (really simple syndication) feeds for all ERS products. Go to to get started. Cotton and Wool Outlook The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC or call (800) (voice) or (202) (TDD). USDA is an equal opportunity provider and employer. 5

6 Table 1--U.S. cotton supply and use estimates 2015/16 Item 2013/ /15 May June Million acres Upland: Planted Harvested Yield/harvested acre Beginning stocks Production Total supply 1/ Mill use Exports Total use Ending stocks 2/ Stocks-to-use ratio Extra-long staple: Planted Harvested Yield/harvested acre 1,527 1,432 1,514 1,514 Beginning stocks Production Total supply 1/ Mill use Exports Total use Ending stocks 2/ Stocks-to-use ratio / Includes imports. 2/ Includes unaccounted. Source: USDA, World Agricultural Outlook Board. Pounds Million 480-lb. bales Percent 1,000 acres Pounds 1, lb. bales Percent 6

7 Table 2--World cotton supply and use estimates 2015/16 Item 2013/ /15 May June Million 480-lb. bales Supply: Beginning stocks-- World Foreign Production-- World Foreign Imports-- World Foreign Use: Mill use-- World Foreign Exports-- World Foreign Ending stocks-- World Foreign Percent Stocks-to-use ratio: World Foreign Source: USDA, World Agricultural Outlook Board. 7

8 Table 3--U.S. fiber supply Feb. Mar. Apr. Apr. Item , lb. bales Cotton: Stocks, beginning 12,945 11,812 9,960 7,096 Ginnings Imports since August Million pounds Manmade: Production Noncellulosic Cellulosic NA NA NA NA Total since January 1 1, , , ,101.3 Jan. Feb. Mar. Mar Million pounds Raw fiber imports: NA Noncellulosic NA Cellulosic NA 15.1 Total since January NA ,000 pounds Wool and mohair: Raw wool imports, clean s-and-finer Not-finer-than-46s Total since January , , ,325.1 Wool top imports Total since January Mohair imports, clean Total since January NA = Not available. Sources: USDA, National Agricultural Statistics Service; U.S. Dept. of Commerce, U.S. Census Bureau; and Fiber Organon. 8

9 Table 4--U.S. fiber demand Feb. Mar. Apr. Apr. Item , lb. bales Cotton: All consumed by mills 1/ Total since August 1 2,009 2,320 2,620 2,632 Daily rate Upland consumed by mills 1/ Total since August 1 1,999 2,309 2,608 2,620 Daily rate Upland exports 1,171 1,484 1,388 1,057 Total since August 1 4,817 6,302 7,689 7,835 Sales for next season Total since August ,130 1,716 Extra-long staple exports Total since August Sales for next season Total since August Jan. Feb. Mar. Mar Million pounds Manmade: Raw fiber exports NA 61.0 Noncellulosic NA 60.4 Cellulosic NA 0.6 Total since January NA ,000 pounds Wool and mohair: Raw wool exports, clean Total since January , ,014.0 Wool top exports Total since January Mohair exports, clean Total since January NA = Not available. 1/ Estimated by USDA. Sources: USDA, Farm Service Agency; USDA, Foreign Agricultural Service, U.S. Export Sales; U.S. Dept. of Commerce, U.S. Census Bureau; and Fiber Organon. 9

10 Table 5--U.S. and world fiber prices Mar. Apr. May May Item Cents per pound Domestic cotton prices: Adjusted world price Upland spot Pima spot Average price received by upland producers NA Far Eastern cotton quotes: A Index Memphis/Eastern Memphis/Orleans/Texas California/Arizona Dollars per pound Wool prices (clean): U.S. 58s Australian 58s 1/ U.S. 60s NQ Australian 60s 1/ NQ U.S. 64s NQ Australian 64s 1/ NA = Not available. NQ = No quote. 1/ In bond, Charleston, SC. Sources: USDA, Cotton Price Statistics ; Cotlook Ltd., Cotton Outlook; and trade reports. 10

11 Table 6--U.S. textile imports, by fiber Feb. Mar. Apr. Apr. Item ,000 pounds 1/ Yarn, thread, and fabric: 238, , , ,144 Cotton 45,731 65,041 59,575 56,140 Linen 19,842 23,874 27,259 19,833 Wool 3,701 4,439 4,198 4,102 Silk Manmade 168, , , ,522 Apparel: 852, , , ,879 Cotton 460, , , ,996 Linen 9,002 10,822 9,206 10,106 Wool 19,221 19,771 18,331 17,714 Silk 9,761 11,429 9,754 10,008 Manmade 353, , , ,054 Home furnishings: 201, , , ,789 Cotton 115, , , ,739 Linen 1,013 1, ,259 Wool Silk Manmade 84, ,992 89,259 83,325 Floor coverings: 61,620 81,154 83,626 72,604 Cotton 7,887 10,592 11,027 8,661 Linen 15,538 22,391 22,185 18,069 Wool 8,381 10,778 11,333 10,879 Silk 1,739 2,905 3,007 2,064 Manmade 28,076 34,488 36,074 32,931 Total imports: 2/ 1,353,786 1,594,252 1,417,050 1,357,799 Cotton 629, , , ,771 Linen 45,395 58,226 59,429 49,268 Wool 31,613 35,332 34,210 32,992 Silk 12,100 14,975 13,428 12,802 Manmade 635, , , ,967 1/ Raw-fiber equivalent. 2/ Includes headgear. Sources: USDA, Economic Research Service; and U.S. Dept. of Commerce, U.S. Census Bureau. 11

12 Table 7--U.S. textile exports, by fiber Feb. Mar. Apr. Apr. Item ,000 pounds 1/ Yarn, thread, and fabric: 241, , , ,628 Cotton 131, , , ,242 Linen 6,377 6,578 7,021 7,911 Wool 2,480 3,459 3,164 3,079 Silk 933 1,136 1,230 1,358 Manmade 99, , , ,039 Apparel: 23,837 28,461 27,319 24,897 Cotton 10,878 13,072 12,024 10,771 Linen Wool 1,198 1,538 1,311 1,402 Silk Manmade 10,399 12,089 12,675 11,282 Home furnishings: 4,434 4,833 4,959 5,732 Cotton 2,132 2,506 2,401 2,456 Linen Wool Silk Manmade 1,744 1,904 1,907 2,839 Floor coverings: 26,493 30,982 28,066 30,593 Cotton 1,972 2,402 2,262 2,069 Linen 966 1,366 1, Wool 1,495 1,978 1,831 1,947 Silk Manmade 22,035 25,177 22,586 25,606 Total exports: 2/ 296, , , ,903 Cotton 146, , , ,563 Linen 8,173 9,012 9,206 9,548 Wool 5,272 7,064 6,384 6,530 Silk 1,951 2,224 2,316 2,473 Manmade 134, , , ,789 1/ Raw-fiber equivalent. 2/ Includes headgear. Sources: USDA, Economic Research Service; and U.S. Dept. of Commerce, U.S. Census Bureau. 12

13 Table 8--U.S. cotton textile imports, by origin Feb. Mar. Apr. Apr. Region/country ,000 pounds 1/ North America 137, , , ,962 Canada 3,100 3,234 3,215 2,916 Costa Rica Dominican Republic 8,252 9,336 8,028 7,035 El Salvador 18,627 20,393 16,556 19,415 Guatemala 8,273 7,670 7,763 6,744 Haiti 13,931 14,680 12,983 12,471 Honduras 29,080 33,479 25,065 25,391 Mexico 38,342 44,262 42,198 41,816 Nicaragua 18,135 20,105 18,487 17,769 South America 3,274 4,044 3,798 4,743 Colombia 1,039 1,572 1,724 1,746 Peru 2,079 2,267 1,744 2,701 Europe 10,290 13,505 11,942 12,116 Germany 942 1,255 1,230 1,448 Italy 1,457 1,934 1,772 1,724 Portugal 1,190 1,439 1, Turkey 4,636 6,160 5,468 5,276 Turkmenistan As ia 465, , , ,024 Bahrain 1,695 1,892 2,251 2,201 Bangladesh 50,309 53,646 49,282 45,716 Cambodia 14,569 18,012 16,967 16,947 China 183, , , ,412 Hong Kong India 64,412 82,891 81,710 66,984 Indonesia 21,941 26,755 25,512 25,366 Israel Japan 828 1,561 1,781 1,312 Jordan 4,033 5,462 3,708 5,535 Malaysia 2,581 3,568 2,673 2,671 Pakistan 53,861 61,477 64,391 63,407 Philippines 3,063 4,552 5,333 4,296 South Korea 3,433 6,840 6,305 5,681 Sri Lanka 7,466 9,666 7,964 8,158 Taiwan 1,709 2,913 2,120 2,453 Thailand 4,162 6,074 5,922 5,535 United Arab Emirates Vietnam 45,664 57,384 51,714 44,518 Oceania Africa 12,140 13,740 13,826 15,859 Egypt 7,318 7,483 7,503 8,630 Kenya 1,986 2,503 2,447 2,327 Lesotho 1,074 1,572 1,917 2,464 Mauritius 778 1, ,043 World 2/ 629, , , ,771 1/ Raw-fiber equivalent. 2/ Totals may not add due to rounding. Sources: USDA, Economic Research Service; and U.S. Dept. of Commerce, U.S. Census Bureau. 13

14 Table 9--U.S. cotton textile exports, by destination Feb. Mar. Apr. Apr. Region/country ,000 pounds 1/ North America 126, , , ,879 Bahamas Canada 9,427 10,590 10,167 9,482 Costa Rica Dominican Republic 17,873 20,823 20,183 18,914 El Salvador 7,862 8,314 8,758 10,162 Guatemala 2,538 3,162 2,704 1,993 Haiti Honduras 59,277 63,380 56,288 46,317 Jamaica Mexico 25,633 27,766 28,302 28,609 Nicaragua 2,656 2,297 2,330 1,539 Panama South America 5,734 5,163 5,775 4,400 Brazil Chile Colombia 2,495 2,402 2,450 2,630 Ecuador Peru 1,946 1,517 2, Venezuela Europe 2,942 3,653 3,030 3,080 Belgium France Germany Italy Netherlands United Kingdom 1,034 1, Asia 10,284 11,872 13,842 8,363 China 6,089 7,164 9,324 4,650 Hong Kong India Israel Japan 1,157 1, Lebanon Saudi Arabia Singapore South Korea Taiwan Thailand United Arab Emirates Vietnam Oceania Australia New Zealand Africa South Africa World 2/ 146, , , ,563 1/ Raw-fiber equivalent. 2/ Totals may not add due to rounding. Sources: USDA, Economic Research Service; and U.S. Dept. of Commerce, U.S. Census Bureau. 14

15 Table 10--Final 2014 U.S. cotton acreage, yield, and production State/Region Planted Harvested Yield Production Pounds/ 1,000 1,000 acres harvested acre bales Upland: Alabama Florida Georgia 1,380 1, ,570 N. Carolina , S. Carolina Virginia , Southeast 2,669 2, ,160 Arkansas , Louisiana , Mississippi ,232 1,078 Missouri , Tennessee Delta 1,455 1,433 1,116 3,333 Kansas Oklahoma Texas 6,200 4, ,175 Southwest 6,471 4, ,492 Arizona , California , New Mexico West , Total Upland 10,845 9, ,753 Pima: Arizona California , New Mexico Texas Total Pima , Total All 11,037 9, ,319 Source: USDA, National Agricultural Statistics Service, May 2015 Crop Production. 15