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U.S. cotton production in the 1999/2000 (August-July) season was forecast by the U.S.D.A. at 16.88 million bales. This was some 2.96 million bales more than the previous season. At the start of the 1999/00 season, it had appeared that the crop could potentially be as large as 20 million bales but poor growing conditions reduced the crop’s potential. Drought adversely affected the crop in some states. Most notable was a late season hurricane in North Carolina which did an extensive amount of damage. The North Carolina crop was 780,000 bales compared to 1.03 million bales in 1998/99. Cotton growers planted 14.6 million acres to the natural fiber, up 1.21 million acres from the previous season. Due to poor conditions in many regions, the amount of acreage that was harvested was some 8 percent less than that planted. The average rate of cotton acreage abandonment is about 6 percent. In 1998/99, 20 percent of the planted acreage was abandoned. For 1999/00, acreage harvested was 13.41 million. Some 1.19 million acres were abandoned. The national average cotton yield was 604 pounds per acre compared to 625 pounds a year earlier. Texas was the largest producing state with 1999/00 production of 5.15 million bales. That was up 41 percent from last season. The Texas yield was 492 pounds per acre which was down 6 percent from last season. Texas harvested 5.03 million acres. California’s crop was estimated at 2.15 million bales, up 43 percent from the season before. The yield was 899 pounds or some 7 percent more than the previous season. The Mississippi crop was 1.74 million bales, up 21 percent from 1998/99. The Georgia crop was 1.55 million bales, up 1 percent from the previous year. The Arkansas crop was 1.43 million bales, up 18 percent from the previous season. At the beginning of the 1999/00 season, U.S. cotton stocks were 3.94 million bales, some 1 percent more than the previous season. Stocks amounted to about 4 months worth of use. Imports of cotton in 1999/00 were forecast to be 80,000 bales, well below the 440,000 bales imported in 1998/99. The total supply of cotton is equal to the sum of beginning stocks and production and imports. For the 1999/00 season, the total supply of cotton was 20.89 million bales, up 14 percent from a year ago. Domestic use of cotton was forecast by the U.S.D.A. to be 10.2 million bales. That would be some 2 percent or 200,000 bales less than in 1998/99. How much cotton is consumed by U.S. textile mills is dependent on a number of factors including the direction and strength of the U.S. economy as well as consumer tastes. In a period of declining interest rates leading to an expanding housing sector, the use of cotton will increase. In late 1999, interest rates were rising and it was likely that at some point the housing sector would slow leading to a decline in cotton use. An important consideration in determining how much cotton will be used by domestic mills is the amount of cotton textiles imported into the U.S. relative to the amount exported. The North American Free Trade Agreement has increased the cotton textile trade over the last five years. The U.S. imports more cotton textiles than it exports leading to a trade deficit that is increasing. This, in turn, reduces the amount of cotton that textile mills need to use. The National Cotton Council reported that in the month of November 1999, the seasonally adjusted annual rate of cotton use was 10.13 million bales which was down from the October estimate of 10.22 million bales. Because of the growing trade deficit in cotton textiles, it is possible that domestic textile mills will use less than 10.2 million bales. The other source of cotton use is exports. Cotton exports from season to season tend to vary more than domestic use. In the past, U.S. cotton prices have been higher than foreign prices putting U.S. exporters at a competitive disadvantage. To counter this the U.S.D.A. enacted a new Step 2 cotton user payment program. This program in effect reimburses to exporters the difference between higher priced domestic cotton and lower priced foreign cotton allowing export sales to be made. The U.S.D.A. forecasts that exports of U.S. cotton in the 1999/00 season will be 6.2 million bales. If that result comes about, it would represent an increase of almost 43 percent from the previous year. The U.S.D.A. reported in its Export Sales report for the week of December 9, 1999, that since the start of the 1999/00 season, cumulative exports of cotton were some 38 percent less than the year before. Total use of cotton in 1999/00 was estimated at 16.4 million bales, up 11 percent from the previous season. Projected ending stocks of cotton were 4.5 million bales, up 14 percent from a year ago. World production of cotton was forecast by U.S.D.A. to be 87.38 million bales, up 3 percent from 1998/99. Production of cotton outside the U.S. was forecast to be 70.51 million bales. The largest producer of cotton is China with the 1999/00 crop estimated at 19 million bales. China has been reducing its cotton production because of a buildup in stocks. China has also been exporting some of its excess cotton. For the 1999/00 season, the U.S.D.A. forecast China’s net exports at over a million bales. China’s stocks of cotton have been estimated to be about 15 million bales. India’s cotton crop was estimated to be 13 million bales, up 2 percent from 1998-99. Pakistan’s crop was estimated at 7.8 million bales, some 24 percent higher than in 1998/99. Production in the Central Asian countries (Uzbekistan and Turkmenistan) was forecast to be 6.5 million bales or some 16 percent more than a year ago. The South American crops were damaged by drought. Brazil’s crop of 1.9 million bales was down 10 percent from a year ago. Argentina’s crop of 600,000 bales was down 33 percent from the previous year. Australia’s crop was forecast at 3.1 million bales, down 6 percent from a year ago. Futures Markets Cotton futures and options are traded on the New York Cotton Exchange (NYCE). Cotton futures are traded on the Bolsa de Mercadorias & Futuros (BM&F). Cotton yarn futures are traded on the Chuba Commodity Exchange (C-COM), the Osaka Mercantile Exchange (OME), and the Tokyo Commodity Exchange (ToCom).
Excerpted from the CRB Commodity Yearbook.