USA CUTS COTTON CROP OUTLOOK
Byline: Joanna Ramey
WASHINGTON — The Agriculture Department Monday revised downward the size of the 1995-1996 cotton crop and the amount of cotton expected to be used by textile mills.
The USDA said U.S. mill consumption of cotton this year is expected to be significantly smaller at 10.7 million bales, down from 11.2 million bales during the 1994-95 crop year, which ended July 31. The 10.7 million-bale consumption figure was a reduction of the USDA’s November estimate of 11 million bales.
Cotton watchers had forecast lower crop figures because the weekly ginnings of cotton reported by the government had showed a slackening since November, said Terry Townsend, statistician with the International Cotton Advisory Committee, a consortium of cotton-producing countries. U.S. cotton production, according to the December report, is pegged at 18.24 million bales, down from the November estimate of 18.84 million bales and well below the 19.66 million bales produced last year.
Crucially, the USDA also reduced the amount of carry-over, or surplus, cotton expected to be left for mills to tap into in August and September as the new crop year begins and the harvest gets under way. The USDA said ending stocks would be 3.4 million bales, down from its 3.7 million-bale November estimate. While the 1995-96 surplus is still considered low, it remains significantly higher than last crop year’s ending stocks of 2.65 million bales.
Townsend forecast the ending-stock figure for the current crop year will actually hit last year’s lows, despite lower mill consumption. Townsend said a combination of the reduction in domestic cotton production and continued demand for U.S. cotton exports will send ending stocks south.
Although textile officials widely cite lack of consumer demand for apparel as a cause for lower mill consumption, Townsend said higher-than-seasonal prices for cotton caused by tight worldwide cotton markets are factors to consider in the cutback of cotton use by mills.
Cotton futures on the New York Cotton Exchange for a March contract closed Monday at 86.2 cents a pound. Although the price is well below the $1-plus per pound of last year, it is still ahead of the 25-year average for March, which is roughly 67 cents, Townsend said.
“Prices this high above average signals to me that someone is worried we’re going to run out of cotton, or else people wouldn’t be willing to pay 86 cents a pound,” Townsend said. — Fairchild News Service