Required Report - public distribution

**Date:** 5/11/2005

**GAIN Report Number:** SP5015

PO0000

**Iberia**

**Cotton and Products**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Stephen Hammond

U.S. Embassy

**Prepared by:**

Leonor Ramos

**Report Highlights:**

U.S. cotton exports into the Iberian Peninsula (Spain and Portugal) will
likely remain under pressure during marketing year (MY) 2005/06
(August/July), even though the local production will fall short of last
year's output. The upside potential for U.S. exports will likely be
eroded by a number of converging factors, which when combined, will
substantively reduce cotton demand in the Iberian market. (LR30SH6)

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Madrid \[SP1\]

\[SP\]

####### TABLE OF CONTENTS

[**Executive Summary 3**](#executive-summary)

[Production, Supply & Distribution Tables
4](#production-supply-distribution-tables)

[Production 6](#production)

[General 6](#general)

[Production Policy 6](#production-policy)

[Consumption 7](#consumption)

[Trade 8](#trade)

[General 8](#general-1)

[Factors Affecting U.S. Cotton 9](#factors-affecting-u.s.-cotton)

[Trade Matrices 9](#trade-matrices)

[Marketing 11](#marketing)

# Executive Summary

FAS/Iberia forecasts a continuing decrease in Iberian raw cotton
imports. The forecast Portuguese and Spanish MY 2005/06 raw cotton
imports will be at 55,000 tons and 10,000 tons, respectively, down
slightly from 60,000 tons and 14,000 tons in MY 2004/05. Iberian imports
of U.S. cotton will be down in MY 2004/05 from previous years, due to a
reduction in total cotton use in Spain and Portugal, but will remain at
around 500 and 900 tons, respectively, during MY 2005/06.

MY 2005/06 raw cotton exports from the Iberian Peninsula will be less
that MY 2004/05, because of the drought reduced crop and reduced planted
acreage. We forecast total Spanish raw cotton exports in MY 2005/06 at
40,000 tons, down from 90,000 tons in MY 2004/05.

We expect to see a further reduction in Iberian raw cotton exportable
supplies in the medium-to-long term, as a result of the Common
Agriculture Policy (CAP) reform, which will be initiated during MY
2006/07. Under the reform, farmers will have 65 percent of their
production subsidy de-coupled from production. CAP reform will likely
lead to a reduction in the number of Iberian farmers that view cotton
production as the most profitable use of their fixed and variable
inputs.

Iberian Peninsula raw cotton production will be down in MY 2005/06, as a
result of a severe drought currently affecting crop development on the
Peninsula (please see SP5004 and 5013). We forecast Iberian raw cotton
production at 260,000 metric tons in MY 2005/06, down from 349,726 tons
in MY 2004/05. Roughly 95 percent of Iberian Peninsula production comes
from the Spanish Autonomous Region of Andalusia.

The Multi-Fibers Agreement (in force as of January 2005) and the
relative strength of the Euro will further reduce the competitiveness of
local textiles manufacturers in traditional EU and third-country
markets. Over the long term, Iberian raw cotton use will continue
downward as local textiles manufacturing loses ground to Asian textile
producers.

Cotton use in Spain and Portugal will be down in MY 2004/05 relative to
previous year levels, due to the closing of several major mills, but
will remain stable in MY 2005/06 at about 255,000 and 55,000 tons,
respectively, before declining again in out years. Some local spinners
have closed, while many larger operations have relocated cotton milling
to countries with more favorable costs, such as Vietnam, China, India
and Pakistan.

# Production, Supply & Distribution Tables

  -------------------- ------------ ---------- ---------- ---------- ------------------ ----------
  **PSD Table**                                                                         

  **Country**          **Spain**                                                        

  **Commodity**        **Cotton**                                    (HECTARES)(TONS)   

                       2003         Revised    2004       Estimate   2005               Forecast

                       USDA         Post       USDA       Post       USDA Official      Post
                       Official     Estimate   Official   Estimate   \[Old\]            Estimate
                       \[Old\]      \[New\]    \[Old\]    \[New\]                       \[New\]

  **Market Year                     08-2003               08-2004                       08-2005
  Begin**                                                                               

  Area Planted         0            94,700     0          90,200     0                  85,000

  Area Harvested       92,000       94,700     90,000     90,200     0                  85,000

  Beginning Stocks     39,844       39,844     26,563     35,321     0                  49,021

  Production           93,622       295,100    108,863    348,800    0                  260,000

  Imports              16,983       16,907     14,152     14,000     0                  10,000

  MY Imp. from U.S.    0            841        0          500        0                  500

  TOTAL SUPPLY         150,449      351,851    149,578    398,121    0                  319,021

  Exports              56,391       56,330     51,166     90,000     0                  40,000

  USE Dom. Consumption 67,495       255,000    60,963     254,000    0                  250,000

  Loss Dom.            0            5,200      0          5,100      0                  5,000
  Consumption                                                                           

  TOTAL Dom.           67,495       260,200    60,963     259,100    0                  255,000
  Consumption                                                                           

  Ending Stocks        26,563       35,321     37,449     49,021     0                  24,021

  TOTAL DISTRIBUTION   150,449      351,851    149,578    398,121    0                  319,021
  -------------------- ------------ ---------- ---------- ---------- ------------------ ----------

  -------------------- ------------ ---------- ---------- ----------- ------------------- ----------
  **PSD Table**                                                                           

  **Country**          **Spain**                                                          

  **Commodity**        **Cotton**                                     (HECTARES)(Bales)   

                       2003         Revised    2004       Estimate    2005                Forecast

                       USDA         Post       USDA       Post        USDA Official       Post
                       Official     Estimate   Official   Estimate    \[Old\]             Estimate
                       \[Old\]      \[New\]    \[Old\]    \[New\]                         \[New\]

  **Market Year                     08-2003               08-2004                         08-2005
  Begin**                                                                                 

  Area Planted         0            94,700     0          90,200      0                   85,000

  Area Harvested       92,000       94,700     90,000     90,200      0                   85,000

  Beginning Stocks     102,427      102,427    68,285     90,799      0                   126,018

  Production           240,674      758,612    279,853    896,658     0                   668,380

  Imports              43,658       43,463     36,380     35,990      0                   25,707

  MY Imp. from U.S.    0            2,162      0          1,285       0                   1,285

  TOTAL SUPPLY         386,758      904,501    384,519    1,023,447   0                   820,105

  Exports              144,964      144,807    131,532    231,362     0                   102,828

  USE Dom. Consumption 173,509      655,527    156,717    652,956     0                   642,674

  Loss Dom.            0            13,368     0          13,111      0                   12,853
  Consumption                                                                             

  TOTAL Dom.           173,509      668,895    156,717    666,067     0                   655,527
  Consumption                                                                             

  Ending Stocks        68,285       90,799     96,270     126,018     0                   61,751

  TOTAL DISTRIBUTION   386,758      904,501    384,519    1,023,447   0                   820,105
  -------------------- ------------ ---------- ---------- ----------- ------------------- ----------

  ------------------- -------------- ---------- ---------- ---------- ------------------ ----------
  **PSD Table**                                                                          

  **Country**         **Portugal**                                                       

  **Commodity**       **Cotton**                                      (HECTARES)(TONS)   

                      2003           Revised    2004       Estimate   2005               Forecast

                      USDA Official  Post       USDA       Post       USDA Official      Post
                      \[Old\]        Estimate   Official   Estimate   \[Old\]            Estimate
                                     \[New\]    \[Old\]    \[New\]                       \[New\]

  **Market Year                      08-2003               08-2004                       08-2005
  Begin**                                                                                

  Area Planted        0              210        0          265        0                  200

  Area Harvested      1,000          210        1,000      265        0                  200

  Beginning Stocks    23,079         23,079     19,378     19,235     0                  18,461

  Production          218            632        218        926        0                  600

  Imports             83,607         84,739     76,204     60,000     0                  55,000

  MY Imp. from U.S.   0              928        0          900        0                  900

  TOTAL SUPPLY        106,904        108,450    95,800     80,161     0                  74,061

  Exports             435            415        435        450        0                  450

  USE Dom.            87,091         87,000     76,204     60,000     0                  55,000
  Consumption                                                                            

  Loss Dom.           0              1,800      0          1,250      0                  1,150
  Consumption                                                                            

  TOTAL Dom.          87,091         88,800     76,204     61,250     0                  56,150
  Consumption                                                                            

  Ending Stocks       19,378         19,235     19,160     18,461     0                  17,461

  TOTAL DISTRIBUTION  106,904        108,450    95,799     80,161     0                  74,061
  ------------------- -------------- ---------- ---------- ---------- ------------------ ----------

  ------------------- -------------- ---------- ---------- ---------- ------------------- ----------
  **PSD Table**                                                                           

  **Country**         **Portugal**                                                        

  **Commodity**       **Cotton**                                      (HECTARES)(Bales)   

                      2003           Revised    2004       Estimate   2005                Forecast

                      USDA Official  Post       USDA       Post       USDA Official       Post
                      \[Old\]        Estimate   Official   Estimate   \[Old\]             Estimate
                                     \[New\]    \[Old\]    \[New\]                        \[New\]

  **Market Year                      08-2003               08-2004                        08-2005
  Begin**                                                                                 

  Area Planted        0              498        0          500        0                   500

  Area Harvested      1,000          498        1,000      500        0                   500

  Beginning Stocks    59,329         59,329     49,815     49,447     0                   47,458

  Production          560            1,625      560        2,380      0                   1,542

  Imports             214,928        217,838    195,897    154,242    0                   141,388

  MY Imp. from U.S.   0              2,386      0          2,314      0                   2,314

  TOTAL SUPPLY        274,817        278,792    246,272    206,069    0                   190,388

  Exports             1,118          1,067      1,118      1,157      0                   1,157

  USE Dom.            223,884        223,650    195,897    154,242    0                   141,388
  Consumption                                                                             

  Loss Dom.           0              4,627      0          3,213      0                   2,956
  Consumption                                                                             

  TOTAL Dom.          223,884        228,278    195,897    157,455    0                   144,344
  Consumption                                                                             

  Ending Stocks       49,815         49,447     49,254     47,458     0                   44,887

  TOTAL DISTRIBUTION  274,817        278,792    246,270    206,069    0                   190,388
  ------------------- -------------- ---------- ---------- ---------- ------------------- ----------

# Production

## General

Iberia: Production of Un-ginned Cotton in Metric Tons

  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
             **1999/00**   **2000/01**   **2001/02**   **2002/03**   **2003/04**   **2004/05**   **2005/06**

  Spain      409,518       300,657       336,984       321,589       295,100       348,800       260,000

  Portugal   73            0             612           843           632           926           600
  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------

Source: Official data up till 2004/05. FAS/Iberia forecast for 2005/06.

Raw cotton production will decline in Spain and Portugal during MY
2005/06, because of a drought. The continuing drought has affected
available water resources for spring crop irrigation, which will make
cotton planting less attractive and less productive. For more on the
Iberian drought, please check FAS GAIN Reports SP5004 and 5013.

Some ninety-five percent of Iberian Peninsula cotton production is
cultivated in the Guadalquivir river basin of Andalucia, in the Spanish
provinces of Seville, Cordoba, Cadiz and Jaen. Smaller areas are located
in Cartagena in eastern Spain (about 3,000 ha), and in the Portuguese
Lower Alentejo region. About 7,600 Spanish, and 20 Portuguese farmers
cultivate Cotton.

## Production Policy

In MY 2006/07, a new cotton regime will be in place, instituted by EU
Reg. 864/2004, dated of April 29, 2004. CAP reform will change farmer
domestic support regulated through EU-set minimum purchase prices paid
by the cotton ginners, up to production ceilings (Maximum Guaranteed
Quantity, MGQ). From MY 2006/07 onwards, cotton producers will be
eligible to receive direct EU subsidy payments determined on the basis
of historic cultivated areas and yields and EU support to the sector.
Under new regime, 65 percent of cotton production subsidies will be
de-coupled and included in the Single Farm Payment (SFP). The remaining
support will be integrated in the country's "financial envelope," and
paid to the farmers on a cultivated area-basis. The CAP reform converted
the MGQ system into an area-based system, and instituted Maximum
Guaranteed Areas (MGAs). For currently effective MGQs, and MGAs and
subsidies to be implemented in 2006, please check table below.

We expect cotton CAP reform to reduce production, as many farmers whose
margins are below area-linked subsidy levels switch to other crops.
According to local sources, once the new regime is implemented, only
farmers who can achieve production of 2,000 tons/ha will choose to
continue cotton production. This could lead very quickly to a reduction
in production to some 140,000 tons in the early stages of
implementation.

###### Iberian MGAs and MQS

+-------------+----------+-----------+-------------+-----------------+
|             | **2005** | **From    |             |                 |
|             |          | 2006      |             |                 |
|             |          | Onwards** |             |                 |
+-------------+----------+-----------+-------------+-----------------+
|             | **MGQ**  | **Base    | **Amount    | **Aid per       |
|             |          | Area**    | d           | eligible        |
|             | **       |           | e-coupled** | hectare**       |
|             | (Tons)** |           |             |                 |
+-------------+----------+-----------+-------------+-----------------+
| Spain       | 249,000  | 70,000 ha | 1,509 €/ha  | 1,039 €/ha      |
+-------------+----------+-----------+-------------+-----------------+
| Portugal    | 1,500    | 360 ha    | 1,202 €/ha  | 556 €/ha        |
+-------------+----------+-----------+-------------+-----------------+
| EU          | 1        | 425,360   | \-          | \-              |
|             | ,031,000 | ha        |             |                 |
+-------------+----------+-----------+-------------+-----------------+

# Consumption

Due to mill closings, total Iberian cotton use will continue to be
reduced over the short and medium-to-long term. We expect the largest
drop to take place in Portugal, as some large millers have already shut
down in August 2004, and more are likely do so till the end of the
current marketing year, for reasons of both financial and strategic
nature. A large miller based in Guimarães, Fiarel, closed in August
2004, after selling the whole factory into Vietnam to a local miller.
Two other large mills - Lameirinho and Coelima - closed down in early
CY-2005. These mills belonged to large textile groups, fully vertically
integrated, who decided to re-locate spinning operations in India or
Pakistan in order to benefit from more attractive operating costs.

Millers that have remained active tend to be part of vertically
integrated groups, and produce special yarns and threads. Yarn
production from ring-spinning mills is mostly n.e. 30, 24 and 20, and
from open-end mills is mostly 16, 12 and 10. Carded and open-end yarn
account for some 80 percent of total yarn production. Finer yarns,
numbers 40 and over are tending to increase to the detriment of yarns
numbers 8 and under, due to the industry trend to specialize in
high-quality thin yarns.

The reduction in demand for local textiles is primarily due to the full
entry into force in January 2005 of the Multi-Fiber Agreement. Industry
sources report that orders for finished textile products are weak and
will not recover in the near-term future. Orders placed by international
groups have become scarce, and tend to be limited to specific occasions
where speed of response is critical. Instead, imports of textile
products from countries with low production costs, namely India and
China, which have been displacing Portuguese and Spanish textile
products in other EU countries. This is affecting all textile product
categories, but especially garments in the case of Portuguese textiles,
and clothing and home furnishings in the case of the Spanish industry.

Even though Iberian Peninsula textile exports to third-country markets
are also being hurt by the Euro appreciation against the dollar, as well
as high labor and electricity costs, some segments remain competitive.
The more competitive textile industry segments include the Portuguese
home-textiles and furnishings, which profit from tradition and good
marketing practices, and the Spanish garment industry, which benefits
from some recognition attained by Spanish fashion in international
markets.

Cotton demand continues to be dominated by SM cotton (1.3/32 and 1.1/16)
for ring spinning, which accounts for some 70 percent of total cotton
use. The remaining 30 percent consists in SLM cotton (1.1/16 and 1.1/8)
for open-end use. Demand for ELS cotton represents a market niche. In
Portugal, the industry estimates this niche to represent some 1,500 to
2,000 tons annually, threatened by high thread imports. SM cotton is
primarily sourced from Equatorial Africa, and SLM cotton, from Central
Africa and the Former Soviet Union. ELS cotton is primarily sourced from
the U.S., Egypt and Israel.

# Trade

## General

Iberia: Un-ginned Cotton Imports in Metric Tons

  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
             **1999/00**   **2000/01**   **2001/02**   **2002/03**   **2003/04**   **2004/05**   **2005/06**

  Portugal   141,409       135,614       121,283       105,297       84,739        60,000        55,000

  Spain      35,406        31,501        29,313        25,785        16,907        14,000        10,000
  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------

Source: Official statistics up till 2003/04. FAS Office estimates for
2004/05 and 2005/06.

Iberia: Un-ginned Cotton Exports in Metric Tons

  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
             **1999/00**   **2000/01**   **2001/02**   **2002/03**   **2003/04**   **2004/05**   **2005/06**

  Spain      54,954        29,339        31,664        17,392        56,330        90,000        40,000

  Portugal   166           80            531           360           415           450           450
  ---------- ------------- ------------- ------------- ------------- ------------- ------------- -------------

Source: Official statistics up till 2003/04. FAS Office estimates for
2004/05 and 2005/06.

Iberian raw cotton imports will be reduced in MY 2004/05 from previous
years due to reduced spinning activity. According to the official
statistics, Portuguese raw cotton imports dropped 16 percent during the
first half of MY 2004/05 relative to the same period the previous year,
and Spanish by 15 percent. We forecast another import reduction for MY
2005/06, due to a further reduction in spinning.

Iberian imports of U.S. cotton will be down in MY 2004/05 relative to
previous year levels. Official trade statistics show that Portuguese
imports during the first half of MY 2004/05 were at 757 tons (612 tons
in first half 2003/04), but Spanish imports during the same period are
reduced from previous year's level.

In Portugal, during the first half of MY 2004/05, Central and Equatorial
African countries remained the leading raw cotton import origins,
favored by long-standing commercial relations, and favorable
quality/price ratios. African cotton accounted for 52 percent of MY
2004/05 MY imports, down from 68 percent the previous year. However,
they lost relative importance in the second half of MY 2004/05 to
Spanish imports due to the favorable shipping conditions, which include
small quantities by truck or rail. Brazilian cotton also regained market
share during the first half of MY 2004/05, favored by a larger supply
and improved prices.

African countries accounted for 21 percent of Spain's cotton imports
during the first half of MY 2004/05, down from 43 percent in the same
period the previous year. The EU market share was up as a result of
transshipments from Belgium.

We forecast a reduction in Iberian Peninsula exports during MY 2005/06
from MY 2004/05 levels as a consequence of the reduced Spanish crop.
Iberian raw cotton exports increased by 59 percent during the first half
of MY 2004/05 when compared to 2003/04, with shipments up to other EU
countries and Morocco, but down for almost all other destinations.

## Factors Affecting U.S. Cotton

U.S. cotton competitiveness in the Iberian Peninsula market is
negatively affected by shipping costs and some quality factors. Some
importers mention problems with the incidence of neps, high micronaire,
and low grades with coloring problems. In addition, some say that many
U.S. cotton exporters lack flexibility in trade practices, which are
needed by most spinners today to survive in this highly competitive
market.

PIMA has emerged in recent years as the most competitive U.S. cotton
type. The threads and materials production from ELS cotton have a
comparatively high margin vis-à-vis other cotton types. U.S. PIMA cotton
competes with Egyptian and Israeli ELS cotton.

## Trade Matrices

+-------------+--------+------------+---------+-------------+--------+
| ######      |        |            |         |             |        |
| ## Import T |        |            |         |             |        |
| rade Matrix |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| **Country** | Spain  |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| **          | Cotton |            |         |             |        |
| Commodity** |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Time Period | Au     | Units:     | Metric  |             | A      |
|             | g/July |            | Tons    |             | ug/Jan |
+-------------+--------+------------+---------+-------------+--------+
| Imports     | 2002   |            | *       |             | **     |
| for:        |        |            | *2003** |             | 2004** |
+-------------+--------+------------+---------+-------------+--------+
| U.S.        | 858    | U.S.       | 841     | U.S.        | 0      |
+-------------+--------+------------+---------+-------------+--------+
| Others      |        | Others     |         | Others      |        |
+-------------+--------+------------+---------+-------------+--------+
| EU          | 4,881  | EU         | 4,155   | EU          | 2,929  |
+-------------+--------+------------+---------+-------------+--------+
| Tchad       | 3,622  | Australia  | 2,816   | Brazil      | 1,715  |
+-------------+--------+------------+---------+-------------+--------+
| Australia   | 3,067  | Tchad      | 1,988   | Australia   | 1,159  |
+-------------+--------+------------+---------+-------------+--------+
| Zimbabwe    | 2,688  | Zimbabwe   | 1,515   | Zimbabwe    | 860    |
+-------------+--------+------------+---------+-------------+--------+
| Burkina     | 1,450  | Burkina    | 1,480   | Syria       | 499    |
| Faso        |        | Faso       |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Cameroon    | 1,180  | Cameroon   | 1,079   | Chad        | 438    |
+-------------+--------+------------+---------+-------------+--------+
| Benin       | 1,114  | Benin      | 597     | Benin       | 266    |
+-------------+--------+------------+---------+-------------+--------+
| Syria       | 1,100  | Egypt      | 562     | Pakistan    | 106    |
+-------------+--------+------------+---------+-------------+--------+
| Cote        | 1,005  | Brazil     | 258     | Cameroon    | 80     |
| d\'Ivoire   |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Pakistan    | 892    | Pakistan   | 207     | Egypt       | 50     |
+-------------+--------+------------+---------+-------------+--------+
| Total for   | 20,999 |            | 14,657  |             | 8,102  |
| Others      |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Others not  | 3,928  |            |         |             | 87     |
| Listed      |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Grand Total | 25,785 |            | 15,498  |             | 8,189  |
+-------------+--------+------------+---------+-------------+--------+

+-------------+--------+------------+---------+-------------+--------+
| ######      |        |            |         |             |        |
| ## Export T |        |            |         |             |        |
| rade Matrix |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| **Country** | Spain  |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| **          | Cotton |            |         |             |        |
| Commodity** |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Time Period | Au     |            | Metric  |             | A      |
|             | g/July |            | Tons    |             | ug/Jan |
+-------------+--------+------------+---------+-------------+--------+
| Exports     | 2002   |            | *       |             | **     |
| for:        |        |            | *2003** |             | 2004** |
+-------------+--------+------------+---------+-------------+--------+
| U.S.        | 0      | U.S.       | 0       | U.S.        | 0      |
+-------------+--------+------------+---------+-------------+--------+
| Others      |        | Others     |         | Others      |        |
+-------------+--------+------------+---------+-------------+--------+
| France      | 6,623  | France     | 13,875  | France      | 6,412  |
+-------------+--------+------------+---------+-------------+--------+
| U.K.        | 2,591  | U.K.       | 5,658   | Portugal    | 3,050  |
+-------------+--------+------------+---------+-------------+--------+
| Portugal    | 1,440  | Portugal   | 5,425   | Belgium     | 2,355  |
+-------------+--------+------------+---------+-------------+--------+
| Other EU    | 2,082  | Other EU   | 4,242   | Other EU    | 4,155  |
+-------------+--------+------------+---------+-------------+--------+
| Morocco     | 1,379  | China      | 8,821   | China       | 7,602  |
+-------------+--------+------------+---------+-------------+--------+
| Switzerland | 1,276  | Algeria    | 7,862   | Morocco     | 3,165  |
+-------------+--------+------------+---------+-------------+--------+
| Turkey      | 929    | Morocco    | 3,838   | Algeria     | 2,241  |
+-------------+--------+------------+---------+-------------+--------+
| Ukraine     | 511    | Turkey     | 1,611   | India       | 718    |
+-------------+--------+------------+---------+-------------+--------+
| Indonesia   | 323    | S          | 1,366   | Colombia    | 607    |
|             |        | witzerland |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
|             |        | Pakistan   | 1,319   | Thailand    | 467    |
+-------------+--------+------------+---------+-------------+--------+
| Total for   | 17,154 |            | 54,017  |             | 30,772 |
| Others      |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Others not  | 238    |            | 2,313   |             | 732    |
| Listed      |        |            |         |             |        |
+-------------+--------+------------+---------+-------------+--------+
| Grand Total | 17,392 |            | 56,330  |             | 31,504 |
+-------------+--------+------------+---------+-------------+--------+

+-------------+--------+------------+----------+------------+---------+
| ######      |        |            |          |            |         |
| ## Import T |        |            |          |            |         |
| rade Matrix |        |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| **Country** | Po     |            |          |            |         |
|             | rtugal |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| **          | Cotton |            |          |            |         |
| Commodity** |        |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| Time Period | Au     | Units:     | Metric   |            | Aug/Jan |
|             | g/July |            | Tons     |            |         |
+-------------+--------+------------+----------+------------+---------+
| Imports     | 2002   |            | **2003** |            | *       |
| for:        |        |            |          |            | *2004** |
+-------------+--------+------------+----------+------------+---------+
| U.S.        | 1,726  | U.S.       | 928      | U.S.       | 757     |
+-------------+--------+------------+----------+------------+---------+
| Others      |        | Others     |          | Others     |         |
+-------------+--------+------------+----------+------------+---------+
| EU          | 4,311  | EU         | 9,112    | EU         | 4,453   |
+-------------+--------+------------+----------+------------+---------+
| Chad        | 13,909 | Chad       | 11,634   | Brazil     | 7,142   |
+-------------+--------+------------+----------+------------+---------+
| Brazil      | 11,112 | Mozambique | 8,816    | Chad       | 3,713   |
+-------------+--------+------------+----------+------------+---------+
| Mozambique  | 9,232  | Zimbabwe   | 6,302    | Mozambique | 3,463   |
+-------------+--------+------------+----------+------------+---------+
| Zimbabwe    | 7,979  | Egypt      | 3,752    | Zimbabwe   | 3,300   |
+-------------+--------+------------+----------+------------+---------+
| Mali        | 6,017  | Cameroon   | 5,397    | Cameroon   | 1,439   |
+-------------+--------+------------+----------+------------+---------+
| Turkey      | 5,728  | Turkey     | 4,843    | Uganda     | 1,415   |
+-------------+--------+------------+----------+------------+---------+
| Uganda      | 5,495  | Brazil     | 5,325    | Paraguay   | 1,264   |
+-------------+--------+------------+----------+------------+---------+
| Cameroon    | 4,608  | Uganda     | 3,999    | Tanzania   | 1,127   |
+-------------+--------+------------+----------+------------+---------+
| Egypt       | 3,534  | Cote       | 2,414    | Turkey     | 992     |
|             |        | d\'Ivoire  |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| Total for   | 71,925 |            | 61,594   |            | 28,308  |
| Others      |        |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| Others not  | 31,646 |            | 22,217   |            | 5,843   |
| Listed      |        |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+
| Grand Total | 1      |            | 84,739   |            | 34,908  |
|             | 05,297 |            |          |            |         |
+-------------+--------+------------+----------+------------+---------+

+-------------+--------+-----------+----------+-------------+---------+
| ######      |        |           |          |             |         |
| ## Export T |        |           |          |             |         |
| rade Matrix |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| **Country** | Po     |           |          |             |         |
|             | rtugal |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| **          | Cotton |           |          |             |         |
| Commodity** |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| Time Period | Au     | Units:    | Metric   |             | Aug/Jan |
|             | g/July |           | Tons     |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| Exports     | 2002   |           | **2003** |             | *       |
| for:        |        |           |          |             | *2004** |
+-------------+--------+-----------+----------+-------------+---------+
| U.S.        | 0      | U.S.      | 0        | U.S.        | 0       |
+-------------+--------+-----------+----------+-------------+---------+
| Others      |        | Others    |          | Others      |         |
+-------------+--------+-----------+----------+-------------+---------+
| EU          | 332    | EU        | 415      | EU          | 131     |
+-------------+--------+-----------+----------+-------------+---------+
| Philippines | 25     |           |          | Bangladesh  | 90      |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          | Hong-Kong   | 7       |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
|             |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| Total for   | 357    |           | 415      |             | 228     |
| Others      |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| Others not  | 3      |           | 0        |             | 0       |
| Listed      |        |           |          |             |         |
+-------------+--------+-----------+----------+-------------+---------+
| Grand Total | 360    |           | 415      |             | 228     |
+-------------+--------+-----------+----------+-------------+---------+

# Marketing

Iberia Peninsula cotton importers generally source cotton from a number
of countries (please see imports and exports section above). Grades,
staple lengths, prices and other specifications are the determining
import factors. None of the major cotton exporting countries carries out
significant promotional activities in Portugal or Spain.

> > In Portugal, PIMA cotton from the United States, Egypt and Israel is
> > in fairly constant demand, while other types are of little interest
> > to importers. MEMPHIS cotton continues to be considered
> > uncompetitive by the local trade when compared to African-sourced
> > cotton. San Joaquin Valley cotton competes with cotton shipped from
> > a series of cheaper-price origins, including Australia.
> > Orleans-Texas cotton is generally considered uncompetitive relative
> > to other origins of similar-type cottons.

In Spain, U.S. cotton competes for a diminishing market with Franc-Zone
African (FZA), Australia, the New Independent States, Syria, and
Argentine. Spanish imports of U.S. cotton include upland cotton, SJV and
some Pima. The main competition for SJV cotton is domestic cotton (which
is less sticky) as well as Australian cottons. Local industry contacts
report Spanish cotton has low-contaminant levels and good ginning
properties. African FZA cottons are favored by price/quality ratios and
cheap freights.

Portuguese cotton spinners and importers are mostly affiliated with the
Oporto-based Portuguese textiles association (ATP). Some 80 percent of
total cotton imports are made directly by the larger millers, with only
some 20 percent being handled by independent dealers. Third-country
exporters rely basically on price advantages and face-to-face contacts
(Chad, Mali and Zimbabwe have in-country representatives).

Spanish cotton importers generally are associated with the Spanish
National Cotton Exchange, which is based in Barcelona at the following
address: CENTRO ALGODONERO NACIONAL; Via Layetana, 32‑34 ‑ 3; 08003
Barcelona; Phone:(34‑93) 319‑ 8950; Fax: (34‑93)319‑8962; E‑mail:
[can@centroalgodonero.com.]{.underline} Web site:
[www.centroalgodonero.com]{.underline}