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Cotton Outlook Long Staple

UPDATE

Cotton Outlook Long Staple

Acceleration in demand exposes tight 

supply situation. 

After the stagnant trading conditions that characterised the 2008/2009 season, 

the last few weeks have seen a dramatic turnaround in the long staple/extra-long 

staple (LS/ELS) market. Traders have reported a marked upturn in demand from a 

number of import markets, most notably China, and significant inroads have been 

made into the large stocks that were carried into the 2009/2010 marketing year. 

Consequently, prices for ELS cottons in particular have strengthened rapidly and 

by a considerable margin.

In our Annual Long Staple Review, published back at the start of September, in 

discussing the reasons for the depressed market conditions witnessed last season, 

we stated that the ‘primary factor appears to have been the global economic crisis 

and its impact on consumer spending patterns’. Whether the recent improvement 

in the business climate stems from a reversal in retail trends is still unclear. As 

with most categories of textiles and clothing, stocks throughout the supply pipeline 

have been run down during the past 12 to 18 months and, therefore, the increased 

offtake could reflect merely the replenishment of inventories. Whatever the case, 

as the buffer provided by carryover stocks has been eroded, the very tight supply 

situation created by record low crops in the major producing countries has weighed 

increasingly on market sentiment.

The USDA reports that Pima 

export sales registrations during the 

four weeks ended 

October 15 rose 

by 97,783 running 

bales, or roughly 40 

percent of the total that was actually exported during the whole of 2008/2009. Sales 

to China alone during that period increased by 67,600 bales.

The cumulative total committed during the marketing year through to October 

15 (accumulated exports plus outstanding sales) was 237,853 running bales, over 

Pima Export Comparison

0

50,000

100,000

150,000

200,000

250,000

6-Aug 20-Aug 3-Sep 17-Sep 1-Oct 15-Oct

2008/09 2009/10
Cotton Outlook Long Staple Update October, 2009

2

three times the year-earlier figure. The USDA places 

Pima carryover into the current season at 367,000 

statistical bales (roughly 355,000 running bales), of 

which, stocks held in the Commodity Credit Corporation loan by October 15 stood at 76,000 running bales. 

As harvesting is barely under way in the San Joaquin 

Valley and taking into account the volume committed 

for export, plus what domestic mills must have absorbed, the nearby supply situation would appear to 

be tight, pending the release into marketing channels 

of loan stocks.

Egyptian export sales registrations during the local season (which started on September 1) through 

to October 17 amounted to 13,374 tonnes, or 48 

percent more than was the case by the same stage 

last season.

Sales during the last week in that period rose by 

no less than 5,419 tonnes.At the start of September, 

stocks of the Giza 88 extra-long staple variety were 

placed by the CottonArbitration and Testing General 

Organisation (CATGO) at 12,711 tonnes, and those of 

the Giza 86 long staple style at 45,486 (the total carryin figure was over 70,000 tonnes). Figures supplied 

by Alcotexa (the exporter’s association), indicate that 

3,239 tonnes of Giza 88 and 9,938 tonnes of Giza 86 

had been committed for export through to October 24. 

New crop production of Giza 88 is predicted only to be 

in the region of 10,000 tonnes, so the total availability 

of this variety is relatively limited. Export offers have 

recently become less readily discernible. Reports from 

origin indicate that the local market is in some disarray as the various players try to absorb the changed 

market circumstances. Clarity is also lacking as to the 

government’s intentions regarding a mooted increase 

in the domestic subsidy payable to mills for consumption of local cottons before the end of the year, and 

a proposed minimum price regime applicable to new 

crop seed cotton.

The restricted nearby supply situation has been 

reflected in international offering rates. Cotlook’s US 

Pima quotation has firmed by 13.00 cents per 

lb since the start of October, to reach 121.00 

cents, a level last witnessed in April. Our Giza 

88 quote has strengthened by nine cents per 

during the same period, to 117.00 cents, and has 

now become nominal. However, it is noteworthy 

that offers of Giza 86 have moved only modestly 

upward, and Cotlook’s quotation at the time of 

writing stands at 97.00 cents per lb.

A noteworthy consequence of the divergence in 

Egyptian Giza 88 and 86 prices is that the lowest foreign value (after adjustment for quality) taken by the 

USDAto calculate the Pima competitiveness payment 

switched from the former variety to the latter during the 

week ended October 22. The subsidy has increased 

from 4.23 cents per lb during the week ended September 10, to 7.63 cents during the week ended October 

29, owing to the faster rate at which Pima quotations 

have firmed compared with Egyptian prices.

Egyptian Weekly Export Sales Registrations

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

12-Sept 19-Sep 26-Sep 3-Oct 10-Oct 17-Oct

2008/09 2009/10

Cotlook's LS/ELS Quotations

95.00

100.00

105.00

110.00

115.00

120.00

1-Sep-09 17-Sep-09 3-Oct-09 19-Oct-09

US Pima

Giza 88

Giza 86
Cotton Outlook Long Staple Update October, 2009

3

In the circumstances, 2009/2010 supply and demand prospects have moved into sharper focus. The 

USDA’s Pima production forecast has been marginally reduced since September 

to 367,000 bales (480 lbs), the 

lowest in modern history. Despite 

some untimely rains of late, the 

health of Pima planted in the San 

Joaquin Valley is described in 

encouraging terms.

Prospective outturn in Egypt is 

also expected to fall to a record 

low of 90,000 tonnes, according 

to our estimates.

In China, our forecast back 

in September of 117,000 tonnes 

now appears to have been overstated. It would seem that a 

smaller area has been cultivated, 

and the weather in southern Xinjiang, where the bulk of the crop 

is grown, has been less than 

ideal. An outturn of no more than 

70,000/80,000 tonnes is foreseen by some private sources. 

Increased import buying interest 

in China has been attributed to reduced domestic 

production forecasts.

Our crop estimates in most of the other major 

producing origins have been 

maintained since September. In 

India, the impact on potential production of flooding in the southern 

states of 

Karnataka and Andhra Pradesh 

(growing areas for long staple 

varieties) has been played down. 

Our world projection is 39,000 

tonnes lower than in September, 

at 374,705 tonnes, which represents a downturn of 14 percent 

from 2008/2009.

Our global consumption projection has also been modestly 

reduced (owing to a downward 

adjustment in Egypt), to 486,582 

tonnes. This figure is, nevertheless, nine percent more than estimated use during the preceding 

season. 

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

2009/10 v 

2008/09

United States 84,717 152,943 147,683 94,122 162,335 137,275 167,000 185,458 93,839 79,905 -15%

Egypt 210,050 316,600 289,750 200,300 295,150 204,300 214,733 226,450 107,000 90,000 -16%

of which:

ELS 30,973 51,262 65,812 58,386 77,555 42,881 52,906 40,740 17,000 10,000 -41%

LS 176,751 261,909 220,535 138,562 212,557 155,930 157,865 188,000 90,000 80,000 -11%

Sudan 21,000 30,000 54,000 48,000 50,000 44,000 21,400 15,000 8,969 9,000 0%

Uzbekistan 11,200 17,000 16,500 17,000 14,000 10,000 12,000 10,500 5,000 5,000 0%

Tajikistan 10,000 18,000 33,000 17,000 13,500 8,000 10,000 7,500 3,000 1,000 -67%

Turkmenistan 20,000 30,000 24,000 27,300 22,900 12,000 25,000 25,000 20,000 12,000 -40%

India 85,000 80,000 60,000 70,000 69,700 51,850 68,850 78,000 76,500 74,000 * -3%

Peru 12,537 6,000 3,600 4,048 8,000 9,211 14,000 15,000 12,000 12,000 0%

China 61,600 97,100 70,000 113,500 86,500 80,000 170,000 185,400 96,000 80,000 -17%

Israel 8,000 19,000 16,500 7,300 14,000 11,500 18,500 19,000 9,000 9,500 ** 6%

Australia 3,300 7,945 1,362 114 392 300 300 300 300 300 0%

Others 4,000 3,000 4,000 4,000 4,000 3,000 3,000 3,000 3,000 2,000 -33%

TOTAL 531,404 777,588 720,395 602,684 740,477 571,436 724,783 770,608 434,608 374,705 -14%

*includes cotton with staple of over 33mm **includes Pima and Acalpi

World Extra-Long and Long Staple Output

tonnes

2008/09 2009/10

09/10 v 

08/09

Americas

United States 6,532 6,532 Unch

Mexico 300 300 Unch

Peru 9,000 9,000 Unch

Europe

Italy 2,500 2,000 -20%

Switzerland 4,000 3,000 -25%

Germany 3,000 2,500 -17%

Turkey 5,000 4,000 -20%

Portugal 4,000 4,500 13%

Czech Rep 150 150 Unch

Slovak Rep 500 500 Unch

Spain 400 300 -25%

Asia

China 150,000 150,000 Unch

India 140,000 145,000 4%

Pakistan 30,000 50,000 67%

Indonesia 10,000 12,000 20%

Japan 8,000 10,000 25%

South Korea 4,980 4,600 -8%

Bangladesh 10,000 12,000 20%

Thailand 9,000 9,000 Unch

Taiwan 2,500 5,000 100%

Turkmenistan 2,500 2,500 Unch

Hong Kong 200 200 Unch

Africa

Egypt 40,000 50,000 25%

Others 3,500 3,500 Unch

Total 446,062 486,582 9%

World Long and Extra-Long Staple 

Consumption - tonnes
Cotton Outlook Long Staple Update October, 2009

4

Cotlook currently projects that 

stocks in Egypt will fall by over 60 

percent during the course of the 

marketing year, to 25,000 tonnes, 

while those of Pima are expected 

to drop by about 53 percent, 

to 31,000 tonnes. In China, we 

predict that stocks will fall to only 

32,000 tonnes, around one third 

of their level at the beginning of 

2008/09.

With harvests in the Northern 

Hemisphere poised to expand, 

significant changes to our already 

very low crop projections may be 

considered unlikely. The key question still to be answered is therefore whether the current upturn in 

mill purchasing of LS/ELS varieties 

can be sustained at the higher 

prices now asked by merchants. It 

is noteworthy in this regard that the 

premium commanded by US Pima 

over upland values, in percentage 

Long Staple Premium

US Pima as a percentage of A Index

110%

150%

190%

230%

270%

3-Aug-04 5-Jan-06 11-Jun-07 7-Nov-08

06/07

04/05

05/06

07/08

08/09

09/10

terms, has not increased substantially during the past couple 

of months, owing to the coinciding strength of the Cotlook A 

Index. Moreover, that premium 

remains fairly low in a historical 

context (see accompany chart). 

The latest indications are that 

offtake has slowed somewhat 

in recent days, but this is perhaps not surprising in view of 

the steepness of the rise in 

prices.

If spinners have merely 

being replenishing inventories and trading returns to 

the hand-to-mouth pattern 

witnessed during the past 18 

months, then the scope for 

further strength in prices may 

be rather limited. However, if 

retail spending patterns are 

again changing, then the tight 

supply situation could become 

still more constrained, and international offering rates may 

react accordingly.