HDR1011800200501212951600
COTTON AND WOOL OUTLOOK                                      December 12, 1995
            Approved by the World Agricultural Outlook Board
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COTTON AND WOOL OUTLOOK is published monthly (except January) by the Economic
Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. 
CWS-1295.  
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Cotton Harvest Nears Completion
 
The 1995 U.S. cotton harvest has progressed at a normal pace.  As of December
3, 89 percent of the U.S. crop was harvested, compared with the 5-year average
of 88 percent.  In the Delta, all States except Tennessee have completed
harvesting.  In the Southeastern States, harvest progress was behind the
average pace except in Alabama.  In Texas, favorable weather allowed harvest
to proceed at a normal pace with 78 percent of the harvest complete, 2
percentage points ahead of the average.  However, harvest in California and
Arizona is behind the average pace.
 
Unfavorable weather and pests during the growing season reduced the cotton
production potential throughout the year.  Survey data indicate that Texas has
the lowest boll weights of the past 11 years.  Similarly, boll weights in
Louisiana and Mississippi rank eighth since 1985.  In Arkansas, they are the
second lowest for the same period.  Boll weights were also very light in
California and Arizona.
 
Despite less than ideal conditions this season, the 1995 cotton crop is
estimated at 18.2 million bales (upland at 17.9 million and ELS at 357,000),
the third largest on record.  The December crop forecast declined 3 percent
from last month and is 7 percent below the 1994 record.  Production declined
250,000 bales from November in both California and Texas.  Statistics indicate
80 percent, or 14.6 million bales, of the 1995 crop had been ginned by
December 1, slightly behind last season's pace.
 
American-Pima production is forecast at 357,000 bales, up 6 percent from 1994
and unchanged from November.  Yields are averaging 832 pounds per harvested
acre, down 142 pounds from last season.  Both planted and harvested area were
increased 10,500 acres from the November report.  Arizona's crop is 90 percent
ginned.  In California, harvest progress was excellent during November with no
measureable precipitation.  Some late maturing fields will receive a second
picking.
 
U.S. Mill Use Lowered Again
 
The estimate for U.S. cotton mill consumption in 1995/96 was lowered this
month to 10.7 million bales, 4 percent below 1994/95's strong pace.  A
slowdown in textile activity and continued relatively high cotton prices have
kept mill use under last season.  According to the latest U.S. Commerce
Department data, cotton mill consumption slowed in October to a seasonally
adjusted daily rate of 37,933 running bales, the second lowest in 21 months. 
Compared with a year ago, October 1995 daily consumption was 8.5 percent
lower.
 
Cotton mill consumption during the first 3 months of 1995/96 totaled
approximately 2.8 million 480-pound bales.  This compares with nearly 3
million a year ago.  Based on the seasonally adjusted annual rates for August
through October, mill use totaled only 10.5 million bales, a major factor in
the reduction of the annual estimate this month.
 
While cotton use has declined, so has that of manmade fibers.  In October,
manmade fiber use on the cotton system dropped to 117.5 million pounds, 3
percent below September and 13 percent lower than October 1994.  Thus,
cotton's share of fiber use has remained quite high and has actually risen to
levels not achieved in recent history.  In October 1995, cotton's share
averaged a remarkable 78.7 percent, with a 3-month average above 78 percent. 
In 1994/95, cotton's share averaged 77 percent.
 
U.S. Exports Unchanged, Foreign Changes Offsetting
 
The outlook for U.S. exports in 1995/96 was unchanged this month even though
there were a number of changes in the outlook for foreign production and
consumption.  The overseas adjustments for 1995/96 were largely offset either
by changes in other foreign countries or by changes in earlier years.  As a
result, the 1995/96 foreign forecast for production and consumption changed
only slightly this month.  Similarly, this month's outlook for 1995/96
compared with 1994/95 is just about the same as a month ago.  In most cases,
higher forecasts for 1995/96 coincided with higher estimates for 1994/95.
 
One exception was the revision of China's consumption and stocks.  Historical
revisions for China's consumption lowered estimated foreign 1995/96 beginning
stocks 600,000 bales.  China's State Statistical Bureau (SSB) revised its
estimate of China's total yarn production, suggesting that mill use of cotton
was 100,000 bales higher in 1993/94 than previously estimated and 500,000
bales higher in 1994/95.  The improved historical performance led to a slight-
-300,000 bale--upward revision for China's 1995/96 consumption.  The revised
1994/95 use number is 20.2 million bales, while 1995/96's is 20.8 million.
 
China's 1995/96 production forecast was also raised, up 500,000 bales to 20
million.  China's SSB recently announced this year's crop would at least match
1994/95's 19.9 million bales, and procurements have risen compared with last
year as the harvest has progressed.  There are reports of continued problems
in the North China Plain, China's traditional main producing area, but better
crops in other provinces now seem likely to offset the problems earlier
foreseen.
 
Australia's outlook has also improved in the last month as recent rains have
permitted increased planting of rainfed acreage and also resulted in higher
irrigation allotments.  Production forecasts were also raised for 1995/96 for
Turkey, Greece, and Franc Zone Africa.  However, Brazil's crop was cut as high
costs for finance and agricultural inputs are expected to result in slightly
smaller acreage compared with 1994/95.  Last year's record yields are unlikely
to be repeated under these circumstances, and at 2.3 million bales, 1995/96
production in Brazil is forecast 226,000 below 1994/95.
 
Brazil's economic problems also led to a reduction in expected 1995/96
consumption, down 100,000 bales from last month (and last year) to 3.9 million
bales.  Brazil's tight monetary policy is affecting consumers as well as
producers and, although a recession is not expected for the overall economy
during either calendar year 1995 or 1996, prospects for textiles have
diminished.
 
However, higher consumption is expected for Turkey as robust textile exports
and industrial investment drive cotton consumption steadily higher.  Recent
data from Turkey led to a 120,000-bale increase in estimated 1994/95
consumption and a 100,000-bale increase for 1995/96.
 
With larger crops expected in some exporting countries (Australia and the
Franc Zone), and smaller crops in one major importing country (Brazil), the
forecasts for both foreign exports and imports in 1995/96 were higher this
month.  While the forecast for foreign exports increased slightly more than
imports, this does not necessarily suggest increased competition for the
United States this year.  Revised estimates suggest foreign exports were also
higher in 1994/95.
 
The forecast for U.S. exports in 1995/96 was unchanged despite expected larger
crops in major competing countries and in China, the largest U.S. customer. 
U.S. export commitments remain strong and in the last month have improved,
particularly to China.  Even though sales since the beginning of the marketing
year have been the second smallest since 1985, preseason sales were the second 
highest ever.  As of November 30, the total export commitment for this season
was 6.7 million bales.  During the last 3 years, total marketing year exports
were similar to export commitments as of early December, suggesting an export
forecast of about 6.8 million bales for 1995/96.
 
Cotton Prices Remain Above Last Year
 
The average price received by upland producers for the first half of November
was 75.2 cents per pound, similar to the previous 3 months but 6 cents above a
year ago.  Likewise, the upland spot price for base quality cotton averaged in
the mid 80-cent range during August through November.  In contrast, ELS spot
prices were near $1.37 per pound, and during November averaged about $1.61. 
If the ELS price holds, producers should have a good incentive to plant more
ELS cotton in 1996.
 
Mill-delivered upland prices averaged 90.6 cents per pound in November, the
lowest since August.  However, upland mill prices averaged only 76.9 cents
during November 1994.  In addition to higher cotton prices, mills are having
to pay more for polyester and rayon staple as well.  For the first 4 months of
the cotton marketing year, both polyester and rayon prices have remained
unchanged at 92 cents and $1.25 per pound, respectively.  This compares with
78 cents and $1.04 per pound during November 1994.
 
Northern Europe cotton prices also remain higher.  In November, the A Index
averaged 89.3 cents per pound, down slightly from the previous 2 months but
more than 20 cents above a year earlier.  Meanwhile, the Memphis Territory
(MT) quote averaged 97 cents per pound in November, and it has been out of the
A Index calculation since September with only a few exceptions.  A year ago,
the MT quote was more competitive.  For the week ending December 7, the A
Index averaged 89 cents per pound, while the MT quote averaged 96 cents. 
Central Asia is currently the cheapest offering and is 11 cents below the
cheapest U.S. offering.
 
Meanwhile, the adjusted world price (AWP) continues to fluctuate.  For the
week of December 8-14, the AWP reached 74.15 cents per pound, up from 74.03
during the previous week.  So far this season, the AWP has ranged from about 
69 cents per pound in August to over 79 cents in late-September.
 
Textile Trade Declines in September
 
U.S. textile imports in September totaled 683 million (raw-fiber equivalent)
pounds, a decrease of 14 percent from August and the smallest monthly
shipments since May.  Imports decreased in each major end-use category. 
Similarly, lower shipments of all types of textile fibers occurred, with
cotton accounting for 56 percent (61.6 million pounds) of the decline. 
However, textile imports during January through September were 9 percent above
the corresponding period of 1994.  Cotton textile imports, at 3.1 million
pounds, were nearly 11 percent higher during the first 9 months of 1995.
 
September textile exports, at 271 million pounds, decreased slightly from a
month earlier.  Exports were down 6 million pounds from August, but were
nearly 12 percent higher than September 1994.  Decreases in yarn, thread,
fabric, and apparel more than offset slight increases in home furnishings and
floor covering.  Cotton textile exports, at 114 million pounds, were 4 percent
below August, but 13 percent above year-ago shipments.
 
Overall, the total textile trade deficit for the first 9 months of 1995
reached 3.7 billion pounds, almost 7 percent higher than the same period in
1994.  The cumulative cotton textile trade deficit was 6 percent higher this
year than during January through September 1994.  Cotton's share of the total
deficit has declined from 58.1 to 57.8 percent because of larger textile
exports.  Growth in cotton-containing textiles and apparel exports continue to
support domestic mill consumption and limit increases in the trade deficit
during 1995.
 
The 1995 Cotton and Wool Yearbook is available for purchase.  For information,
call 1-800-999-6779.
 
The next Cotton and Wool Outlook will be released on February 9, 1996.
 
For further information, contact Leslie Meyer at (202) 501-8528 (U.S. Cotton),
Robert Skinner at (202) 219-0767 (U.S. Cotton), John Lawler at (202) 501-7162
(Wool), or Steve MacDonald at (202) 219-1179 (Foreign Cotton).
 
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