COTTON AND WOOL                                              February 10, 1995
             Approved by the World Agricultural Outlook Board
------------------------------------------------------------------------------
This situation and outlook report is published by the Economic Research
Service, U.S. Department of Agriculture, Washington, DC 20005-4788.  CWS-0295.
------------------------------------------------------------------------------
 
Record 1994 Cotton Production and Offtake
 
The 1994 U.S. cotton crop is estimated at 19.73 million bales (upland-19.39
million and ELS-342,000), compared with 16.13 million in 1993.  According to
the February Cotton Ginnings report, 19.5 million bales (99 percent of the
crop) had been ginned by February 1.  Final 1994/95 ginnings, as well as final
upland and ELS cotton production, will be released by USDA on May 10.
 
With production all but final, total U.S. cotton supplies this season are
placed at 23.26 million bales, the largest since the 1966 season.  However,
total use (mill consumption plus exports) is projected at a record 20.7
million bales.  Based on these estimates, 1994/95 U.S. ending stocks are
expected to decline to 2.7 million bales, 830,000 below the beginning level.
 
Mill Demand Solid
 
According to the latest U.S. Commerce Department data, cotton mill consumption
remained strong in December despite the normal seasonal slowdown.  During the
calendar month, preliminary December cotton mill use reached 783,300 bales,
compared with 936,800 bales in November.  In comparison, however, December
1993 mill consumption totaled only 744,400 bales.  On a daily basis, cotton
mill use declined from November's 42,600 bales to 35,600.  Compared with a
year ago, December 1994's daily average was 3,200 bales higher.
 
The solid demand for cotton can also be illustrated by its share of fiber use
on the cotton system.  In December, cotton's share surpassed 77 percent and
has averaged near this level for the season.  Cotton has increased its share
in an expanding fiber market as a result of the strong demand for denim, as
well as cotton apparel and home furnishings.
 
Cotton consumption during the first 5 months of 1994/95 climbed to 4.64
million bales, compared with 4.24 million a year ago.  Based on the seasonally
adjusted annual rates, mill use for the August-December period averaged 11.1
million bales, equal to the latest USDA estimate.  If realized, this cotton
consumption level would be the highest since 1942.
 
Foreign Production and Consumption
 
The 1994/95 foreign production estimate is virtually unchanged this month at
64.3 million bales, 6 percent higher than a year earlier.  However, the
outlook for foreign consumption in 1994/95 is weaker, while imports and ending
stocks are revised upward.  U.S. exports are also revised upward by 400,000-
bales, to 9.6 million bales.  If realized, the U.S. export level would be the
highest since 1926/27.  With world trade at 28.6 million bales, the United
States is expected to capture over one-third of world trade, the largest share
since 1960/61.
 
In South Asia, gin deliveries have continued to lag earlier expectations, and
India's crop is revised down 200,000 bales to 9.8 million.  Yields are now
estimated lower in India due to damage from pests in the north and excessive
rains in central India.  However, in Uzbekistan, late-season deliveries have
already exceeded earlier expectations, leading to a 150,000-bale increase in
estimated 1994/95 production. Earlier reports from Uzbekistan suggested that
machinery problems hampered this year's harvest and, apparently, also altered
the seasonal pattern of deliveries.
 
Total foreign consumption in 1994/95 is forecast at 73.9 million bales,
slightly lower than a year earlier.  This month's downward revision is due
mainly to China and Russia.  Textile production slowed in each country early
in the marketing year compared with 1993/94, and 1994/95 cotton consumption is
revised down 700,000 and 500,000 bales, respectively.  China's consumption 
slowed early in the year, primarily reflecting widespread efforts to update
spinning equipment.  In Russia, the disruption of trading patterns and weak
consumer demand continue to undercut the viability of Russian textile
producers.  
 
Foreign imports and ending stocks are revised upward this month, largely
because of China and India.  In addition to large purchases from the United
States this year, trade data from China suggest imports of more than 600,000
bales from other exporters through November.  With continued purchases from
the United States, and higher than expected imports from other countries,
China's expected 1994/95 imports are raised from 1.9 million bales to 3.0
million.  Given reduced consumption and increased imports, the forecast for
China's ending stocks is up 1.9 million bales.  With higher production and
imports compared with a year earlier, and lower consumption and exports,
China's ending stocks are now forecast to rise nearly 1.5 million bales in
1994/95.  China's robust imports in the face of high world prices and lagging
consumption presumably reflect efforts to reduce high prices within China and
meet regional stockbuilding demands.  Transportation within China is difficult
even under ideal circumstances, and inflation in excess of 20 percent annually
has intensified the reluctance to transfer commodities such as cotton.
 
Cotton Prices Higher in January
 
With the continued tight world supply situation, U.S. and world prices have
moved to near historical high levels.  The average price received by farmers
for upland cotton through mid-January reached 76.2 cents per pound, up 3 cents
from December.  The January price is the highest monthly average in 14 years.
 
Similarly, both ELS and upland spot prices moved higher in January.  The ELS
spot price for the San Joaquin Valley averaged near $1.09 per pound, up
slightly from a month earlier and the highest since the 1991/92 season.  On
the other hand, the upland spot price climbed over 6 cents in January to
average 88.1 cents per pound, the highest since the Civil War, when prices
averaged near a dollar for the season.
 
Mill-delivered cotton prices moved up 8 cents in January to 95.2 cents per
pound.  January's price was nearly 24 cents above January 1994 and the highest
since September 1980.  While cotton prices have continued upward, manmade
fiber prices have remained relatively stable.  Polyester prices increased in
January, however, to 82 cents per pound, the highest since May 1990.
 
In addition, the adjusted world price (AWP) remained at historically high
levels into early February.  For the week of February 10-16, the AWP in effect
was 84.40 cents per pound, down slightly from the previous week's record. 
Likewise, the Northern Europe price continued to rise in January.  During the
month, the Cotlook A Index averaged nearly 96 cents as the world cotton
situation remains tight.  By early February, the A Index had reached nearly a
dollar, before falling back to the 98-cent level.  For the week ending
February 9, seven of the 14 styles were quoted, with 8 cents separating the
highest and lowest offerings.
 
The 1994 calendar year average price for upland cotton was 68.3 cents per
pound.  Final deficiency payments for upland producers who participated in the
1994 acreage reduction program have been determined.  The final payment
totaled 4.6 cents per pound (the difference between the target price and the
calendar year average price) for the 1994 crop.  An advance payment of 6.45
cents per pound was made available to producers.  However, those who received
the advance payment will have to repay the difference (1.85 cents) by July 31,
1995.  For 1995/96, the projected deficiency payment rate for upland cotton is
3.7 cents per pound.  Producers may sign up for the 1995 upland cotton program
between January 30 and April 28 and request 50 percent of the estimated
deficiency payment.
 
U.S. Textile Trade Declines
 
U.S. textile imports in November 1994 totaled 595 million pounds (raw fiber
equivalent), down 13 percent from October and the lowest since May.  Imports
declined in each major end-use category and for all types of fibers.  Cotton
imports, at 309 million pounds, accounted for 51 percent of all textile
shipments.  However, these were the lowest cotton imports since May.  Textile
imports during January through November were 10 percent above the
corresponding period of 1993.  Cotton textile imports were up only 5 percent
during the first 11 months of 1994.
 
November textile exports, at 240 million pounds, declined 3 percent from a
month earlier, the first decline in 4 months.  However, November's exports
were 13 percent above a year earlier.  Declines occurred in all major end-use
categories except floor coverings and all fiber types except linen.  Cotton
textile exports, at 99 million pounds, were 6 percent below October, but 23
percent above a year ago.
 
Overall, the textile trade deficit for the first 11 months of 1994 totaled 4.3
billion pounds, 8 percent higher than a year earlier.  The cumulative cotton
trade deficit, however, was only 2 percent above the first 11 months of 1993. 
In addition, cotton's share of the trade deficit has declined from 61.3 to
57.8 percent due to stronger textile export demand.  Cotton textile exports
should reach a record 1.1 billion pounds (2.3 million bale-equivalents) during
1994, which continues to bolster domestic consumption and limit increases in
the total textile trade deficit.
 
The next issue of the Cotton and Wool Outlook will be released on
March 10, 1995.  For further information, contact Bob Skinner,
Leslie Meyer, John Lawler, or Steve MacDonald at (202) 219-0840.
 
U.S. COTTON SUPPLY AND USE ESTIMATES
----------------------------------------------------------------------
                                                    1994/95
                                           ---------------------------
Item                         1993/94        Dec        Jan        Feb
----------------------------------------------------------------------
Upland:                                      Million acres
  Planted                      13.25      13.89      13.89      13.56
    Program                    11.44      11.11      11.11      11.11
  Harvested                    12.59      13.27      13.16      13.16
                                                Pounds
  Yield/harvested acre           601        695        707        707
                                        Million 480-lb. bales
  Beginning stocks              4.46       3.30       3.30       3.30
  Production                   15.76      19.22      19.39      19.39
    Total supply               20.23      22.53      22.69      22.69
  Mill use                     10.35      10.93      10.93      11.02
  Exports                       6.56       7.85       8.85       9.23
    Total use                  16.90      18.78      19.78      20.24
  Ending stocks                 3.30       3.86       3.07       2.60
                                               Percent
  Stocks-to-use ratio           19.5       20.5       15.5       12.9
Extra-long staple:                           1,000 acres
  Planted                        190        175        169        169
    Program                       89         84         84         84
  Harvested                      189        175        166        166
                                                Pounds
  Yield/harvested acre           938        962        987        987
                                          1,000 480-lb. bales
  Beginning stocks               206        227        227        227
  Production                     370        350        342        342
    Total supply                 576        577        569        569
  Mill use                        72         75         75         85
  Exports                        307        350        350        375
    Total use                    379        425        425        460
  Ending stocks                  227        142        134         99
                                               Percent
  Stocks-to-use ratio           59.9       33.4       31.5       21.5
----------------------------------------------------------------------
Based on USDA estimates.
 
WORLD COTTON SUPPLY AND USE ESTIMATES
----------------------------------------------------------------------
                                                   1994/95
                                           ---------------------------
Item                         1993/94       Dec        Jan        Feb
----------------------------------------------------------------------
Supply:                                 Million 480-lb. bales
Beginning stocks
  World                        37.34      30.38      29.94      30.14
  Foreign                      32.68      26.85      26.41      26.61
Production
  World                        76.93      85.82      84.01      84.04
  Foreign                      60.79      66.25      64.29      64.31
Imports
  World                        28.00      27.85      28.76      29.78
  Foreign                      27.99      27.84      28.75      29.78
Use:
Mill use
  World                        84.85      85.80      86.11      84.99
  Foreign                      74.43      74.80      75.11      73.89
Exports
  World                        26.76      27.24      27.92      28.64
  Foreign                      19.90      19.04      18.72      19.04
Ending stocks
  World                        30.14      30.85      28.57      30.22
  Foreign                      26.61      26.85      25.37      27.52
Stocks-to-use ratio                            Percent
  World                         35.5       36.0       33.2       35.6
  Foreign                       35.8       35.9       33.8       37.2
----------------------------------------------------------------------
Based on USDA estimates.
 
FIBER SUPPLY
----------------------------------------------------------------------
                                           1994                  1993
                                ----------------------------
Item                             Oct        Nov        Dec        Dec
----------------------------------------------------------------------
Cotton:                                  1,000 480-lb. bales
  Ginnings                     6,824      6,826      2,904       2,134
  Imports since August 1         2.6        2.6         NA         0.6
  Stocks, beginning            3,083      8,631     13,810      13,457
    At mills                     602        591        598         598
    Public storage             2,089      6,734     11,450      11,491
    CCC stocks                   116        940      2,338       2,370
 
Manmade:                                   Million pounds
  Production                   872.9      810.9      812.4       739.3
    Noncellulosic              827.9      772.2      768.1       699.9
    Cellulosic                  45.0       38.7       44.3        39.4
    Total since January 1    7,998.1    8,810.0    9,622.4     8,787.0
 
                                           1994                  1993
                                ----------------------------
                                 Sep        Oct        Nov        Nov
                                --------------------------------------
                                            Million pounds
  Raw fiber imports             92.4       94.6       94.0        73.5
    Noncellulosic               86.6       88.8       87.4        64.2
    Cellulosic                   5.8        5.8        6.6         9.3
    Total since January 1      706.1      800.7      894.0       857.3
 
Wool and Mohair:                            1,000 pounds
  Raw wool imports, clean      4,081      5,723      8,116       7,174
    48's-and-finer             1,907      3,363      5,346       5,896
    Not-finer-than-46's        2,147      2,314      2,388       1,227
    Total since January 1     70,564     76,288     84,404      91,892
 
  Wool top imports               428        271      1,087         353
    Total since January 1      3,109      3,380      4,467       3,386
 
  Mohair imports, clean            0         53         37           0
    Total since January 1        100        153        190          13
----------------------------------------------------------------------
NA = Not available.
 
COTTON SYSTEM FIBER CONSUMPTION
----------------------------------------------------------------------
                                           1994                  1993
                                ----------------------------
Item                             Oct        Nov        Dec        Dec
----------------------------------------------------------------------
Cotton:                                  1,000 480-lb. bales
All consumed by mills 1/         935        937        783        744
  Total since August 1 1/      2,921      3,857      4,641      4,244
  SA annual rate 2/           10,998     11,163     11,120     10,093
  SA daily rate 2/              42.3       42.9       42.8       38.8
  Daily rate                    44.5       42.6       35.6       32.4
 
Upland consumed by mills 1/      928        929        777        741
  Total since August 1 1/      2,899      3,828      4,605      4,220
  SA annual rate 2/           10,909     11,075     11,046     10,050
  SA daily rate 2/              42.0       42.6       42.5       38.7
  Daily rate                    44.2       42.2       35.3       32.2
 
Spindles in place              7,398      7,346      7,266      8,046
  Active spindles              6,961      6,927      6,859      7,513
    100 percent cotton         2,919      2,914      2,913      3,185
    100 percent manmade        1,181      1,182      1,169      1,280
    Blends                     2,861      2,831      2,777      3,048
 
Cotton's share of fibers        76.8       76.5       77.2       75.8
 
Manmade:                                    1,000 pounds
Total consumed by mills 1/   135,427    138,386    111,258    113,822
  Total since August 1 1/    420,917    559,302    670,560    648,870
  Daily rate                   6,449      6,290      5,057      4,949
    Noncellulosic staple       5,492      5,310      4,335      4,131
    Cellulosic staple            957        980        722        818
----------------------------------------------------------------------
1/ Adjusted to calendar month.  2/ SA = seasonally adjusted.
 
FIBER EXPORTS
----------------------------------------------------------------------
                                           1994                  1993
                                ----------------------------
Item                             Sep        Oct        Nov        Nov
----------------------------------------------------------------------
Cotton:                                  1,000 480-lb. bales
  Upland exports                 320        336        695         394
    Total since August 1         835      1,171      1,866       1,226
  Sales for next season           12         71      2,775          10
    Total since August 1          28        100      2,874         143
 
  ELS exports                   12.9        4.9       14.8        11.0
    Total since August 1        29.0       33.9       48.8        60.3
  Sales for next season          0.0        0.0        4.2         0.0
    Total since August 1         0.0        0.0        4.2         1.6
 
Manmade:                                   Million pounds
  Raw fiber exports             81.1       79.6       83.3        64.7
    Noncellulosic               76.6       74.3       75.9        61.3
    Cellulosic                   4.5        5.3        7.4         3.4
    Total since January 1      663.0      742.6      825.9       624.2
 
Wool and Mohair:                           1,000 pounds
  Raw wool exports, clean      122.7      409.9        6.9       134.2
    Total since January 1    2,183.6    2,593.4    2,600.3     2,528.8
  Wool top exports           1,357.0      912.4    1,115.3     1,420.6
    Total since January 1   10,070.0   10,982.5   12,097.8     9,029.3
 
  Mohair exports, clean        695.7    1,268.0      900.4       623.8
    Total since January 1    5,483.7    6,751.7    7,652.1     5,317.3
----------------------------------------------------------------------
 
FIBER PRICES
----------------------------------------------------------------------
                                     1994            1995        1994
                                ---------------     
Item                             Nov       Dec        Jan         Jan
----------------------------------------------------------------------
Domestic cotton prices:                    Cents per pound
  Adjusted World Price         63.14      72.09      80.66       54.22
  Mar'95 futures               75.57      84.84      91.17       69.05
  Dec'95 futures               70.24      72.21      74.42          NQ
  Upland spot 41-34            72.00      81.92      88.11       66.53
  Pima 46-03                  101.20     108.83     108.88       88.10
  Avg. price received by:
    Upland producers           69.30      73.20      76.20       62.70
 
  Mill delivered:
    Cotton
      Actual                   76.91      87.39      95.17       71.51
      Raw fiber equivalent     85.46      97.10     105.74       79.46
    Rayon staple
      Actual                  104.00     104.00     104.00      104.00
      Raw fiber equivalent    108.33     108.33     108.33      108.33
    Polyester staple
      Actual                   78.00      78.00      82.00       72.00
      Raw fiber equivalent     81.25      81.25      85.42       75.00
 
    Price ratios                               Percent
      Cotton/rayon              78.9       89.6       97.6        73.3
      Cotton/polyester         105.2      119.5      123.8       105.9
 
Northern Europe cotton quotes:            Cents per pound
  A Index                      77.28      87.06      95.63       69.34
  Memphis Territory            80.94      92.15     100.31       73.19
  California/Arizona           82.94      96.65     105.06       72.56
  B Index                      75.98         NQ      96.60       64.42
  Orleans/Texas                78.31      90.10      97.56       66.38
 
Wool prices (clean):                      Dollars per pound
  U.S. 56's                     1.45       1.45       1.45        1.05
  Australian 56's 1/            2.06       2.17       2.32        1.51
  U.S. 60's                     1.65       1.65       1.66        1.15
  Australian 60's 1/            2.21       2.27       2.47        1.63
  U.S. 64's                     2.38       2.38       2.45        1.40
  Australian 64's 1/            2.75       2.81       2.91        2.04
----------------------------------------------------------------------
NQ = No quote.
1/ In bond, Charleston, SC.  2/ greasy.
 
TEXTILE TRADE
----------------------------------------------------------------------
                                           1994                  1993
                             -------------------------------
Item                             Sep        Oct       Nov         Nov
----------------------------------------------------------------------
Imports:                                   1,000 pounds 1/
 
  Yarn, thread, and fabric   152,636    168,038     158,101    150,402
    Cotton                    72,620     73,350      70,193     71,281
    Linen                     12,693     25,628      19,599     20,884
    Wool                       3,930      4,491       4,322      3,695
    Silk                         724        834         908        439
    Manmade                   62,669     63,735      63,079     54,103
 
  Apparel                    474,103    462,646     386,329    335,136
    Cotton                   243,391    242,630     213,810    177,386
    Linen                     22,183     23,753      16,232     21,000
    Wool                      26,812     24,164      15,001     11,801
    Silk                      12,977     15,924      12,604     16,897
    Manmade                  168,740    156,175     128,682    108,052
 
  House furnishings           37,305     28,471      28,354     30,365
    Cotton                    26,381     19,642      19,753     22,251
    Linen                        156        221         131         83
    Wool                         175        164         133        122
    Silk                          35         19          23         17
    Manmade                   10,558      8,425       8,314      7,892
 
  Floor covering              21,824     18,066      17,563     15,120
    Cotton                     4,299      4,466       3,599      3,432
    Linen                      3,568      3,322       3,065      1,164
    Wool                       7,027      3,231       3,379      5,762
    Silk                         494        416         439        130
    Manmade                    6,436      6,631       7,081      4,632
 
  Total imports 2/           692,395    682,840     600,346    536,363
    Cotton                   349,158    341,900     310,707    275,966
    Linen                     14,231     17,194      14,025     17,483
    Wool                      38,281     32,282      23,193     21,570
    Silk                      38,766     52,962      39,076     43,211
    Manmade                  251,959    238,502     213,345    178,133
 
Exports:                                  1,000 pounds 1/
 
  Yarn, thread, and fabric   117,415    118,195     116,093    102,436
    Cotton                    36,674     38,087      37,800     27,236
    Linen                      3,238      3,551       3,462      1,931
    Wool                       3,060      3,336       2,924      2,416
    Silk                       1,199      1,471       1,754        852
    Manmade                   73,244     71,750      70,153     70,001
 
  Apparel                     91,770     93,865      87,686     73,397
    Cotton                    58,263     59,592      53,885     46,135
    Linen                      2,153      2,840       2,195      1,860
    Wool                       3,222      3,003       3,111      2,498
    Silk                       1,489      1,568       1,488      1,381
    Manmade                   26,643     26,862      27,008     21,523
 
  House furnishings            5,812      7,503       7,403      6,180
    Cotton                     3,341      4,426       4,167      3,734
    Linen                        198        187         318        209
    Wool                          48         80          77         75
    Silk                          80         99         183        132
    Manmade                    2,145      2,711       2,657      2,030
 
  Floor covering              27,027     28,006      28,422     29,574
    Cotton                     2,984      3,410       3,550      4,017
    Linen                      1,311      1,180       1,271      1,305
    Wool                       1,333      1,753       1,424      1,145
    Silk 3/                      ---        ---         ---        ---
    Manmade                   21,399     21,663      22,177     23,107
 
  Total exports 2/           242,431    247,930     240,761    212,058
    Cotton                   101,321    105,556      99,547     81,194
    Linen                      6,912      7,767       7,276      5,320
    Wool                       7,688      8,196       7,595      6,164
    Silk                       2,768      3,138       3,424      2,365
    Manmade                  123,742    123,273     122,920    117,015
----------------------------------------------------------------------
1/ Raw fiber equivalent.  2/ Includes headgear.  3/ Absence of trade.