Memphis, Tennessee
February 13, 2008
Dr. Gary Adams, the
National Cotton
Council’s vice president, Economics and Policy Analysis,
said U.S. cotton growers are projected to produce 15.4 million
bales in 2008 – the smallest since the 1998 crop of 13.9 million
bales.
In presenting the NCC’s 2008 Economic Outlook to delegates at
the organization’s annual meeting in Memphis here today, Adams
said that this U.S. cotton production estimate of 14.8 million
bales of upland and 600,000 bales of extra long staple (ELS)
fiber is based on the NCC’s survey that has planting intentions
of 9.32 million upland acres and 231,000 ELS acres.
Adams noted that a range of 12-18 million bales is not
unrealistic as weather will affect the final production.
The economist told delegates the NCC sees U.S. exports of 14.7
million bales and domestic mill use of 4.4 million bales in
2008-09. Assuming a new farm bill is enacted with the economic
assistance program for the U.S. textile industry, Adams said any
2008 textile mill losses due to a slowdown in the U.S. economy
and the elimination of China import safeguards should be
tempered.
By July of 2009, he said, U.S. cotton stocks are expected to
fall sharply as total offtake exceeds the 15.4 million bale
crop.
Adams also noted that the 2008 U.S. crop production estimate
translates to 5.3 million tons of cottonseed, down from 6.6
million tons in 2007.
“If competing feed prices remain strong, there’s little if
anything that would call for lower cottonseed prices in 2008,”
the economist said. “In fact, just the opposite seems true.
Cottonseed prices could push higher with the expectation of a 5
million ton crop.”
Regarding world trade, Adams said world production is expected
to increase to 122.4 million bales in 2008 as larger crops in
China, Brazil, India, Pakistan, Australia and West Africa more
than offset lower U.S. production. India, in fact, is now the
second largest producer and processor of cotton, devoting more
area to cotton production than any other country.
“While their textile industry has been expanding, the most
notable development in the Indian market is cotton production
that has more than doubled in the last five years, and is
estimated at almost 25 million bales in 2007,” Adams said. He
said India’s production growth is largely the result of improved
yields, which have soared from a 270-lb. per acre average in
2002 to more than 500-lbs. in 2007.
He said the NCC sees India producing more than 26 million bales
in 2008 and expects them to remain a significant exporter –
perhaps as much as 7 million bales.
On the demand side, Adams said even with slower growth in China
mill cotton use, that country’s textile sector still could
consume a healthy 57 million bales – 16.6 million bales imported
-- in the 2008 marketing year. He said China also will continue
to be the largest export customer of U.S. cotton.
“Demand (world) is expected to grow but at a slower pace due to
overall economic performance and strength in cotton prices
relative to competing fibers,” he said. “However, total use is
expected to exceed production, which will further tighten
stocks.”
Adams said declining global stocks should continue to be
supportive of world prices in 2008, but, “One concern will be
the ability to maintain demand growth at higher price levels,
particularly in light of concerns about the general economy. In
addition, the gaps between cotton prices and yarn prices and
polyester prices have widened. So, while the current outlook is
supportive of prices, we can not forget the competition from
manmade fibers. ”
Additional details of the 2008 Cotton Economic Outlook will be
available on Monday, February 11 at
http://www.cotton.org/econ/reports/annual-outlook.cfm. |
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