If U.S. cotton producers had any doubts they're in a global marketplace, those doubts have pretty much been vanquished by USDA forecasts of raw cotton exports of 13.2 million bales in 2003-04, a National Cotton Council economist says.
Gary Adams, the NCC's vice president for economics and policy analysis, says the U.S. cotton industry will continue to see shifting demand as exports increase, while the domestic textile industry experiences further contraction under a rising tide of textile and apparel imports.
Presenting the NCC's 2004 Economic Outlook at its annual meeting in New Orleans, Adams said raw cotton exports of 13.2 million bales for the 2003-04 marketing year will account for 72 percent of the United States' 2003 crop.
“U.S. cotton continues to meet price competition and will maintain its current trade share, despite extremely competitive conditions in the world market,” Adams said. “Customers for U.S. exports have changed slightly the past few years as China became a significant buyer of U.S. raw cotton during the 2002 and 2003 marketing years.”
He said the NCC expects China will continue to be a net importer of raw cotton for the near future, but believes those imports will drop as China's crop recovers from the drought-reduced levels of 2003.
Adams noted that as a response to stronger prices and increased competition from man made fibers, world mill use is expected to decline to 97.1 million bales, with U.S. mill use estimated at 6.2 million bales for 2003. China's mill use is expected to increase some 700,000 bales to 30.2 million, joining a short list of countries with projected mill increases in the current marketing year.
Currently, China consumes one out of every three bales of cotton produced in the world.
He noted that the U.S. textile industry continues to struggle against surging imports of cotton textile products into the United States, including escalating imports from Vietnam.
Adams said that over the past two years, U.S. cotton product imports from Vietnam have increased by more than 2,000 percent based on square meter equivalents. Nearly 34 percent of all trousers imported, for example, were manufactured in Vietnam.
The NCC economist said the cotton goods import surge will continue, particularly once all quotas are eliminated on Jan. 1, 2005. Total U.S. imports of cotton goods were estimated at a 9 percent gain to 19.3 million bale equivalents in 2003 but the NCC projects these imports will increase to 20.5 million bales in 2004.
On a brighter note, Adams said that although U.S. cotton imports continued to increase in 2003, an estimated 7.4 million bale equivalents, or 38.1 percent, contained cotton grown in the United States.
NCC economists expect the world crop to recover to 102.3 million bales in 2004, up by 10.1 million bales from 2003. China will account for more than half of the recovery, assuming better yields and increased area. The Australian crop also is expected to more than double as recent rains have eased drought conditions.
The NCC projects world mill use at 98.2 million bales for 2004-05, an increase of 1.1 million bales from 2003-04. The increased consumption will not match the larger crop, and stocks will build during the coming marketing year.
Adams also announced the results of the NCC's 21st Annual Early Season Planting Intentions Survey — total U.S. cotton plantings of 14.76 million acres, an increase of 9.5 percent from 2003 plantings of 13.48 million acres. Breaking down the total, the survey revealed that upland acreage will increase 9.3 percent to 14.55 million acres, while extra long staple or Pima intentions of 212,000 acres would be an 18.6 percent increase from 2003.
With average abandonment, total upland and ELS harvested area would be about 12.94 million acres. Applying each state's average yield to its 2004 projected harvested acres generates a crop of 18.50 million bales — 17.93 million bales of upland cotton and 561,000 bales of ELS cotton.
This compares to 2003's total production of 18.22 million bales, according to USDA's January 2004 estimate. Cottonseed production for 2004 is projected at 6.78 million tons, up from 6.69 million tons last year.
“As growers consider their 2004 planting decisions, prices are at their highest levels since the beginning of the 1998 planting time,” Adams said. Coupled with last year's record national average of 725 pounds per acre and overall quality improvement, cotton will remain a strong planting decision for producers this crop year.
Adams noted that while upland cotton prices were stronger than year-earlier levels, there also was increased competition from higher grain prices.