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Cotton production estimated to reduce by 1.5 million bales
17
Jul '08
The world 2008/09 projections include lower beginning stocks, production, offtake, and ending stocks. World production is reduced about 1.5 million bales due mainly to reductions in India and the United States.

The India revision is based on lower reported planted area. A decrease of nearly 1.3 million bales in world consumption largely offsets the production decline. Consumption is reduced mainly in China, India, and Turkey, due to recent indications of slower growth due to sluggish world economic conditions.

World ending stocks are reduced about 1.6 percent from last month and continue to show a significant decline of about 13 percent from the beginning level, contributing to the highest world cotton prices in a decade.

The U.S. 2008/09 cotton projections include lower production and exports, resulting in a net reduction of 100,000 bales in ending stocks compared with last month. Production is reduced 500,000 bales based on slightly lower planted area in the June Acreage survey and slightly higher abandonment reflecting conditions in Texas.

Domestic mill use is raised 100,000 bales to 4.4 million. Despite the slowing economy, several factors are supporting domestic mill use, including higher overseas transportation costs, the weaker dollar.

The export forecast is reduced 500,000 bales due to lower U.S. supplies and lower foreign import demand. The forecast for the average price received by farmers is raised 1 cent on each end of the range.

Despite a 1.0 million bale decrease from last month, China's imports are still forecast to grow by 10 percent in 2008/09. The year-to-year growth is mainly because of steady domestic production and a 3- percent increase in use.

For August 2007 through May 2008, U.S. cotton has a 39 percent share of China's imports, while India accounted for 37 percent. The U.S. share is up 5 percentage points from year-ago levels, while India's share is up 9 percentage points.

The United States should be in a favourable position next year to capture the growth in China's imports. While India has been able to expand total exports and share to China in the last two years, growth in the next year will be limited. India's exports are forecast to remain flat because of tighter stocks, continued consumption growth, and a minimal expansion of domestic production.

Exports by other countries than India and the United States will grow by only 1.3 percent, while U.S. exports are forecast to grow by 4.3 percent or 600,000 bales. A significant decline of 1.0 million bales in production for India for 2008/09 was caused by lower area as land is switched to other crops.

United States Department of Agriculture

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