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US cotton crop forecast lower in October
17
Oct '08
The latest U.S. Department of Agriculture (USDA) cotton projections for 2008/09 indicate that both foreign cotton production and consumption are forecast to decrease slightly from last season's records (fig. 1). Foreign production is projected at 100 million bales, about 1.5 percent below 2007/08 and the first decrease since 2005.

Foreign consumption, on the other hand, is forecast at 117.9 million bales, about 1 percent lower than last season but the first decline in a decade. With the expected foreign cotton crop decline greater than the mill use reduction, the gap between foreign consumption and production is projected to increase 500,000 bales this season. At 17.9 million bales, the gap is forecast to be its second largest behind the 18.1- million-bale gap of 2006/07.

USDA's October Crop Production report indicated that the 2008 U.S. cotton crop would total 13.7 million bales, one percent (135,000 bales) below September's forecast and 29 percent below 2007/08.

Upland production is expected to approach 13.3 million bales—down 127,000 bales from September—while the extra-long staple (ELS)crop is projected at 451,000 bales—8,000 bales lower. During the past 20 years, the October forecast has been below final cotton production 16 times while above the final estimate only 4 times.

In addition, past differences between the October forecast and final cotton production indicate that chances are two out of three for the 2008 U.S. cotton crop to range between 13.1
and 14.3 million bales.

Regional upland cotton production in 2008 is expected below the last several years. Compared with last month, the October U.S. upland cotton production estimates were lower in three of the four regions. The Delta region saw the crop estimate reduced 4 percent to nearly 3.7 million bales, the lowest since 1986. However, the effects of Hurricanes Gustav and Ike were somewhat offset by larger crops in Missouri and Tennessee. Minor reductions were reported for the Southwest and West regions in October.

In contrast, the crop forecast for the Southeast rose to nearly 3.2 million bales, 2 percent above September. Despite the increase in October, the projection remains the region's lowest cotton crop in 15 years. Area is also at its lowest since 1993. However, the Southeast yield is estimated at 788 pounds per harvested acre, the third highest on record.

Total cotton harvested area is forecast at only 7.8 million acres in 2008, the lowest in 25 years as U.S. abandonment is one of the highest on record at nearly 18 percent. Based on this area, the U.S. cotton yield is forecast at 849 pounds per harvested acre in 2008, 30 pounds below last season's record but the third highest.

As of October 5th, only 16 percent of the U.S. cotton crop had been harvested,compared with 26 percent in 2007 and a 5-year average of 24 percent. Most States are below their respective averages, with Mississippi and Arkansas significantly delayed in harvesting the 2008 crop. Overall crop conditions remain similar to a year ago, with 50 percent of the area reported in “good” or “excellent” condition, while 20 percent is rated “poor” or “very poor” as of early October.

Export Estimate Lowered Significantly; Stocks and Prices Revised

The U.S. cotton export forecast was reduced 1.5 million bales this month to 13 million. Although a dramatic cut from last month, the export forecast is now more in line with the past two seasons. A lower foreign cotton consumption estimate this month, coupled with a higher foreign production forecast, has reduced the import demand expectations considerably this season to its lowest in four years.

Nevertheless, the U.S. share of global trade remains at a healthy 36 percent, the highest in three years. Despite the reduction in demand for U.S. cotton this season, U.S. ending stocks are still projected to fall considerably in 2008/09. Ending stocks are now forecast at 6.2 million bales, 37 percent below the beginning level and similar to the 2005 season.

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