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Cotton production forecast marginally higher in December
12
Dec '09
The USDA December forecast of the 2009 U.S. cotton crop was slightly higher this month at 12.6 million bales, but still about 2 percent below the 2008 crop. The national yield increased to 782 pounds per harvested acre, while the harvested area was unchanged at 7.7 million acres and slightly above 2008's 25-year low. Upland production is estimated at 12.2 million bales, the smallest crop in 20 years. The extra-long staple (ELS) crop remains estimated at 367,000 bales, the smallest since a similar-sized crop was produced in 1995.

On a regional basis, the upland output is mixed when compared with last season. A larger crop is estimated for 2009 in the Southwest and Southeast regions, while smaller production is expected in the Delta and West regions (fig. 2). In the Southwest, an upland crop of nearly 5.4 million bales is forecast, the second lowest in the last 5 years as average yields are the lowest during this period. Nevertheless, the Southwest region is expected to account for 44 percent of the U.S. upland crop in 2009.

In the Southeast, a slightly larger crop is projected due to a record yield of 881 pounds per harvested acre. The crop, forecast at 3.4 million bales, is the highest for the region since 2006 when area was significantly higher. For the Delta, a crop of only 2.7 million bales is expected this season. Record low area, coupled with below-average yields due to excessive rainfall at harvest time, reduced the Delta crop to its lowest since 1983. In the West region, upland production is expected to reach only 725,000 bales, the lowest since 1946, as area in 2009 was at its lowest since 1922. Although the region's crop is half the level of just 3 years ago, a record yield in California helped keep the region's crop from falling further.

Demand for U.S. Cotton Increased:

U.S. cotton demand in 2009/10 was increased nearly 4 percent in December to 14.4 million bales, but still the lowest since 1988. While U.S. mill use was unchanged this month at 3.4 million bales, exports were increased 500,000 bales to 11 million. With world cotton mill use projected higher, foreign import demand is also expected to rise considerably and support the higher export forecast.

However, 2009/10 U.S. exports are forecast at their lowest since 2001/02, as fewer supplies in the United States and record supplies in India are expected to limit the potential for U.S. shipments in 2009/10. U.S. cotton supplies this season are the lowest in over a decade, while competition from India is expected to push their exports to near record levels in 2009/10. As a result, the U.S. share of global trade is projected to decline to 32.5 percent, the lowest since 2000/01.

Stocks Decline and Price Expectations Rise in December:

Based on these latest supply and demand estimates, ending stocks for 2009/10 are projected to decline nearly 2 million bales from the beginning level to 4.5 million bales. The stock reduction is the second consecutive season for lower U.S. supplies and is the lowest level since 2003/04. The latest estimate places the stocks-to-use ratio at 31 percent, the lowest in four years.

As a result of increased demand expectations as global consumption improves, U.S. farm prices are being influenced by rising world prices. The December forecast for the upland farm price for 2009/10 was increased to a range of 56-64 cents per pound, up 4 cents on each end of the range from November. This compares with 2008/09's farm price of 47.8 cents per pound.

U.S. Department of Agriculture (USDA)


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