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Domestic cotton production rise by 5.8% in MY 2007/08

18 May '07
4 min read

Another factor that will continue to adversely affect domestic cotton consumption is the growing volume of foreign apparel and textiles entering Mexico, which has depressed demand for domestically produced products. At the same time, the expected slowdown in economic growth in 2007 will lead to lower levels of consumer purchasing power, and thus a decline in the growth of apparel spending. The outlook for the Mexican economy this year is less favorable than that of CY 2006.

Mexico's Gross Domestic Product (GDP) is forecast to grow by 3.1 percent in 2007, compared to 4.46 percent growth in 2006. Inflation is also playing a significant role in apparel spending patterns. From March 2006 to February 2007 year-over-year inflation was roughly 4.1 percent. That is far lower than the triple-digit inflation experienced in the 1980's, but it is well above the central bank's target rate of 3 percent.


As a result of the above-mentioned factors, Mexico is expected to import approximately 1.5 billion bales of cotton in MY 2007/08, approximately the same volume as MY 2006/07. The U.S. is expected to maintain its dominant market share of cotton imports, as practically all cotton imports are sourced from the United States. The import estimates for MY 2005/06 and 2006/07 have been revised upward and downward, respectively, reflecting official data from the Secretariat of Economy (SE) and preliminary information from the CMCA.

Similarly, the MYs 2005/06 and 2006/07 cotton export estimates have both been revised downward, reflecting both SE official figures and industry sources. With imports remaining unchanged in MY 2007/08, ending stocks are projected to decline to 1.185 million bales, tightening the stocks-to-use ratio to 53.4 percent, compared to a 54.9 percent stocks-to-use ratio in MY 2006/07.

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United States Department of Agriculture Foreign Agricultural Service

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