Mexican cotton output forecast to decline in MY 2006/07

19 May '06

3 min read

USDA Foreign Agricultural Service announces Report Highlights: Mexican cotton production is forecast to decrease to 617,000 bales in MY 2006/07, driven by an 11.5 percent reduction in harvested area. Sluggish demand and a delayed announcement detailing the government support programs are the main reasons for this drop in production.

Cotton consumption for MY 20006/07 is forecast to remain unchanged at 2.0 million bales. With sluggish demand, cotton imports are also expected to remain unchanged at 1.5 million bales in MY 2006/07.

Mexican cotton production for MY 2006/07 (July-August) is forecast at 617,000 bales (480 lb./bale), a decrease of 1.5 percent from the MY 2005/06 (July-August) revised estimated production.

This decline in production was driven by a reduction in the planted area for cotton. Mexican farmers chose to reduce cotton plantings because two factors increased the risk profile of cotton production:

1. The Mexican Ministry of Agriculture (SAGARPA) waited until late in planting season to announce the details of the MY 2006/07 Cotton Price Support Program. This late
announcement led many farmers to hedge their bets by either not planting anything, or by switching to other crops; and

2. Many farmers are concerned about new outbreaks of white fly, which can severely damage cotton production. In MY 2005/06 white fly infestation affected several
cotton producing states, especially in the states of Sonora and Sinaloa.

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