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U.S. upland cotton production, exports, and mill use is projected to stabilize following significant contractions in the past

Thursday, August 10, 2017

From 2006 to 2015, upland cotton exports decreased by 34 percent, production by 42 percent, and mill use by 31 percent. Key factors that drove these shifts include: increased competition from foreign suppliers, prolonged droughts that lowered production, lower import demand from China, and competition from synthetic fibers (such as polyester). While many factors limited cotton market opportunities through 2015, USDA baseline projections through 2026, which provide a long run view of the U.S. farm sector, nonetheless indicate that exports of U.S. upland cotton and mill use are expected to increase relative to the 2006-15 time period. Between 2016 and 2026, U.S. upland cotton exports and mill use are projected to rise by 3 and 7 percent, respectively, while production is expected to drop by less than 1 percent (stocks are also projected to decrease over this period). The major factors expected to drive this change are increased global demand from rising incomes and populations and the cotton crop’s reputation of superior quality relative to its competitors. This chart appears in the Amber Waves article, "U.S. Upland Cotton Exports and Mill Use Projected To Improve," released in August 2017.

Productivity gains, declining acreage lower cotton production costs

Wednesday, May 31, 2017

USDA estimates commodity costs and returns based on periodic of commodity producer surveys. Cotton producers were surveyed in 1997, 2003, 2007, and most recently in 2015. Total economic costs estimated from these cotton surveys declined from about $1.40 per pound in 1997 to $0.92 in 2015. Declining real costs of cotton production reflect productivity gains in the industry that can be traced to the adoption of new cotton production technologies and changes in where cotton is grown. Productivity gains were particularly rapid during 1997-2003 as genetically modified (GM) cotton was widely adopted and real production costs fell nearly 20 percent. Between 2003 and 2015 real production costs fell another 20 percent, while cotton acreage declined 36 percent. Cotton became more concentrated in the low-cost Southern Plains region and declined in the high-cost areas of California and the Mississippi Delta region. This chart is drawn from the ERS Commodity Costs and Returns data product, updated in May 2017.

Declining cotton stocks in China leading to a reduction of global stocks

Tuesday, April 25, 2017

The latest USDA cotton projections for marketing year 2016/17 indicate that world ending stocks are forecast at 90.9 million bales, 6 percent below the previous season and 19 percent (nearly 21 million bales) lower than 2014/15’s record of 111.7 million bales. Global cotton stocks in 2016/17 are expected to decline in back-to-back years after five consecutive seasons of rising supplies. Earlier cotton prices support policies in China that contributed to the buildup in global stocks, culminating in nearly 67 million bales of cotton at the end of 2014/15. Likewise, the recent trend of declining supplies is attributable to more recent policies in China that discouraged production, limited raw cotton imports, and began the process of reducing the surplus in government-held stocks. In 2016/17, China’s cotton stocks are forecast at 49.1 million bales, nearly 18 million bales below the record and the lowest in 5 years. With combined stocks in the rest of the world expected higher in 2016/17, China’s share of global stocks are projected to decrease to 54 percent, compared with 60 percent during the previous three seasons. This chart appears in the ERS Cotton and Wool Outlook report released in April 2017.

U.S. net textile and apparel imports steady in 2016

Monday, April 3, 2017

U.S. net textile and apparel fiber imports were stable in calendar year 2016, near 2015’s record total. In 2016, net imports approached 15.8 billion raw-fiber-equivalent pounds. Total fiber product imports reached 19.3 billion pounds in 2016, compared with 19.6 billion pounds in 2015. Meanwhile, textile and apparel product exports totaled 3.5 billion pounds in 2016, compared with nearly 3.8 billion pounds a year earlier. With synthetic product imports rising for 7 consecutive years, cotton’s share has declined steadily during this period. For the last 3 years, synthetic products have accounted for the largest share of total net imports. In 2016, synthetic textile and apparel products contributed 50 percent to total net imports, while cotton products supplied 43 percent and linen, wool, and silk products provided an additional 7 percent. Compared with 5 years ago, the contributions have been reversed. In 2011, cotton accounted for 50 percent of the total net imports, while synthetics provided 44 percent. This chart appears in the ERS Cotton and Wool Outlook report released in March 2017.

Consumption exceeding production in the global cotton industry for second consecutive year

Thursday, March 2, 2017

Prior to the 2015/16 marketing year, global cotton production had exceeded consumption for 4 consecutive years. This led to increasing ending stocks and downward pressure on cotton prices. In addition to the negative production incentives from low prices and excess stocks, poor weather conditions further reduced global cotton production in 2015/16. Consumption exceeded production in 2015/16 by 15 million bales and falling prices stabilized. In 2016/17, projected production has remained below consumption and prices have increased. The global cotton industry also continues to face price competition from synthetic fibers to maintain market share. Consumption is only projected to grow by 1 percent in 2016/17 and is up only 4 percent over a 5-year period. This chart is drawn from the ERS Cotton and Wool Outlook tables released in February 2017.

Global cotton production projected to rebound from 13-year low

Monday, October 3, 2016

The latest U.S. Department of Agriculture (USDA) estimates for 2016/17 project world cotton production at 102.5 million bales, 6 percent above the previous season’s 13-year low. The three largest cotton-producing countries remain India, China, and the United States. In 2016/17, these countries are forecast to account for 62 percent of global production, slightly below the 3-year average (approximately 64 percent) as larger harvests are expected from a number of other cotton-producing countries such as Pakistan and Brazil. India is expected to remain the leading producer, after first surpassing China in 2015/16. Globally, 2016/17 cotton production is rising as a result of a higher yield expectation. World cotton area, on the other hand, is declining for a second consecutive season and projected to dip to its lowest since 1986/87. The reduction in planted cotton area may be due to declining global cotton prices as well as reduced imports from China. The ratio of cotton prices to alternative fibers such as polyester has also remained high even as cotton prices have fallen. This is due in part to the recent declines of global oil prices, which constitutes a key input in polyester production. This chart is based on data reported in the ERS Cotton and Wool Outlook published September 2016.

Mixed picture for recent returns to production of U.S. field crops

Thursday, September 1, 2016

Estimates of U.S. crop returns per acre reveal large differences in crop profitability across commodities and over time during 2010-13. Returns to crop production are defined as the gross value of production less total economic costs. Total economic costs include operating costs such as seeds, fertilizer, and pesticides; the capital recovery cost for machinery and equipment; and the costs?known as opportunity costs?of employing land, labor, capital and other owned resources that have alternative uses. While returns to total economic costs for corn, soybeans, rice, and peanuts were positive, on average, for the 2010-13 period, average returns for other major crops were negative.? For most crops, changes in farm prices and the gross value of production per acre, rather than changes in production costs, have driven returns to total economic costs. Lower prices contributed to reduced returns for corn, soybeans, wheat, sorghum, and peanuts in 2013, while price and yield increases improved returns for oats and rice.? The negative returns over total economic costs for some crops indicate that that those producers realized a lower rate of return to their land, labor, and capital than the benchmark rates of return used in ERS commodity cost and returns accounts; returns over operating costs alone were positive for all crops throughout the period.? This chart is based on data found in Commodity Costs and Returns.

India close to becoming world's largest cotton producer

Thursday, September 1, 2016

India?s cotton production has expanded rapidly since the early 2000s, passing the United States to become the world?s 2nd largest producer in 2006/07 (August/July marketing year), and now poised to surpass China?the world?s largest producer. India?s cotton production began to expand with the introduction of genetically-modified Bt (Bacillus thuringiensis) cotton; higher yield potential and increased pest resistance boosted profitability and stimulated growth in both area and yields. Since 2000/01, India?s cotton area has increased about 2.8 percent annually and is now more than double the area sown to cotton in China and more than triple U.S. cotton area. However, India?s cotton yields, while improving about 6 percent annually since 2000/01 to an average of 530 kgs/ha during 2009/10-2013/14, remain well below those achieved in China (1,357 kgs/ha) and the United States (916 kgs/ha). With gains in production, India has emerged as the world?s second largest exporter of raw cotton, after the United States, and the second largest consumer of raw cotton, after China. Cotton processed in India is destined for its large domestic market as well as exports of cotton yarn, fabric, and clothing.? Find additional analysis of cotton market developments in Cotton and Wool Outlook: July 2014.

Global cotton stockpiles beginning to decline

Thursday, September 1, 2016

Global ending stocks of cotton are forecast to decline in the 2015/16 marketing year (August-July), down about 9 percent from last year?s record of nearly 112 million bales. Cotton stocks rose dramatically between 2010/11 and 2014/15 as relatively high prices encouraged world production and discouraged consumption. Despite this season?s anticipated decrease, ending stocks remain double the 2010/11 level. The recent global stocks buildup resulted from policies in China that insulated Chinese cotton producers from declining world prices and, at the same time, also encouraged imports. More recent policy shifts in China have discouraged production and imports in that country, beginning the process of reducing the surplus of Government-held stocks. In 2015/16, China?s stocks are expected to decrease for the first time since 2010/11. However, with stock reductions also expected in the rest of the world, China?s share of global stocks remains above 60 percent. This chart is from the April 2016 Cotton and Wool Outlook report.

U.S. farm prices of major field crops are forecast to decline for 2014/15

Thursday, September 1, 2016

Current USDA forecasts show declines in U.S. average farm prices for major U.S. field crops?corn, soybeans, wheat, and cotton?of 4 to 19 percent in 2014/15. For corn, soybeans, and wheat, this would be the second consecutive year of declining prices. Soybean prices are forecast to decline the most in 2014/15, based on an expected record U.S. crop, combined with ample supplies from Brazil and Argentina. U.S. corn prices are forecast to fall 10 percent in 2014/15, after a 35-percent decline in 2013/14, also based on a large U.S. corn crop forecast and competition from other exporters like Brazil, Argentina, and Ukraine. U.S. wheat prices are forecast to decline about 4 percent in 2014/15, despite the forecast for smaller U.S. supplies, due to adequate supplies from both traditional and Black Sea wheat exporters. Although smaller cotton crops are forecast for China and India?the top two global producers?a larger U.S. crop is expected to lead to a fifth consecutive year of rising global cotton stocks and a 12-percent drop in U.S. prices in 2014/15. Find additional analysis in the current ERS outlook newsletters: Feed Outlook: July 2014, Oil Crops Outlook: July 2014, Wheat Outlook: July 2014, and Cotton and Wool Outlook: July 2014.

World cotton consumption expected to exceed production for second consecutive year

Thursday, September 1, 2016

World cotton consumption is expected to grow modestly during the 2016/17 marketing year (August-July), reaching 110.8 million bales. That is similar to 2014/15 levels after dipping slightly in 2015/16. Modest growth in the global economy and relatively low cotton prices are expected to support mill use in most countries. China, India, and Pakistan are expected to lead world cotton mill use and account for a combined 62 percent of the total, similar to 2015/16. Global cotton production is forecast at 104.4 million bales in 2016/17, a modest increase following the 16-percent reduction in production in 2015/16?the result of inclement weather and pest damage in a number of producing countries. While cotton area is expected to decline, a rebound in yields would support the increase in production. With global cotton consumption forecast to exceed production for a second consecutive season, 2016/17 world ending stocks are projected to decline 6 percent from 2015/16, but at more than 96 million bales, ending stocks remain historically high and will continue to weigh on prices and production. This chart is from the May 2016 Cotton and Wool Outlook report.

U.S. cotton production and share of global supply are expected to be up in 2016

Thursday, September 1, 2016

The 2016 U.S. cotton crop is expected to reach 15.8 million bales (1 bale = 480 pounds), 23 percent larger than the 2015 crop, reflecting a 17-percent increase in acreage, lower abandonment and higher yields compared to last year. Globally, cotton production is projected to reach 102.5 million bales in 2016, up 5 percent from last year. Global cotton production is concentrated among a small number of countries, with India and China accounting for nearly half of world production and the top five producers expected to supply 77 percent of the world?s cotton this year. Production in most countries is expected to increase at least modestly this year, with the exception of China, where production is expected to fall 4.5 percent to 21.4 million bales as acreage there falls to historically low levels. Given the large increase in U.S. production, the U.S. share of global supply is expected to increase from 13.2 percent in 2015 to 15.4 percent in 2016, compared to a 27-percent share supplied by India and 21 percent by China. This chart is from the ERS report Cotton and Wool Outlook report, July 2016.

China shifts towards imports of cotton yarn

Thursday, September 1, 2016

Mill use of cotton in China?the world?s largest spinner of raw cotton into yarn?is projected to remain steady at 36 million bales for 2013/14 (August/July), but has declined over the last decade while imports of cotton yarn have increased.? With China?s Government maintaining a policy that sets a high domestic floor price for raw cotton, domestic prices remain above world prices, creating an incentive for China?s textile industry to import more lower-priced cotton yarn from the world market.? Data for the last three seasons indicate the growth in China?s cotton yarn imports, which reached an equivalent of nearly 8.3 million bales of raw cotton in 2012/13, more than double the level imported in 2010/11. The largest yarn suppliers to China during this period were Pakistan, India, and Vietnam, with the three countries accounting for 72 percent of China?s cotton yarn imports during the past two seasons.? Along with China?s shift to more imports of cotton yarn, global raw cotton trade is only expected to reach 39 million bales in 2013/14, 17 percent below the record of 46.7 million bales set in 2012/13, as China?s raw cotton imports fall about 9.3 million bales. This chart can be found in the Cotton and Wool Chart Gallery with analysis in Cotton and Wool Outlook: September 2013.

Export market key to demand for U.S. cotton

Thursday, September 1, 2016

With the significant decline in cotton use by U.S. mills since the late 1990s, exports now account for about 75 percent of the demand for U.S. cotton, making global market developments key to the outlook for U.S. producers. The source of demand for U.S. cotton shifted with the elimination of textile and apparel import quotas that existed under the international Multifiber Arrangement?a process completed in 2005?leading to increased U.S. imports of textiles and apparel and reduced U.S. demand for raw cotton.? Since 2005, there has been significant variability in the volume of U.S. exports and in world prices, much of it attributed to developments in China, the largest global and U.S. market for cotton. Large Chinese purchases contributed to the spike in world prices in 2010/11 (August/July), while large stocks and reduced buying by China are key factors in the outlook for reduced global and U.S. exports in 2013/14. Mill use of cotton in China has now declined for four consecutive seasons in response to government policies, with more consumption shifting to countries such as India, Pakistan, and Vietnam, who are exporting growing volumes of cotton yarn and other intermediate products to China and other markets. This is an updated version of a chart found in Charting the Essentials, with additional analysis available in Cotton and Wool Outlook: April 2014.

Manmade fibers account for a growing share of textile imports

Tuesday, March 29, 2016

U.S. net imports of textile and apparel fiber products increased for a third consecutive calendar year in 2015 to the highest on record, reaching 15.7 billion pounds (raw fiber equivalent), compared with 14.5 billion pounds in 2014. U.S. net imports consist mostly of cotton and manmade fiber products, as demand for linen, wool, and silk products remains relatively small. With manmade fiber imports expanding steadily in recent years, cotton’s share has declined consistently. In 2015, cotton textile and apparel products accounted for 44 percent of the total imports, while manmade fibers contributed nearly 49 percent. By comparison, in 2007, cotton accounted for 56 percent of all textile and apparel imports, while the share of manmade fibers was 37 percent. This chart is from the Cotton and Wool Outlook, March 2016.

Output and employment in the U.S. textile industry has stabilized

Monday, November 2, 2015

Employment at U.S. textile plants has fallen by nearly two-thirds over the past 20 years as fabric production and apparel manufacturing shifted overseas in search of lower labor and production costs. Today, more than 60 percent of clothing and other textile products purchased by U.S. consumers is produced outside of the United States. However, both the sharp decline in U.S. textile employment and the rise in import share of U.S. fiber consumption began to level off around 2009. In recent years, the U.S. textile industry—particularly the capital-intensive yarn and fabric production industry—has shown signs of a modest rebound. Cotton consumption by U.S. textile mills in marketing year 2015 (August/July) is forecast at 3.7 million bales, up 3.5 percent from a year ago and 12.1 percent from its 2011 low. In 2014, U.S. textile mill employment showed its first gain since 1994—up 0.2 percent. Investment in U.S. cotton spinning by firms from China and India is underway as well, reflecting the changes in global textile markets since the Multi-Fibre Arrangement (which governed world trade in textiles and garments) expired on January 1, 2005. This chart is from the October Cotton and Wool Outlook report.

India to surpass China as world's top cotton producer

Friday, July 31, 2015

Cotton production is concentrated among only a few countries, with the world’s five largest cotton-producing countries forecast to produce nearly 80% of world production in 2015/16. India and China together account for more than 50 percent of global cotton production, but production in China is declining while increasing in India. In 2015/16, India is expected to surpass China as the world’s largest cotton producer for the first time on record, with a crop forecast at 29.5 million bales, pushing India’s share of world production to 26.5 percent. For China, 2015/16 production is forecast to decrease 10 percent (3 million bales) to 27 million bales, the lowest since 2003/04. China’s share of global production is forecast at 24 percent as area continues to trend lower. The difference in the production outlook for China and India can be traced in part to China’s rising wages and increasing production costs, while new technology and production practices have driven India’s yields and output significantly higher in recent years. Its output surpassed the United States for the first time in 2006 and is now poised to surpass China, which had been the world’s largest cotton producer since 1982. This chart is from July 2015 Cotton and Wool Outlook report.

Global cotton stockpiles remain near record-high levels

Tuesday, June 30, 2015

Global cotton stocks have risen over the last several years, largely the result of growth in China’s stocks. Government policies in China supported national reserve purchases of domestic cotton and, at the same time, significant imports of raw cotton. These policies strengthened global cotton prices by keeping China’s supplies out of the marketplace while also encouraging production in other countries. Stocks in China at the end of 2014/15 (August/July marketing year) are estimated at a record 65.6 million bales, or 60 percent of global stocks. For 2015/16, policy adjustments in China are expected to reduce stocks slightly to 62.6 million bales, with its share of world stocks remaining unchanged. Globally, cotton stocks are expected to decline in 2015/16 for the first time in 6 years, but would still remain more than double the level in 2010/11, resulting result in only a slight decrease in the world stocks-to-use ratio. As a result, the 2015/16 world cotton price is expected to remain near the current season’s average of about 71 cents per pound, the lowest in 6 years. This chart is from the June 2015 Cotton and Wool Outlook.

China's large cotton stockpiles affect world markets

Friday, May 8, 2015

China has been the world’s largest cotton producer and consumer of cotton for decades, and it became the largest importer shortly after its 2001 accession to the World Trade Organization (WTO). Economic growth has transformed its agriculture sector, driving wages higher and spurring greater mechanization in many areas; however, small scale cotton production persists with limited mechanization and high production costs, especially in eastern China. To support its farmers, China introduced a support price for cotton in 2011, and from 2011 to 2013 acquired more than 40 percent of China’s cotton crop in an attempt to maintain domestic cotton prices 50-60 percent above world prices. This has resulted in China’s government owning a large amount of cotton stocks, equivalent to nearly 200 percent of its annual use and half of the world’s consumption. New policies in 2014 included a shift from stock acquisition toward target-price based direct subsidies and a sharp reduction in cotton import quotas. Reduced purchases by China’s government and a transition of cotton stockpiles toward long run historic levels could result in years of lower imports, and a decline in world prices. This chart is based on Cotton Policy in China, CWS-15c-01, March 2015.

Cotton production in California expected to decline due to drought

Wednesday, May 6, 2015

California is the fourth largest cotton producing state, and production there depends heavily on irrigation. California is the dominant producer of the longer and finer quality “Extra-long Staple” (ELS) fiber that is used in high-value products such as sewing thread and more expensive apparel and home furnishing items. During the past three years, California production accounted for 95 percent of the total ELS cotton in the United States. The on-going drought that began in 2012 remains a major concern for agricultural producers as reservoir levels and water supplies have been reduced significantly; record-low water allocations were seen in 2014, affecting the type and amount of crops some farmers can produce. While acreage planted to upland and ELS varieties varies from year to year, the lingering drought in California is expected to limit acreage once again in 2015. USDA’s Prospective Plantings report released at the end of March indicated a 27-percent decrease in the State’s total cotton area for 2015, with ELS area declining 29 percent and upland area decreasing 21 percent. While California’s total cotton area would be at its lowest since 1932, the decline is similar to the one experienced during the previous statewide drought of 2007-09. This chart is based on information in Cotton and Wool Outlook: April 2015.

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