Cotton Outlook: Global Trade To Decline in 2014-15

The latest U.S. Department of Agriculture (USDA) projections for 2014/15 indicate that global cotton trade is forecast to decrease for the second consecutive season. World trade is projected at 34.3 million bales in 2014/15, 16 percent (or nearly 6.5 million bales) below 2013/14 and 27 percent below 2012/13’s record of 46.7 million bales.

Domestic Outlook

U.S. Cotton Crop Reduced in December

The USDA December forecast of the 2014 U.S. cotton crop was reduced 3 percent this month to 15.9 million bales; however, the estimate remains 3 million bales above the 2013 crop. While planted area rose 600,000 acres to 11 million acres this season, harvested area increased 2.3 million acres as the drought eased in the Southwest region this summer.

U.S. harvested area is estimated at nearly 9.9 million acres, the highest in 4 years. The 2014 national yield is projected at 773 pounds per harvested acre, below both last season and the record of 892 pounds per acre achieved in 2012. Upland cotton production is estimated at 15.3 million bales, compared with the 12.3 million bales produced in 2013. The extra-long staple (ELS) crop is forecast at 578,000 bales, the lowest in 4 years. For current production estimates by State and region, see table 10.

Upland cotton production is forecast to increase in three of the four Cotton Belt regions this season as a result of higher area. The Southwest will regain its position as the leading producing region for the 2014 season. The upland crop in the Southwest is forecast at 6.2 million bales, 43 percent above 2013’s 4.4 million bales; the increase is due largely to a low abandonment rate of about 17 percent, compared with the previous 3-year average of 50 percent. As of December, the Southwest upland yield is estimated at 556 pounds per harvested acre, the lowest in over a decade.

For the Southeast, cotton production in 2014 is estimated at 5.1 million bales, 17 percent above last season. The larger crop results from the second-highest yield on record–927 pounds per harvested acre; the record of 1,033 pounds was set in 2012. In the Delta, production is expected to approach 3.3 million bales this season as both area and yield are above a year ago. A

lthough area of 1.4 million acres is below the 5-year average, the Delta yield is forecast at a record 1,104 pounds per harvested acre. In the West, upland production is expected to reach only 723,000 bales, the lowest on record for the region. Area shifted out of upland cotton for the third consecutive season as water limitations–mainly in California–pushed acreage to a low of 241,000 acres.

U.S. Demand Forecast Unchanged; Stocks and Prices Revised

U.S. cotton demand for the 2014/15 season is forecast at 13.8 million bales, unchanged from last month but 2 percent below 2013/14. U.S. cotton mill use–based on data from the Farm Service Agency–remains projected at 3.8 million bales, up from last season’s 3.55-million-bale estimate. U.S. exports, on the other hand, are forecast at 10 million bales in 2014/15, 500,000 bales below 2013/14. Reduced foreign import demand, mainly by China, is expected to lower world trade and keep U.S. exports at their lowest since 2000/01. Despite a lower volume of shipments by the United States in 2014/15, the U.S. share of global trade is projected to rise from 26 percent to 29 percent.

Due to the production change this month, U.S. ending stocks are now forecast at 4.6 million bales, more than 2 million bales above the beginning level. Both the stocks and the stocks-to-use ratio–estimated at 33 percent–would be the highest since 2008/09. Based on the latest supply and demand outlook for 2014/15, the average upland cotton farm price is now forecast to range between 59 and 64 cents per pound, compared with the final 2013/14 price of 77.9 cents per pound.

Full report.


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