Cotton Outlook: Record 2017 U.S. Net Textile and Apparel Imports

Cotton bales in gin warehouse. ©Debra L Ferguson Stock Images

U.S. net textile and apparel fiber imports increased to a record in calendar year 2017, as demand for clothing increased with the expanding economy. Net imports in 2017 approached 16.2 billion raw-fiber-equivalent pounds, 2 percent above 2016.

Total fiber product imports surpassed 19.7 billion pounds in 2017, compared with 19.3 billion pounds in 2016. Meanwhile, textile and apparel exports in 2017 totaled 3.5 billion pounds, similar to a year earlier.

With synthetic product net imports rising for 8 consecutive years, cotton’s share has declined considerably as growth in athleisure wear has increased demand for synthetic fibers. During each of the last 4 years, synthetic fiber products accounted for the largest share of total net imports.

In 2017, synthetic textile and apparel products contributed 50 percent of the total, while cotton products accounted for 43 percent, and linen, wool, and silk combined for an additional 7 percent. Although these percentages equaled those of 2016—suggesting at least a pause in cotton’s declining share—the percentages for cotton and synthetic products were nearly reversed just 5 years ago.

In 2012, cotton net imports accounted for 49 percent of the total, while synthetics contributed 44 percent.

Domestic Outlook

U.S. Cotton Supply and Demand Revised in March

The U.S. cotton crop estimate for 2017/18 decreased 233,000 bales this month to 21.0 million bales (upland at 20.3 million bales and extra-long staple at 695,000 bales) based on data in the March Cotton Ginnings report. The latest estimate is 22 percent above the 2016 crop and would be the largest U.S. production since 2006.

USDA will release the final U.S. cotton production estimate for the 2017 crop on May 10. Based on the current crop estimate and beginning stocks of 2.75 million bales, the 2017/18 cotton supply totaled 23.8 million bales, 13 percent more than last season and the highest in 10 years.

In March, the 2017/18 U.S. cotton demand estimate is projected at approximately 18.2 million bales, nearly identical to 2016/17 and on the high end of the range over the last decade. While U.S. cotton mill use in 2017/18 is estimated at 3.35 million bales—up 3 percent from 2016/17—exports are forecast marginally below 2016/17 shipments at 14.8 million bales.

Through the first half of 2017/18, U.S. textile mills used 1.6 million bales of cotton, similar to the corresponding period of 2016/17. Mill use during the second half of the season is expected to improve slightly, however, to reach the higher estimate.

More on Cotton

U.S. cotton exports in 2017/18 are expected to approach last season’s level as a stronger global demand helps offset the effect of increased competition from foreign producers. As a result, the U.S. share of global trade is forecast to dip slightly in 2017/18 to 38 percent from 2016/17’s 6-year high of 40 percent.

U.S. cotton export commitments through the first 7 months of 2017/18 totaled 14.5 million bales, compared with 12.1 million bales for the corresponding period last season. Shipments during 2017/18 have reached approximately 6.8 million bales, or 46 percent of the export forecast.

At the comparable period during 2016/17, shipments had attained 49 percent of final exports. While currently in the middle of the peak period for the United States, cotton shipments reached a 12-year high of more than 550,000 bales for the week ending March 1.

Although seasonal patterns are expected, prospects for above-average shipments during the second half of 2017/18 are supported by the strong export commitments. Based on the latest estimate, U.S. cotton exports will need to average around 365,000 bales per week for the rest of the season.

With U.S. cotton demand below production, stocks are estimated to double in 2017/18, albeit from a low beginning level. For 2017/18, U.S. ending stocks are projected at 5.5 million bales, compared with 2.75 million bales in 2016/17.

Based on the current supply and demand estimates, the 2017/18 stocks-to-use ratio is projected to reach 30 percent; although well above last season’s 15 percent, the ratio is similar to that in 2015/16. The average price received by U.S. upland cotton producers is expected to range between 68 cents and 70 cents per pound in 2017/18.

At the midpoint of 69 cents per pound, U.S. cotton prices would be slightly above 2016/17 and the highest in 4 years.

U.S. Retail Cotton Consumption Unchanged in 2017

U.S. domestic cotton consumption (mill use plus net textile imports) was virtually unchanged in calendar 2017 as consumer demand for cotton products held steady. Retail consumption was estimated at nearly 8.5 billion (raw-fiber-equivalent) pounds, or 17.7 million bale-equivalents for the year.

While domestic cotton consumption in 2017 was only marginally above 2016, it was the second highest since 2010. Nevertheless, the 2017 retail cotton consumption estimate remains more than 20 percent below the calendar 2006 record of nearly 10.9 billion pounds.

Reviewing the individual components, U.S. cotton product imports and exports moved in opposite directions in 2017, as demand for synthetic products has limited cotton’s growth. Cotton product imports surpassed 8.6 billion pounds in calendar year 2017, slightly above 2016; at the same time, however, cotton product exports decreased 1 percent to 1.7 billion pounds in 2017.

Meanwhile, U.S. cotton mill use in calendar 2017 slipped below 1.6 billion pounds. As a result, the U.S. per capita estimate of retail cotton consumption remained steady at 26 pounds in 2017; however, U.S. mill use of cotton accounted for less than 5 pounds of the total as the manufacturing of textile and apparel products remains concentrated in low-wage-rate countries.

Full report.

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