Usda Tones Down Pima Cotton Projection

The USDA has, in its latest report on January 9, cut down the production estimates of American Pima cotton variety during the season by 8,000 bales to 5.33 lakh bales. The output of Pima cotton, even after the latest reduction in USDA estimate, is 45 per cent higher than that recorded in the previous year at 3.68 lakh bales.

The USDA has on August 12 last predicted the Pima cotton production during 1996-97 will go up 57 per cent over the last years total production to 5.76 lakh bales. The industry reactions to the lowering of estimate for Pima cotton production were, however, mixed. Many observers believe that the actual output may be even lower than the final estimate of 5,33,000 bales.

 

In the latest estimate the government has trimmed down the harvested acres by 5,500 acres and raised the beltwide average yield by 6 pounds, which otherwise works out to be nearly 998 pounds per acre, said Supima Association of the United States. The revised estimate says that the California Pima yields have been gradually reduced since rains began to fall in the San Joaquin Valley (SJV) three months ago. The New Mexico and Texas projected yields were, however, increased considerably to offset cuts in their respective harvested acreage, said the agency.

Though the projected average yield of 998 pounds/acre is better than the beltwide average of 977 pounds/acre during the previous five years, it is considerably lesser than what was projected a few months ago.

On the demand side, the USDA maintained its earlier US Pima offtake level of 5.30 lakh bales, which is a 32 per cent increase over 4.02 lakh bales recorded during the previous year's season.

The export sales of Pima had slowed a bit at the beginning of the new year, but had bounced back by the end of January to put total sales for the marketing year at 4.05 lakh running bales.

As regards imports, Japan already has surpassed its last seasons total 87,000 running bales registered till January 23. South Korea's purchases of 41,000 actual bales nearly double than the purchase of Pima cotton during the same period last year. Pakistan, Bangladesh and Indonesia, too, have registered sizable increases of US Pima imports over their respective figures during the 1995-96 season.

The USDA has maintained its projection of 425,000 bales of Pima exports this season. With domestic consumption remaining unchanged at 1.05 lakh bales, the 8,000 bales cut in output proportionately reduces final stocks to 76,000 from 84,000 bales. Meanwhile, the International Cotton Advisory Committee (ICAC) has estimated an increase in the production of extra-long staple (ELS) cotton exports by 73 per cent. According to ICAC report published January 15, 1997, after continuously dropping through the three decades to a total of 6.85 lakh bales in 1995-96, the ELS cotton exports are expected to rise in this season to 1.2 million bales.

The ICAC expects Egypt to account for the bulk of the increase by increasing its exports from 87,000 bales in 1995-96 to 4.65 lakh bales bales this year. With just 2.82 lakh bales registered through January 11, such an increase remains a tall order for the 1996-97 marketing year. Regardless how many bales the United States and Egypt export this season, it is clear that world ELS cotton consumption is increasing at a time when prices are holding at more or less traditional levels.

Bright outlook for new ELS cotton: The US Pima acreage may decline slightly this year, but the market continues to send positive signals. The old crop production of US keeps shrinking as cotton fields in California seemingly keep sinking beneath the constant pounding or rain and storm-fed flooding. A Pima crop, originally pegged at 5.76 lakh bales has now been trimmed to 5.33 lakh bales. Another 10,000 bales may yet be cut before final tallies are released in May.

At present, supply/demand figures place ending stocks at a mere 76,000 bales on a stocks/demand ratio of 14.3 per cent.

The ICAC has adjusted its estimated world ELS stocks/use ratio down to 25 per cent in its report released of January 15.