Executive summary - 1991/92 world cotton production, forecasts - U.S. Dept. of Agriculture, Economic Research Service report

This month's World Cotton Situation highlights a trend established in the beginning of the 1991/92 marketing year (MY) on August 1, 1991--record high cotton production and increasing cotton stocks. USDA's world production estimate increased this month to 92.2 million bales, 421,000 bales greater than January's projection. This is 3.5 million bales greater than the previous world record cotton production set in 1984/85. The increase this month is primarily the result of a larger-than-anticipated crop in Pakistan, which was raised by 800,000 bales to 8.8 million bales. Accordingly, the world cotton stock estimate rose this month by more than 900,000 bales. In contrast to the increase in the world cotton production estimate, the world consumption estimate for MY 1991/92 declined by 540,000 bales to 85.6 million bales. This is the fourth reduction in USDA's consumption estimate, which began the year at a record 88.0 million bales. The reductions brought estimated consumption down below the previous record established in 1989/90 of 86.6 million bales. The reduction this month is due primarily to decreases in the estimates for the former Soviet Union and Turkey. World cotton exports for MY 1991/92 are expected to reach 22.9 million bales, or nearly 200,000 bales below last's month's estimate, and slightly below the estimate for MY 1990/91. Although the world export estimate did not change appreciably since last month, there is substantial change in the estimates of major cotton exporters. The former Soviet Union's export estimate is reduced by 500,000 bales, while Pakistan's export estimate increased by 450,000 bales. The world cotton stocks forecast, as mentioned previously, was again revised upward. The world ending stock estimate for February rose to nearly 35.0 million bales, an increase of more than 900,000 bales above last month's estimate. The largest increase was for the former Soviet Union, where ending stocks are expected to increase significantly due to lower-than-anticipated exports and an increase in cotton production. The world cotton price situation continued to reflect the rebuilding of cotton stocks by registering continued declines in both cash and futures markets. According to Cotlook, Ltd.'s A-Index of Northern European price quotations, prices declined steeply throughout January. The A-Index began the month at 61.21 cents per pound on January 2, but fell to 57.53 cents per pound by January 30. Cotton futures prices on the New York Cotton Exchange, as measured by the March contract, also fell steeply--from 59.58 cents per pount on January 2 to 53.06 cents on January 30. Several international developments are highlighted this month including: reports that India will import as much as 500,000 bales in MY 1991/92; the resolution of the intellectual property rights issue with China, which could have threatened U.S. cotton exports to that country; Pakistan's larger-than-anticipated crop that led to an increased export estimate; reduced cotton exports for the former Soviet Union; and increased export commitments of U.S. cotton to Egypt. [Table 1 Omitted]

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