2010 cotton crop forecast higher in September (USA)

According to USDA’s September Crop Production report, the 2010 U.S. cotton crop is projected at 18.8 million bales, up 300,000 bales from last month’s forecast and nearly 6.7 million bales above the 2009 production. Higher area and nearrecord low abandonment have contributed to the year-over-year gain. In addition, the third highest national yield is expected to boost the crop to its largest in 3 years.

The U.S. upland crop is estimated at 18.3 million bales, nearly 6.6 million bales above last season and 1 million bales above the 5-year average. During the previous 20 years, the September forecast has been below final cotton production 12 times and above 8 times. Past differences between the September forecast and the final production estimate indicate that chances are 2 out of 3 that the 2010 U.S. upland crop will range between 17.0 and 19.7 million bales.

Compared with last season, 2010 upland cotton production is forecast higher for each region of the Cotton Belt (fig. 2). In the Southwest, a record production is forecast at 9.3 million bales, resulting from the largest harvested area in 5 years and the second highest yield in the region.

For the Southeast region, the cotton crop is estimated at 4.2 million bales—slightly above the 5-year average—as higher area is expected to more than offset a lower yield in 2010. In the Delta, area rebounded after 4 consecutive years of decline and, with the second highest yield on record, Delta production is forecast at 3.7 million bales in 2010, the largest there in 3 years.

In the West, the 2010 upland cotton area and production are projected to rise for the first time in 6 seasons despite an expected decline in yield from last year. In addition, the extra-long staple (ELS) crop is largely grown in the West region, mainly California. ELS production is forecast at 498,000 bales, 24 percent above the 2009 crop, with California expected to account for 90 percent of the total.

Total 2010 cotton planted area in the United States was estimated at 11.0 million acres, the highest since 2006; meanwhile, harvested area is projected at nearly 10.8 million acres, also the largest in 4 years. Abandonment, estimated at 2.4 percent, is well below average and the lowest in over 60 years. The national yield is forecast at 839 pounds per harvested acre, 62 pounds above last season but 40 pounds below the 2007 record. For current production estimates by State, see table 11.

Demand and Stock Estimates Revised
For the 2009/10 season, U.S. mill use and exports were each raised slightly based on the latest data. Mill use was increased to 3.45 million bales based on Department of Commerce data, while the season ending U.S. Exports Sales report indicated shipments for 2009/10 were 12.04 million bales. In addition, ending stocks were reduced to 3.0 million bales based on the preliminary end of season Census Bureau stock data.

For 2010/11, demand was also increased in September with stocks declining further. U.S. mill use was increased to 3.6 million bales based on early season indications that suggest U.S. mill use could rise to the level experienced in 2008/09. At the same time, the U.S. export forecast was raised 500,000 bales to 15.5 million for 2010/11.

India’s policy to limit exports, the flood effects in Pakistan, and China’s anticipated need for cotton imports are likely to benefit U.S. shipments of cotton this season. With foreign import demand and mill use rising to its highest in 3 years, foreign ending stocks are forecast at their lowest level since 2002/03. At 15.5 million bales, the current U.S. export forecast would be second only to 2005/06’s record estimate of nearly 17.7 million bales.

As a result of this month’s adjustments, the 2010/11 ending stock estimate is 2.7 million bales, 300,000 bales below last season. In addition, the stocks-to-use ratio is forecast to fall from 19 percent to 14 percent by season’s end. Both the stock level and ratio are their lowest since 1995/96. As a result, cotton prices have remained relatively high. The 2010/11 average upland cotton farm price is now forecast to range between 63 and 77 cents per pound. The midpoint of 70 cents would represent a 12-percent increase from last season.

U.S. Textile Trade and Trade Deficit expand in First Half of 2010
U.S. textile trade grew during the first half of 2010, compared with a year ago. Total imports during the first 6 months of 2010 reached nearly 8.4 billion (raw-fiber equivalent) pounds, 15 percent above a year ago. During the same period, textile exports expanded 21 percent to 1.8 billion pounds. As a result, the textile trade deficit for January-June 2010 increased to nearly 6.6 billion pounds or 14 percent above the corresponding period in 2009.

Cotton products continue to account for the majority of U.S. textile and apparel trade. During the first half of 2010, cotton product imports approached 4.6 billion pounds, up from 4.0 billion during the first half of 2009. Similarly, cotton textile exports increased to 870 million pounds through June 2010, compared with 736 million pounds a year earlier. Consequently, the cotton product trade deficit for the first 6 months of 2010 totaled 3.7 billion pounds, or 14 percent more than in 2009.

Meanwhile, the leading trading partners with the United States continue to account for an increased share of the U.S. cotton textile and apparel market during the first half of 2010. For U.S. imports, the top five suppliers combined for nearly 64 percent of the total during January-June 2010, compared with 61 percent a year earlier and 62 percent for calendar year 2009 (fig. 3). While each of the top five suppliers’ volume grew, their shares were mixed with only China showing appreciable growth during the first half of 2010.

For U.S. cotton product exports, the top five destinations through the first 6 months of 2010 accounted for over 85 percent of the total, slightly below the corresponding period in 2009 but similar to the entire calendar year. Of the top five export destinations, quantity increases were noted for Honduras, Mexico, and the Dominican Republic versus a year ago.