USDA: Production to Rise Significantly

The U.S. 2010/11 cotton projections include higher production, domestic mill use, exports and ending stocks compared with June, USDA said on July 9.

• Production of 18.3 million bales was raised nearly 10 percent from the June estimate due to higher planted area – as reported in the June 30 Acreage report – combined with lower than expected abandonment and a higher average yield per harvested acre. The projected abandonment rate and yield have been adjusted to reflect early July crop conditions in the Southwest, which are the most favorable since 1994/95.
• Domestic mill use was raised marginally on stronger recent activity.
• Exports were raised sharply due to the projected larger available supply and strong foreign demand.
• While ending stocks of 3.5 million bales are 700,000 bales above the June estimate, the stocks-to-use ratio of 20 percent remains relatively tight. But it is higher than 1994/95 (12.86 percent), 1995/06 (14.24) and what is now projected for the marketing year that ends July 31 (18.53 percent)

Worldwide:

• Higher production will be mostly offset by lower beginning stocks. Beginning stocks were reduced mainly in Pakistan, due to adjustments in production beginning in 2007/08, reflecting reduced estimates of average bale weights. Production for 2010/11 was raised in the United States, Brazil, and Uzbekistan, but lowered in Pakistan.
• World consumption is raised slightly based on increases for Turkey and the United States.
• World trade is supported by projected higher import demand by Pakistan, Turkey and China.
• World stocks are marginally above the June projection and the world stocks-to-use ratio is the smallest since 1994/95.