The latest U.S. Department of Agriculture estimates indicate that total U.S. cotton textile and apparel trade was virtually unchanged during the first half of 2017, compared with the corresponding period of 2016.
While U.S. cotton product imports totaled the equivalent of nearly 8.6 million 480-pound bales of raw cotton during January-June 2017—compared with 8.5 million bales for the first 6 months of 2016—cotton product exports decreased 3 percent to nearly 1.8 million bale-equivalents. Based on these volumes, the cotton textile and apparel trade deficit was marginally higher at 6.8 million bale-equivalents.
U.S. cotton product imports remain concentrated among a handful of suppliers, with the top five countries accounting for two-thirds of the total during the first half of 2017. China continues as the leading supplier of U.S. product imports despite gains seen among other countries.
During the first half of 2017, China accounted for 30 percent of the total, with India contributing 12 percent. In addition, Pakistan, Vietnam, and Bangladesh each provided an additional 8 percent of the mid-year total.
Domestic Outlook
2017 U.S. Cotton Production Forecast Higher in August
According to USDA’s first survey-based forecast of the 2017 crop, U.S. cotton production is estimated at 20.5 million bales, compared with July’s projection of 19 million bales and last season’s final estimate of nearly 17.2 million bales. The 2017 production increase of approximately 3.4 million bales is the result of higher area and yield estimates compared with 2016.
Based on the August forecast, total cotton planted area in 2017 is estimated at nearly 12.1 million acres, the same as indicated in the June Acreage report but 2 million acres (20 percent) above 2016. Harvested area is projected at 11.1 million acres this season, implying an abandonment rate of 8 percent, which is slightly above the reported 5.5 percent in 2016. The U.S. yield is forecast at 892 pounds per harvested acre this season, about 3 percent above 2016 and matching the record of 2012.
Upland cotton production in 2017 is projected at nearly 19.8 million bales, about 3.2 million bales above 2016. During the past 20 years, the August upland production forecast was above the final estimate 12 times and below it 8 times. Past differences between the August forecast and the final production estimates indicate that chances are two out of three for the 2017 upland crop to range between 18.3 and 21.2 million bales.
Compared with 2016, U.S. upland production is expected higher in each Cotton Belt region in 2017 (fig. 2). Based on the August estimates, the 2017 Southwest crop is projected to reach a record 9.6 million bales, nearly 850,000 bales above 2016.
Higher area in 2017 is responsible for the estimated output, as yield is slightly below the previous season. Abandonment is forecast at 13 percent for the region in 2017, above the previous 2 seasons but below the 5-year average. Yield is projected at 745 pounds per harvested acre, the third highest on record.
In the Southeast, 2017 production is projected to reach 5.2 million bales or nearly 27 percent of the U.S. cotton crop. While area in the region is expected above the 5-year average, production and yield are forecast at 5-year highs.
The Delta crop is forecast to reach 4 million bales this season—the largest production since 2012—and accounts for 20 percent of U.S. cotton production. Area increased for the second consecutive season in the Delta, and the yield is expected to surpass the 5-year average and reach 1,077 pounds per harvested acre.
For the West, upland production is forecast at 905,000 bales in 2017, 200,000 bales above last season and the largest crop in 5 years. An area increase this season more than offsets a yield estimate (1,503 pounds per harvested acre) that is slightly below average.
Likewise, extra-long staple (ELS) cotton production—grown primarily in the West—is expected to expand in 2017, reaching 770,000 bales and the highest since 2012. Planted area and yield are projected to increase this season to 252,000 acres and 1,495 pounds per harvested acre, respectively.
U.S. cotton crop development is behind last season and the 5-year average. As of August 6, 58 percent of the cotton area was setting bolls, compared with 68 percent for both 2016 and the 2012-16 average. A number of States—including Alabama, California, Georgia, and Texas—are contributing to the late development this season, while Missouri and Tennessee are considerably ahead of their respective averages.
Meanwhile, 2017 U.S. cotton crop conditions are above those for 2016 but slightly below the 2015 level. As of August 6, 57 percent of the crop area was rated “good” or “excellent,” compared with 48 percent last year, while 14 percent was rated “poor” or “very poor,” compared with 16 percent a year earlier.
The recent increase in U.S. crop conditions was largely attributable to improvements reported in Texas and the Southeastern States.
U.S. Cotton Demand and Stocks Revised in August
U.S. cotton demand for 2017/18 and 2016/17 were revised this month based on recently released data. For 2017/18, demand is projected at 17.55 million bales, nearly 4 percent above the July forecast but 3 percent below the adjusted 2016/17 demand of nearly 18.2 million bales.
Larger supplies from a higher August production forecast provide an opportunity for U.S. cotton shipments in 2017/18; however, expanded production around the world this season will likely provide increased competition.
For 2017/18, U.S. cotton exports are forecast at 14.2 million bales, 700,000 bales above last month’s forecast but 700,000 bales below the revised 2016/17 export estimate. Final marketing year data for 2016/17 was reported in USDA’s U.S. Export Sales report on August 10.
Consequently, the 2017/18 U.S. share of global trade is forecast to decline from 2016/17’s 40 percent to about 38.5 percent this season, but will remain above the 5-year average of 30 percent. Meanwhile, U.S. cotton mill use was reduced 50,000 bales each for 2016/17 and 2017/18 to 3.25 and 3.35 million bales, respectively, as U.S. mill activity continues at a historically low level.
With U.S. cotton production projected to exceed demand in 2017/18, ending stocks are forecast to rise considerably this season to 5.8 million bales, compared with 2016/17’s estimate of 2.8 million bales. As a result, this season’s stocks-to-use ratio is expected to more than double to 33 percent, the highest since 2008/09 when the ratio approached 38 percent.
As of August, the 2017/18 upland farm price is forecast to range between 55 and 67 cents per pound. The midpoint of 61 cents per pound is 7 cents below the 2016/17 estimate but near the 2015/16 price.
Source: http://agfax.com/2017/08/15/cotton-outlook-u-s-cotton-textile-and-apparel-trade-unchanged-in-2017/