USDA estimates for 2015/16 project global cotton production at 108.7 million bales, nearly 9 percent below the previous season and the lowest since 2009/10. The three largest cotton-producing countries remain India, China, and the United States; in 2015/16, these countries are expected to account for 63 percent of world production, slightly below last seasonΆs share. However, the latest projection indicates that India will surpass China as the top producer this season.

IndiaΆs ascension to the worldΆs leading-producer status largely results from having the most cotton area. Harvested area in India is expected to account for nearly 38 percent of the global total in 2015/16, and is more than three times that of either China or the United States.

While yields in India remain well below the world average, India is forecast to produce 29 million bales in 2015/16–27 percent of the global cotton crop. India surpassed the United States in cotton production in 2006/07, and is poised to overtake China this season as area declines in China for the fourth consecutive season.

Domestic Outlook

2015 U.S. Cotton Crop Estimate Higher in September

According to USDAΆs September Crop Production report, the 2015 U.S. cotton crop is forecast at 13.4 million bales, 346,000 bales above last monthΆs forecast but 2.9 million bales below 2014Άs production. SeptemberΆs projection is a 2.6-percent increase from August, resulting from an expected increase in harvested area which was partially offset by a lower yield.

Total 2015 U.S. cotton planted area was reduced nearly 4 percent in September based on acreage reported to USDAΆs Farm Service Agency (FSA). Planted area was estimated at about 8.6 million acres by the National Agricultural Statistics Service (NASS), while harvested area was forecast at 8.2 million acres–up from the 7.9-million-acre forecast in August.

As a result, abandonment is projected at 4.5 percent, compared with 15 percent in 2014. The national yield is projected at 789 pounds per harvested acre, 49 pounds below 2014 and the lowest since a similar yield was recorded in 2011.

U.S. upland production is forecast at approximately 13 million bales, 17.5 percent below the 2014 crop and 2.4 million bales below the 5-year average. During the previous 20 years, the September upland cotton forecast was below the final estimate 11 times and above it 9 times. Past differences between the September forecast and the final upland estimate indicate that chances are two out of three that 2015 production will range between 12.1 and 13.8 million bales.

Compared with last season, 2015 upland cotton production is lower in each region of the Cotton Belt. Even with an increase in the September forecast, the Southwest upland crop is still projected below 2014. At 6.1 million bales, the 2015 crop is only 400,000 bales below a year ago despite the lowest Southwest planted area since 1989.

Beneficial rainfall this growing season has kept abandonment expectations low; abandonment for the Southwest is estimated at only 6 percent, compared with the 5-year average of 36 percent. As a result, harvested area is projected near that of last season while yield is estimated at 618 pounds per harvested acre, compared with the 5-year average of 642 pounds.

In the Southeast, cotton production is forecast at 4.2 million bales in 2015, 1 million bales below last season. While 2015 area–2.2 million acres–is at its lowest since 2009, the Southeast yield of 917 pounds per harvested acre is the third highest on record. In the Delta, the 2015 cotton crop is only expected to reach 2.2 million bales, the smallest output since 1983.

Favorable alternatives reduced cotton area by one-third in 2015 to less than 1 million acres, a record low. Meanwhile, the regionΆs yield–1,131 pounds per harvested acre–is forecast to reach a record for the fourth consecutive season.

In the West, the upland crop is projected at 490,000 bales, 36 percent below 2014, as area declines for the fourth year in a row. The 2015 yield is forecast at 1,479 pounds per harvested acre, below 2014Άs record but near the 5-year average. The extra-long staple (ELS) crop remains concentrated in the West, where over 90 percent of the ELS production is grown. Lower area and yield in 2015 are forecast to result in a total ELS crop of 451,000 bales, compared with 566,000 bales in 2014. U.S. cotton crop development continues to lag last season and the 5-year average.

As of September 13th, 46 percent of the area had bolls opening, compared with 49 percent a year ago and the 2010-14 average of 51 percent. In contrast, U.S. cotton crop conditions remain above the last several seasons. As of September 13th, 52 percent of the 2015 crop area was rated “good” or “excellent,” compared with 49 percent last year, while 13 percent was rated “poor” or “very poor,” compared with 18 percent a year ago.

Demand, Stock, and Price Estimates Revised

The 2015/16 U.S. cotton export forecast was raised slightly this month as a result of the larger U.S. crop and the expected competitiveness of U.S. cotton this season. U.S. cotton exports are projected at 10.2 million bales, 200,000 bales above the August forecast but still the lowest export estimate since 2000/01.

As a share of world trade, U.S. cotton exports are projected to account for about 30 percent of global shipments in 2015/16, a share that is between that of 2013/14 and 2014/15. U.S. cotton mill use in 2015/16 is forecast at 3.7 million bales, unchanged from last month but 3.5 percent above the revised 2014/15 estimate.

U.S. 2015/16 cotton ending stocks are now projected at 3.2 million bales, 500,000 bales below last seasonΆs estimate. The expected stocks-to-use ratio of 23 percent at seasonΆs end is slightly below 2014/15Άs 25 percent. Based on the current supply and demand estimates, the 2015/16 upland cotton farm price is forecast to range between 56 cents and 68 cents per pound. The midpoint of 62 cents per pound is slightly above last seasonΆs estimate of 60.5 cents per pound. The final 2014/15 farm price will be released in October.

For 2014/15, demand estimates were revised up slightly in September to reflect final data. U.S. exports were adjusted to 11.25 million bales, nearly 7 percent above 2013/14. Cotton mill use reached about 3.6 million bales in 2014/15, marginally above the previous season. Based on the supply and demand estimates and stocks data collected by FSA and NASS, U.S. cotton ending stocks for 2014/15 are estimated at 3.7 million bales. For more details on the calculation of 2014/15 ending stocks, see the Highlight section in this report.