The latest U.S. Department of Agriculture (USDA) cotton estimates for 2017/18 project global cotton ending stocks to rise 3 percent from the previous season’s 5-year low to 92.4 million bales. With world production expected to exceed consumption, global stocks are forecast to increase 2.8 million bales by season’s end, as higher stocks outside of China in 2017/18 more than offset China’s anticipated decrease.
Domestic Outlook
2017 U.S. Cotton Production Estimate Lowered in October
According to USDA’s October Crop Production report, 2017 U.S. cotton production is estimated at 21.1 million bales, 3 percent below last month’s forecast but still 4 million bales above the 2016 crop. Both harvested area and yield were reduced this month, lowering the U.S. production estimate by 640,000 bales.
The U.S. upland cotton crop is forecast at 20.4 million bales, well above last season and one of the largest upland crops on record. During the previous 20 years, the October estimate has been below final production 11 times and above it 8 times; the October forecast equaled final production in 1 year.
Past differences between the October estimate and final production indicate that chances are two out of three that the 2017 U.S. upland cotton crop will range between 19.4 million and 21.4 million bales.
Upland cotton production is forecast to increase in each of the Cotton Belt regions this season. In the Southwest, the 2017 upland crop is forecast at nearly 10.2 million bales, 1.4 million bales above last season as the largest harvested area since 1981 is projected to more than offset a slight decrease in yield.
Southwest abandonment is expected to reach 15 percent, nearly double the rate in 2016 but below the 5-year average of 25 percent. The Southwest yield is estimated at 757 pounds per harvested acre in 2017, compared with last season’s 764 pounds.
In the Southeast, 2017 cotton production is projected at 4.8 million bales, 1 million bales above each of the last two seasons as planted area rebounded to match the 5year average of 2.5 million acres.
Meanwhile, the region’s yield is estimated at 928 pounds per harvested acre, which is above 2016 and the 5-year average, despite losses associated with the remnants of Hurricane Irma, which passed through the Southeast in September.
In the Delta, the cotton crop is forecast at 4.4 million bales, the largest since 2011 as area expanded to a 5-year high and yield is projected near the record set in 2014. Cotton area harvested in 2017 is estimated at 1.9 million acres, 500,000 above the 5-year average. The yield is also expected to improve, reaching 1,112 pounds per harvested acre, the second-highest on record.
In the West, the upland cotton crop is forecast at 953,000 bales in 2017, up from last season and the highest in 5 years. Additional area this season more than offset a decrease in yield, which is forecast at 1,510 pounds per harvested acre and near the 5-year average.
The extra-long staple (ELS) cotton crop—grown mainly in the West—is forecast at 727,000 bales in 2017, the highest since 2012; ELS area is at its highest since 2011, while the yield of 1,441 pounds per harvested acre is similar to the average over the last 4 seasons.
Total 2017 U.S. cotton harvested area is estimated at 11.4 million acres, compared with 9.5 million acres last season. The national yield is projected at 889 pounds per harvested acre, slightly below the record set in 2012. For current production estimates by State.
2017/18 U.S. Demand and Stock Estimates Revised
The U.S. cotton demand estimate for 2017/18 was lowered to 17.85 million bales in October, 400,000 bales below the September projection and about 300,000 bales below 2016/17. U.S. cotton exports accounted for the decrease this month and are projected at 14.5 million bales in 2017/18.
The lower estimate this month is attributable to the lower U.S. crop estimate and expectations for competition from other major cotton exporters. Nevertheless, U.S. cotton exports in 2017/18 are projected at the third highest on record, behind only 2005/06 and last season. The U.S. share of global trade is forecast at 38 percent in 2017/18, down from 40 percent last season but above the previous 5 years.
While the U.S. demand projection was reduced in October, the lower U.S. production estimate more than offset the reduction in exports; as a result, the U.S. ending stocks estimate declined this month to 5.8 million bales. However, stocks are expected to more than double in 2017/18, reaching their highest since 2008/09.
The stocks-to-use ratio is forecast at 32.5 percent, compared with a relatively low 15 percent in 2016/17. Based on the latest supply and demand estimates and recent prices, the average upland cotton farm price is projected to range between 55 cents and 65 cents per pound in 2017/18.
The midpoint of 60 cents would represent an 8-cent decline from last season’s estimate of 68 cents per pound and would be the lowest in 9 years.
