Executive summary – world cotton production estimated to exceed consumption for market year 1991-92; world exports estimated to rise from previous year; prices fall through November 1991; futures prices drop for December 1991 throu

Executive summary – world cotton production estimated to exceed consumption for market year 1991-92; world exports estimated to rise from previous year; prices fall through November 1991; futures prices drop for December 1991 through March 1992 contracts – U.S. Dept. of Agriculture, Foreign Agricultural Service report

The world outlook for marketing year (MY) 1991/92 continues to indicate production will exceed consumption, resulting in a further rebuilding of world cotton stocks. This month’s world production forecast of 90.5 million bales is 1 percent below last month’s projection, but 4 percent above the 1990/91 level. For crop year 1991/92, the downward adjustment in the world crop estimate is mainly due to lower estimated output in Australia, India, and Paraguay. In the United States, the MY 1991/92 crop estimate was lowered to 18 million bales to reflect current harvest data. On the demand side, world consumption for MY 1991/92 is projected at 86.5 million bales, 1 percent lower than last month’s forecast, but up 1 percent from last season’s estimate. The largest downward adjustments for MY 1991/92 were made in the consumption estimates for Brazil, China, India, and Indonesia. The reasons for the downward adjustments range from economic conditions (both recession and inflation) to industry restructuring and high domestic cotton prices. Turning to trade, world exports for MY 1991/92 are forecast at 23.3 million bales, 3 percent lower than last month’s projection, but slightly higher than the estimated level for MY 1990/91. The downward adjustment in the world export estimate for MY 1991/92 is primarily due to a decrease in the export estimates for Australia, India, Paraguay, and the Soviet Union. Since August, information for MY 1991/92 continues to point to a rebuilding of world cotton stocks. Thus, this month’s world stock estimate of 31.9 million bales, is up 1 percent from last month’s estimate and 14 percent above the estimated level for MY 1990/91. International cotton prices continued to fall throughout November. The Cotton Outlook A-Index of northern European cotton quotes fell from 65.85 cents per pound on November 1 to 61.85 cents on December 5. The Memphis Territory quote also fell sharply, from 68.25 cents per pound on November 1 to 64.75 cents on December 5. New York futures prices fell for both December 1991 and March 1992 contracts on November 22 when the Secretary used his full discretionary authority to lower the Adjusted World Price. On that date, the December contract fell the limit from 58.50 cents per pound to 56.50 cents. The March contract also fell the limit from 60.78 cents per pound to 58.78 cents for the same period of time. International developments highlighted this month include:

— Textile mills in Japan going bankrupt — Consumption and exports in India restrained by smaller 1991/92 cotton crop — Chinese Government attempts to curtail excess cotton yarn production — Tight monetary policy in Indonesia adversely affects textile consumption — Civil war disrupts Yugoslavia’s cotton imports and consumption — Export outlook for Cote d’Ivoire remains strong — Drought and economic conditions in Brazil negatively impact production

and consumption — Cotton exports in Paraguay for MY 1991/92 lowered due to smaller crop

COPYRIGHT 1991 U.S. Department of Agriculture

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