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Cotton Economic Report NCC Mid-Year Board Meeting August 17-19, 2005 Prepared by: Economic Services National Cotton Council. Macroeconomic Situation. Global economic growth for ’05 forecasts at 4% Down from last year’s level of 5.1% - PowerPoint PPT Presentation

Text of Macroeconomic Situation

  • Cotton Economic Report

    NCC Mid-Year Board MeetingAugust 17-19, 2005

    Prepared by:Economic ServicesNational Cotton Council

  • Macroeconomic SituationGlobal economic growth for 05 forecasts at 4%Down from last years level of 5.1%

    US economy grew at 3.8% in Q1 and preliminary estimate for Q2 is 3.4%Unemployment at 5%, below year-ago level

    Oil prices at record levels

  • U.S. Crude Oil Spot Price

  • U.S. #2 Diesel, Gulf Coast

  • U.S. Cotton Production & Use

  • 2005 U.S. Cotton AcreageSoutheast2,956 3,008 1.8Mid-South 3,430 3,880 13.1 Southwest6,155 6,120 -0.6 West868 795 -8.4 ALL UPLAND 13,409 13,803 2.9 ALL ELS250 266 6.6 ALL COTTON13,659 14,069 3.020042005% Actual Estimate ChangeThousand Acres

  • U.S. Cotton Crop ConditionIndex Based on Ratings10-Yr Hi10-Yr Lo03 (730 #/ac)04 (855 #/ac)05 (USDA @ 748 #/ac)

  • U.S. Cotton Supply

  • U.S. Cotton Demand

  • U.S. Cotton Retail Consumption20052004

  • U.S. Cotton Textile Imports from China20052004

  • Active China Safeguards

    Description% Filled As Of% Change from Year AgoJan. June (Official)Cotton, Wool, & MMF Socks100%May 12,200581%Cotton Knit Shirts100%July 5, 20051606%Cotton Trousers100%July 8, 20051765%Cotton & MMF Underwear100%July 5, 2005515%Combed Cotton Yarn19.9%Aug. 8, 200526%M&B Cotton & MMF Shirts, Not Knit95.6%Aug. 8, 2005343%MMF Knit Shirts100%July 12, 2005489%MMF Trousers100%Aug. 3, 2005369%

  • U.S. Cotton Textile Imports from ROW20052004

  • U.S. Cotton Mill Use20052004

  • U.S. Cotton Mill Use

  • The Intl Market & Trade

  • Foreign Cotton Production & Use

  • Change in 05 Production

  • Change in 05 Mill Use

  • World Cotton TradeImports by Top-10 US Cust.Total Imports

  • World Cotton TradeTotal ImportsUS ExportsImports by Top-10 US Cust.

  • Ending Stocks & Prices

  • U.S. Cotton Ending Stocks

  • World Cotton Ending Stocks

  • Cotton Price

  • SummarySmaller world crop But not as small as originally thoughtDemand picture looks optimisticShould exceed productionCotton prices relative to polyesterChina expected to purchase record amount from world marketStocks continue to hang over the market

  • MerchantsGinnersCottonseed

    2867161313286716131329If USDAs acreage projections turn out to be on target, NCC estimates a supply of cotton for the 2005 marketing year at about 27 million bales.This supply would be comprised of beginning stocks of beginning stocks of 7.5 million bales and production totaling 19.5 million.Of course the bright spot for US cotton in recent years has been an expanding export market.While US mill consumption of cotton has steadily declined since 1997, world cotton consumption has experienced steady growth, with world consumption projected to reach almost 106 million bales this marketing year.In contrast, world production, after two years of strong growth, is expected to fall, leaving a gap of some 19 million bales between world consumption and world production. This would suggest a significant drawdown of world stocks and a much needed export opportunity for US cotton.As noted earlier, world cotton stocks are projected to fall.

    Some of the reduction will occur in US stocks; a small reduction is seen in Chinas stocks; but most of it will occur in the rest of the world.

    A fall in stock levels and the stocks-to-use ratio generally suggests prospects for rising prices.As noted earlier, world cotton stocks are projected to fall.

    Some of the reduction will occur in US stocks; a small reduction is seen in Chinas stocks; but most of it will occur in the rest of the world.

    A fall in stock levels and the stocks-to-use ratio generally suggests prospects for rising prices.2867161313