World cotton situation undergoes big change

The last five to 10 years have brought significant changes in the U.S. and global cotton situation. Here are a few examples:

As everyone knows, we're seeing shifts in acreage in the United States. A recent report from USDA noted that in the 1980s, nearly 70 percent of U.S. cotton area was located in the Southwest and West, where land and water were plentiful. However, recent water concerns in these regions and the success of the boll weevil eradication program in the Southeast have led to dramatic gains in area and production there.

The share of total upland cotton area in the Southeast has tripled since the 1980s, according to USDA. As a result, the share of U.S. cotton area in the Southwest and West has declined from about 70 percent in 1980 to less than 50 percent in 2000.

Since 1996, Brazil has had the largest production gain of any major cotton-producing country, and its expected crop this year of 3.4 million bales is more than two and a half times the 1996 level. The cotton crop in Brazil is forecast 17 percent above the previous year.

Although the size of Brazil's crop is similar to 1990-91 levels, changes to the industry over the past decade have been substantial, USDA noted. Brazil's economic reforms during the 1990's have reduced harvests in the states of Parana and Sao Paulo - where cotton is traditionally hand picked - during the first half of the decade, but there has been a surge in mechanized crop production in Mato Grosso and northern Bahia since 1996.

China's rebound in cotton consumption during 1999-2000 is also worth mentioning. Over the previous seven years, a gradual decline had reduced its annual consumption by around 2.7 million bales. But this year, that decline was erased with a 3 million-bale increase.

The record consumption is expected to continue for another year, prompting the country to auction off about 5 million bales through the newly formed China National Cotton Exchange. Most came from government stocks. Those stocks, considered huge, have been hanging over the market and prices like a dark cloud for several years now.

On the other hand, cotton production is forecast slightly higher in China. The important question is whether rising consumption and falling stocks will mean larger imports. Currently, USDA expects China's imports to match its exports and any change could have instant ramifications.

There is the trend toward increased textile production and apparel exports by lower-income countries and the associated decline of cotton fiber use by textile mills in wealthier markets.

In 1990, Japan, the European Union, South Korea, Taiwan, and Hong Kong accounted for 17 percent of world cotton fiber consumption. By 1999-2000, their share had dropped to 10 percent.

Among wealthier countries, the United States is an exception to the general shift away from cotton fiber use for domestic textile production, with output climbing by 16 percent between 1990 and 2000.

The expanding U.S. economy and consumer promotion contributed to the gain by driving up consumer demand for cotton products by 60 percent in the 1990s.

On the other hand, nearly 60 percent of the 20 million-bale U.S. demand for clothing and other products is met by imports. But free trade with Canada and Mexico is providing new opportunities for U.S. textile exports, sustaining textile production despite rising imports, USDA says.

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