Mexico Decreases Cotton Planted Area 50%

MEXICO CITY - May 30/02 - STAT -- Poor international prices and government support have caused Mexico's planted area for cotton to drop 50%, causing the USDA to project production of only 188,000 bales, the lowest in eight years.

Production for 2000/2002 was 432,000 bales, meaning production will decrease 56%. This is the lowest production level since 1993, when a large white fly outbreak in the northwestern part of the country was one of the reasons for the terrible crop that year. While both Mexican government support and world prices continue to be low, producers are also finding that the lack of available financing and dry weather in some parts of the north are hampering their planting plans.

This is particularly true for producers in Sonora, where the forecast for planted area has been reduced from 13,000 hectares in 2001/2002 to only 3,000 hectares for the crop now being planted. In Sinaloa, growers planted alternative crops with less risk and "relatively" higher profits, such as corn. Meanwhile, in Tamaulipas, the lack of water availability and early-season drought conditions prevented growers from planting.

For 2002/2003, consumption is expected to decline slightly to 1.9 million bales. The decrease in consumption is attributed to the decline in Mexican textile exports (due to the slowdown in the U.S. economy and relatively high cost of production), a strong peso and heavy apparel imports, mainly from Asian countries. Moreover, Mexican cotton mills' use continues to stagnate, despite recent decreases in cotton prices.

Mexico continues to be the most important export market for the U.S. cotton, sourcing 90% of its foreign cotton from the United States. For 2002/2003, however, Mexico's imports are forecast to drop 3% as consumption is also decreasing almost 50,000 bales.