World Cotton Supply, Use Declining

WASHINGTON - Jul 12/06 - SNS -- World cotton production will likely end up smaller than expected in 2006-07, but that drop is offset by a reduction in forecast usage levels, according to the latest supply and demand outlook report from the USDA's World Agricultural Outlook Board.

The world cotton 2006-07 balance sheet has nearly offsetting production and consumption. World production is reduced mainly in the United States and Australia, while consumption is reduced in India, the United States, Korea, and Thailand. World trade is virtually unchanged and the world stocks forecast is raised less than 1%.

For 2005-06, marginal adjustments in U.S. domestic mill use and exports, which reflect recent activity, reduce estimated ending stocks 100,000 bales to 6.5 million.

This month's 2006-07 U.S. cotton forecasts include offsetting reductions in supply and use, which leave ending stocks unchanged. U.S. production is reduced marginally to 20.5 million bales, despite larger planted area in the June 30 Acreage report, as drought is expected to raise abandonment in the Southwest region, well above the historical average. Domestic mill use is reduced to 5.5 million bales based on recent lower consumption levels. Exports are reduced to 16.6 million, consistent with the lower available supply.

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