Tighter World Cotton Supply

WASHINGTON - Jun 10/08 - SNS -- International cotton production estimates for 2008-09 are down from last month, according to the latest forecasts from the USDA's World Agricultural Outlook Board, with production of 116.4 million bales down 1.6 million bales from last month and 3.6 million bales from 2007-08.

USDA's first projections by country show year-to-year declines for the United States, Brazil, Turkey, Central Asia, and Egypt, partially offset by increases for India, the African Franc Zone, Australia, and Pakistan. World ending stocks of 54.1 million bales are reduced about 1.5 million from last month and 12.5% from the beginning level.

The U.S. 2008-09 supply and demand forecasts include an increase in beginning stocks which is more than offset by higher exports, resulting in slightly lower ending stocks relative to last month. Beginning stocks are raised 300,000 bales, reflecting a lower export estimate for 2007-08. Production and domestic mill use for 2008-09 are unchanged. The export projection is raised 500,000 bales to 15.0 million, mainly due to lower foreign production. Accordingly, ending stocks are reduced to 5.4 million bales, equal to 28% of total use.

The U.S. June estimates include a forecast range of 58.0 to 72.0 cents per pound for the 2008-09 upland cotton weighted average price received by farmers and an estimate of 57 cents for 2007-08. These prices are included pursuant to the enactment of the Food, Conservation, and Energy Act of 2008, which removed a 79-year-old prohibition on the publication of cotton price forecasts by USDA. The increase for 2008-09 compared with 2007-08 is based mainly on the projected decline in U.S. and world cotton supplies and ending stocks.

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