Smaller World Cotton Supply

WASHINGTON - Jul 11/08 - SNS -- The world 2008-09 projections include lower beginning stocks, production, offtake, and ending stocks, according to the latest supply and demand ourlooks from the USDA's World Agricultural Outlook Board.

World production is reduced about 1.5 million bales to 114.94 million due mainly to reductions in India and the United States. The India revision is based on lower reported planted area. A decrease of nearly 1.3 million bales in world consumption largely offsets the production decline. Consumption is reduced mainly in China, India, and Turkey, due to recent indications of slower growth due to sluggish world economic conditions. World ending stocks are reduced about 1.6% from last month and continue to show a significant decline of about 13% from the beginning level.

The U.S. 2008-09 cotton projections include lower production and exports, resulting in a net reduction of 100,000 bales in ending stocks compared with last month. Production is reduced 500,000 bales based on slightly lower planted area in the June Acreage survey and slightly higher abandonment reflecting conditions in Texas. Domestic mill use is raised 100,000 bales to 4.4 million.

Despite the slowing economy, several factors are supporting domestic mill use, including higher overseas transportation costs, the weaker dollar, and the payments to mills included in the Food, Conservation, and Energy Act of 2008. The export forecast is reduced 500,000 bales due to lower U.S. supplies and lower foreign import demand. The forecast for the average price received by farmers is raised 1 cent on each end of the range.

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