The Cotton situation

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Material Information

Title:
The Cotton situation
Physical Description:
v. : ; 27 cm.
Language:
English
Creator:
United States -- Dept. of Agriculture. -- Economic Research Service
United States -- Agricultural Marketing Service
United States -- Bureau of Agricultural Economics
Publisher:
Economic Research Service, U. S. Dept. of Agriculture.
Place of Publication:
Washington, D.C.
Frequency:
five no. a year
bimonthly[ former may 1961-]
irregular[ former 1945/46-mar. 1961]
monthly[ former 1936-1944]
quarterly
completely irregular

Subjects

Subjects / Keywords:
Cotton trade -- Statistics -- Periodicals   ( lcsh )
Cotton trade -- Periodicals   ( lcsh )
Genre:
federal government publication   ( marcgt )
statistics   ( marcgt )
periodical   ( marcgt )

Notes

Dates or Sequential Designation:
CS-1 (Nov. 1936) -
Dates or Sequential Designation:
Nov. 1936-Apr. 1975.
Dates or Sequential Designation:
Ceased publication in Apr. 1975.
Issuing Body:
Issued by: U.S. Bureau of Agricultural Economics, 1936-Oct. 1953; by: Agricultural Marketing Service, Nov. 1953-Mar. 1961; by: Dept. of Agriculture, Economic Research Service, May 1961-Apr. 1975.
Issuing Body:
Issues for 1936-Oct. 1953 published by the U. S. Bureau of Agricultural Economics; Nov. 1953-Mar. 1961 by the Agricultural Marketing Service; May 1961-Apr. 1975 by the Dept. of Agriculture, Economic Research Service.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 020142316
oclc - 01768374
lccn - 63045282
Classification:
lcc - HD9070.1 .C78
System ID:
AA00013000:00004

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World cotton prospects
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Cotton and wool situation
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Wool situation
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Cotton and wool situation
Related Items:
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Full Text

UNITED STATES DARTi INT OF AGRICULTURE
Bureau of Arriculturl Zco-or.ics
7.a shin.ton

OS-4 Februa.ry 1937

! i_------------------
TMi COTTON SITUATION
-----------------------------------

U DEPOSITORY Su-..ry

;ill r.ctivity rnd cotton consur.intion throughout the world continued

to show a further i::nroveraent frora the hir- levels of recent -.onths. Cotton

consu:r-tion in the United States in Jrnunty rnd in the 6 months Au-ast

through January wore record. hi-hs for these "arid.s. Production and srles

of cotton roods rre at ne. -ocnks in J.nnn and Chins. British mills are re-

ported to have the fullest order books at any ti-.:e since 1922. The Europern

cotton textile situation shows -ener-l ir-:rove ent.

Spot prices in the United St-tes nvera:oed 12.64 cents in Jan- -rj; co.--

pare; with 11.62 in January 1936, nnd were the hi-hest for any Jnnup.ry since

1930.

In spite of the l..r-e consurw-tion of rll cotton in foreign countries,

consumption of Arericran cotton has been rrunnin. s-.rller than in the correspond-

in, months of the 1935-36 season, and exports front the United States in the

first 6 months of the current season (Au.ust-J.nuary) were 14 -ercent less

than a year earlier. The export outlook for the ir'.:eCi.te future, however,

has been brightened so:.er-hlt. A lopn h?.s been nade by AN.erican b-nr:ors to

Italy for the purchase of A.ericnn cotton, a.d it is --os-ible that l.rf-r

quantities of cotton !..y be solid to Ger.nny on a bartcr b-sis. It is ,ro.nble

thit sore increase will t.ke lance in the sun-ly of "free" cotton in the

United St-.tes Ps a result of the oncrition of tl.e 'resent Co;.u.odity Credit

Cornorntion Plnn covering the rclense of loin cotton. Also, the hi. rnd

rising level of activity in the cotton textile industries of the world should

tend to further expand the der.-nd for nll kinds of ria cotton.






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The fourth n-nd se:-i-final esti-.-.te of the Indian Government places the

1936-37 cotton area at 25,050,000 acres co-.npared with 25,138,000 acres last

year. The crop is estir-ted at 4,987,000 bales, or 4 percent larger than

in 1935-36 and 12 percent ..tove avcrnse -roduction in the 10 years ended

1932-33. A further increase has taken place in acreage and production in

the Sind nrea, where a large portion of the cotton grown consists of American

varieties directly co,.ipetitive with cotton c:rown in the United States. Ginnincs

of cotton in Egypt un to. February 1 were 12 percent lrger than innings up

to the corresponding date lst year.


Domestic Prices Continue Strong

The -rice of Middling- 7/8" cotton .t the 10 :.;.-rkets averaged 12.84
cents in Janurry cornered with 11.62 cents in January 1936. With the ex-
ception of last July .-'hen the -ver-Co 10-narket price was 12.90 cents, this
is the hi-hect price for any month since September 1934 pnd the highest for
any Jnuary since the corresnondinr :.-onth in 1930. The average prices for
the weeks ended February 6, 13 and 20 were 13.01, 12.90 and 12.77 cents, re-
spectively. The su-)ly of A-ierican cotton in trade channels is now relatively
s'.all. The trade niso sea:.:s to be t.n'ing into account the fact that an agri-
cultural conservation -ro-r.'m., si-'ilar to that of 1936, r.ay be effective this
year, and thot the difficulties attendant u'on a very large increase in cotton
3creare Vithin the space of one season also nay serve to hold down cotton
acreage in the United States in 1937. Other factors which continue to be
i.nortant price-strengthening influences are the hi'h level of domestic con-
sumiotion in the United States, the very large utilization of all kinds of
cotton in foreign countries, and the ontir;.istic outlook for consumption of
cotton textiles and raw cotton in the near future resulting from the large
volume of unfilled orders held by world mills and increasing industrial
activity and trade in United Stntes and foreign countries.

A rise in the -rice of Am-erican cotton at Liverpool in January
accomnanicd the strengthenin- of 10-r:.arket prices in the United States.
The prices of forei-n growths tended to rise also so that their prices
relative to American chanced co:-.-aratively little. The average price of
three types of Indian expressed as a percentage of two types of American
was 79.1 in both December and January, and was the highest ratio for these
cottons since last 1.arch. The average of their ratios in the 10 seasons
1923-24 to 1932-33 was 81.3


CS-4






Brazilian Sao Paulo Fair in January, at 98.5 percent, was little
changed from recent months and was about the same as the 10-year average,
but it was cheaper relative to American than during most of the 1935-36
season. Egyptian Uppers average 111.7 percent of American Middling in
January and were higher than for any month since August, but they were
cheaper relative to American then in most of last season and were considerably
below the 10-year average ratio of 125.8.

Suplyv of "Free" Cotton in United States Larger Than Year Ago;
Stocks of Government-Financed Cotton Smaller;
Domestic Consumption Plus Exports Running at
Higher Rate

On January 31 the supply of cotton in trade channels in the United
States amounted to about 7,400,C00 bales, according to estimates of the New
York Cotton Exchange Service. This is an increase of 32 percent over the
approximately 5,600,0O0 bales of "free" cotton on January 31, 1936. The
total supply of cotton on hand in the United States at the same time last
season was 10,700,000 bales or about 300,CG0 bales more than present stocks
(January 31) of 10,400,000 bales. On January 31 of this year, however,
Government-financed stocks amounted to 3,00u,0UC bales compared with more
than 5,000,0C0 on the corresponding date a year earlier. Consumption of
American cotton in the United States totaled 3,767,2CC bales in the 6-month
period from August to January of the present season, an increase of 814,000
bales or 28 percent over consumption in the corresponding period a year earlier
Exports in the first 6 months of this season were 569,00C bales, or 14 percent
less than last year. In the last 6 months of the 1935-36 season consumption
amounted to 3,267,000 bales and exports to 1,969,000 bales.

There is some reason for believing that in the second half of the
present season, domestic consumption of American cotton will not show as
large a percentage increase over the corresponding months a year earlier .s
was shown in the first half. But if such an increase should actually take
place, domestic consumption in the 6 months from February to July inclusive
would amount to 4,178,400 bales. If the improvement shown in exports in
January is maintained, exports from February to July would compare more
favorably with last year than was the case in the first 6 months of the
present season. Assuming, however, that exports in both the first half and
the second half of the present season bear the some relation to last year,
exports from February to July would amount to 1,693,C(C bales. Total domestic
consumption of American cotton in the 1936-37 season would be about 7,950,000
bales and exports 5,100,000 bales. The carry-over in the United St-tes on
August 1 would be approximately 4,500,000 bales of which only about 1,500,0C0
bales would be "free" cotton, assuming no reduction in Gcvernment-financed
stocks which, as stated above, amounted to about 3,000,000 bales on January
31. Stocks of "free" cotton in the United States on August 1, 1936 jr.ounted
to about 3,300,000 bales, and in the 5 years ended 1928-29 averaged 2,489,r,00
bales.

It must be recalled, of course, that some of the loan-.,tock cotton
will move into domestic and export markets and that domestic consuinption,
exports, carry-over, and the quantity of the vovernment-financed cotton
released are to some extent interdependent factors. While the intensity of
the domestic and foreign demand will effectt the extent to which cotton is
released from the loan stock, the qu-ntity released and the tennis under which
it in released, by affecting the supply of cotton available to the trade, will,
in turn, affect consumption, exports and carry-over.


CS-4


- 3 -




CS-4


The Commodity Credit Corporation Eantunced that 250,812 bales of
loan cotton were covered by requests for releases received through and
including February 18, not including requests in transit or in process of
completion. Between February 1 and 15 the average 10-market price was well
above 12.75 cents. However, during the week ended February 20 the market
hovered right about 12.75 cents. Loan cotton is being released at 25 points
under the 10-market price of Middling 7/8" on the preceding day (with
allowances for differences in value arising from staple, grade and location)
only if the lO-market price is 12.75 cents or higher. It is reported to be
the belief of the trade that actual outright purchases of loan cotton plus
purchases of equities (rights to request release) amount to considerably more
than 250,000 bales, but that the rate at which the cotton is being released
is more apt to decline then to increase during the remainder of the release
period.

Exports from United States Still Running Lower than Last Season-
Exports from India and Egypt Larger

Exports from the United States were 538,280 running bales in January
or slightly less thcn shipments of 542,776 bales in January 1936. In the 6
months ended January 31, exports totaled 3,435,000 bales or 14 percent less
than exports of 4,003,600 bales in the corresponding period a year earlier,
and 32 percent less than the average for the 10 yerrs 1923-24 to 1932-33.

As compared with last season (August-January 1935-36), smaller quantity
of American cotton were token by all of the major import countries with the
exception of France and Canada. In the month of January, exports to the
United Kingdom, France and Itely were larger but exports to Germany, Japan
and CO .n.da were smaller than in Janua-ry a ye.r earlier. The outlook for the
immediate future is brightened somewhat by (1) the lo-.ns made by American
bankers to Italy for the purchase of American cotton, (2) the possibility
that bc.rter trade with Germany may be increased, (3) the release of some
Government-financed cotton into trade channels, and (4) the need of foreign
cotton mills for large quantities of all kinds of cotton.

Exports from India in the 5 months ended December 31 totaled 943,800
b.les of approximately 478 pounds compared with 713,800 bales in the
corresponding months of 1935 end 718,700 bales in the 10-year period ended
1932-33. As compared with the year before, larger quantities of Indian cotton
were taken by nec.rly all important importing countries, including the United
Kingdom, Germany, France and Italy; and an especially large increase occurred
in exports to Japan.

Exports of cotton from Egypt in the 6-month, August-January, period
amounted to 1,052,500 bales of approximately 478 pounds compared with
1,037,800 bales in the same period in the 1935-36 season and 826,800 bales
in the 10 years 1923-24 to 1932-33. Exports from Egypt to Japan were more thai
double those in the corresponding months a year earlier. Larger shipments alsi
occurred to India and the United States, but smaller quantities were sent to
the United Kingdom, France, Germany and Italy.

The Textile Situation

Domestic consumption high mill margins advance

The domestic mill situation continues to be very favorable and
activity is well up to the generally high level of recent months. In some


-4-




CS-4


recent weeks, sales of goods have been less than current production, but
this is said to be due in part to the fact that many mills are booked ahead
so solidly that they cannot take any more new business for delivery at any
reasonably near future date. Goods prices have remained firm for the most
part and have strengthened on some lines. Mill margins (based on 17 con-
structions of grey cloth) averaged 18.22 cents in January compared with
17.70 in December and with 13.70 cents in January 1936. January margins are
the highest for any month since October 1925.

Consumption of all kinds of cotton in the United States amounted to
678,064 bales in January compared with 590,484 a year earlier and is a
record high for the month. Consumption in the 6-month period August to
January 31 totaled 3,848,195 bales, an increase of 28 percent over consump-
tion in the same period a year earlier; it also is a record high. The largest
previous consumption in this 6-month period was 3,627,494 bales in the 1927-28
season.

European mill activity, cotton consumption show further increase 1/

European cotton textile developments in January maintained, on the
whole, the favorable trend which has characterized the situation for several
months. Mill activity rose further in a number of countries, domestic whole-
sale and retail demand for cotton textiles remained high, and exports were
generally sustained and even showed a gain in several countries. As a result,
mill consumption of raw cotton developed favorably and spinners, stimulated
also by a firmly rising market, bought an appreciable volume of raw material.
Consumption of American cotton, however, is indicated in some quarters not
to be keeping pace with the general rate of expansion, and American is said
to have been somewhat neglected in spinner purchases, partly as a result of
price-relationships favoring competitive types of foreign cotton.

Immediate outlook favorable.- The European cotton textile picture
is now more generally favorable than it has been for a long time. In fact,
nothing in the present situation can be pointedcut as likely to bring an
early reversal of the favorable tendencies present in most countries. On
the contrary, it seems likely that the present rate of activity will at least
be maintained everywhere for some time to come, There are certain week spots
in the situation, however, such as heavy forward buying in Francc, the sudden
growth of Italy's exports with the resultant accumulation of clearing balances
in her favor, the German foreign exchange difficulties, and the increased
production costs in Great Britain with their possible ultimate effect on
exports.

The underlying and most important factor in the outlook is the slowly
but steadily progressing recovery in world trade and purchasing power. The
rise in world prices of agricultural products and raw materials, generally,
in 1936 has materially enhanced the capacity to buy in a large number of
textile importing countries the world over. This is being reflected in current
orders and promises to be a buoyant influence for months to come. Advrnce
orders for both domestic -and export account have been booked to such a
significant extent in most of the European countries cs to last the industry
at present rates of occupation for a considerable length of tire. Even in the
case of Germany and Italy, there is some prospect for eventual improvement in
raw material supplies. The recent United States Treasury ruling on the use of
Reichsmarks for imports from Germany has been viewed ho2tfuljby some JGerman
1/ Prepared largely from a report received by the Bureau from Agricultural
Attache Lloyd V. Steere rt Berlin, under date of February 8, 1937.


- 5 -




- 6 -


interests, and it is thought that increased German takings of American
cotton may be made possible. Italian buyers of American cotton, moreover,
were recently reported to have obtained a credit to cover the purchase of
50,000 bales, and further transactions of this kind are announced as pending.

The situation in individual countries.- In the United Kingdom, a
good volume of cotton textile business both for domestic and export trade
was reported during January. British mills are now said to have the largest
and most extended order books since 1922, despite materially increased
prices. Basic conditions appear favorable for continued active demand from
consumers. Such anxiety as is encountered is chiefly about increased costs
and their ultimate effects on exports. Recent demand for raw cotton has
reflected in some measure the general activity in cotton spinning, but only
moderate buying has been reported for American cottons, the prices of which
are nigh relative to competitive cottons, and the better qualities of which
are said to be difficult to obtain. Good business w'as reported in
Brazili-as and heavy forward buying in Peruvian. In other growths the
turnover was generally described as moderate to fair.

In Germany, the situation reported in December is practically
unchanged, with mill operations continuing at fairly high levels and with
increasing substitution of artificial fibers. A certain -mount of optimism
has recently developed over the possibility of obtaining increased supplies
of American cotton under the recent United States Treasury ruling on certain
types of transactions with Germany. It is thought that the ruling will
enable the resumption of barter transactions, at least on a modest scale.
On the other hand, others are rather skeptical as to the practical
possibilities, and point to the fact that present supplies of cotton are
very short and will hardly suffice to maintain the current rate of mill
activity for any length of time.

In Czechoslovakia, the cotton industry has benefited from further
improvement in the general economic situation, though exports continue
hesitant. The devaluation of the crown does not appear to have greatly
alleviated the unsatisfactory export position of the industry, and urgent
demands are being voiced that some additional export aid be granted. It is
reported that the Government. may grant certain tax refunds and freight
rebates on export textiles.

The textile situation in Austria is still quite favorable. The
uncertain export outlook appears to be something of a weak spot, however,
because of heavy dependence of yarn exporters upon business with Rumania
where foreign exchange and clearing difficulties frequently interrupt trading.
The production in Austria of fine counts of yarn spun from Egyptian cotton
is rapidly increasing and will replace most of the fine counts hitherto
imported. Austrian cotton weavers have recently set up a cartel and marked
price increases are threatened.

The very favorable developments in France as reported for several
months continued in January, following some post-holiday quietness at the
beginning of the month. Full activity is reported from many centers and
orders on hand are sufficient to last the industry for a considerable time.
Prices have increased sharply and, as a result comparatively little stimulus
to cotton goods exports has been experienced from the devaluation of the
franc. A large part of the extraordinary revival in the industry seems
attributable to heavy advance buying incident to rapidly rising prices, and
to the expectation of a further decline in the gold value of the currency.


CS-4







CS-4


Nevertheless, it does not appear that this development is of such magnitude
as to entail an earl, reaction that would d curtail mill activity and consumption
of raw cotton. Steady consolidation in domestic economic activities seems
to be going on, despite labor and oth.-r troubles, and a basic improvement in
ultimate consumer demand is evident.

Cotton reports from Italy / continue encouraging, as it a. pears
that the recovery of her formerly important export business in cotton goods
is still making vury satisfactory progress. As a result of this sudden
expansion of Italian deliveries ho'.jev-r, there has been a large accumulation
of clearing balances in favor of Italy with certain clearing countries -
a condition which may eventually necessitate reducing or checking the
expansion of exports to those countries. On the other hand, Italy has
needed large balances to clear up indebtedness to certain countries arising
from the sanctions' episode.

'arket developments in Italy are encouraging also fro.., the st-ndpoint
of demand, but they are not so bright from the supply sidu. The restricted
supply of cotton fiber for the production of goods for domestic consumption,
the practical exhaustion of stocks of materials, and the eager demand for
new textiles have had the effect of increasing materially the price of all
goods made from cotton mixed with the substitutes that are now commonly used
throughout th, Italian cotton industry. It will be recalled that until several
months ago, and before the improvement in the industry s-t in, old supplies
of goods for the home market were .still. plentiful; .prices howcev.r, were
considered high until devalu-tion.

Cotton arrivals in Italian :jorts during January 1937 were about 2?
percent above arrivals in January 1935 but considerably smaller than in
December 1936. Increased mill activity is expected to increase Italian
cotton buying from the' proceeds of exported cotton goods. At the same time
the opinion is expressed in some quarters that Indian and Brazilian cotton
will be favored by Italian buyers ..t the expense of American in view of the
favorable price of the former. This situation, however, might be avoided
by transactions such -s one recently reported, in which Italy w.s granted a
purchase credit for 50,000 bales of Amerinan cotton. :.ore transactions of
this kind .r, excxcctud for the near future, .and 150,000 balls are reported
as likely to be obt-.ined under a similar arrangmr.nt.

Favorable reports continue to comc from !-olland .':hcrj co:ton spinning
mills have profited greatly from th, general stimulus of devaluation.
Spinners are sold out for delivery in both near and future months .s r. result
of a sh.rp incre-.se in the d_-r-nd ior cotton yarns, v.w,iclh c-.niot be fully
satisfied by domestic spiruiing establishments. Exports of cotton goods to
the Dutch Indios h :vu boon favorably influenced by the dev.-luation, a.d the
general tone in the industry is more hopeful thin a.- anyl tli.c sinl.l the
crisis. Simil:-rly favorable conditions h-,ve bce.n cr,.-.ted by devaluation in
Switzorl-nd, where spinning mills h-.ve experienced a subst anti .1 rLviv-l,
with demand from both domestic buyers :.nLd c*x.ortcrs considerably inrornsed.


2/ Basoe on inforur.tion received from the American Consuliate at i.:iln.





CS-4


A very substantial increase in Russian production of cotton textiles
in 1936 is indicated by figures recently released. Production of cotton
fabrics by enterprises of the Cormissariat of the Light Industry amounted, it
is stated, to approximately 2,843,000,000 yards in 1936 as co..ipared with
2,350,000,000 yards in 1935 and 2,348,000,000 yards in 1934. To these figures
must be added the output of the local industries which, according to the
1935 plan, (no figure is at hand for 1936), was to amount to 373,000,000 yards.
Assuming a similar figure for 1936, total production of the Soviet textile
industry would appear to have amounted to a little over 3,000,000,000 yards
as compared with 3,516,000,000 yards provided for by the plan.

This year's plan provides for a further large increase in production,
one about in line with the increased production of raw cotton, with
4,233,000,000 yards indicated as the plan for the factories under Light
Industry, and 4,466,000,000 for all enterprises taken together. This would be
an increase of more than one-fourth compared with the 1936 plan and an
increase of about 36 percent as compared with the above estimated figure of
actual production in 1l36.

Raw cotton consumption,sales of cotton goods at high levels
in Janan and China s V

Jp--an Imports of all kinds of cotton into Japan totaled 384,000 bales
during December and 574,000 bales in January compared with 373,000 and 461,000
bales, respectively, a year earlier 4/. Total imports of all growths from
September to January amounted to 1,738,000 bales and were 28 percent larger
than imports in the corresponding period a year earlier.

In the jionth of January and in the September-January period, imports of
Amurican cotton totaled 226,000 and 750,000 bales, respectively, or 26 percent
less in the first case and 7 percent less in the second case than in the
corresponding monthss of 1935-36. Imports of Indian cotton showed a large
increase, being 119 percent larger in January 1937 than in January 1936 and
65 percent larger in the 5 months September through January than in the same
period a year earlier. In the 5-month period, imports from nearly all countries
except the United Status, were larger than in the previous season. Especially
large increases occurred in receipts from Brazil which were 119,000 bales
compared with only 3,000 last year. Imports from several smaller cotton pro-
ducing countries have assumed significant proportions.

Mill takings of all kinds of cotton were 383,000 bales in December and
370,000 in January, or a third larger and a quarter larger, respectively, than
in December 1935 and January 1936. Takings of American cotton of 174,000 bales
were only slightly larger than in the preceding December, and in January wLre
26 percent less than in January 1936. Takings of Indian of 132,000 and 165,000
bales were nearly twice as large as in December and January a year earlier.

Wharf stocks of all kinds of cotton on January 31 amounted to 606,000
bales, an increase of 61 percent over stocks on January 31, 1935. All kinds of
cotton shared in the increase.

/ Prepared largely front cables received from Agricultural Commissioner Dawson
at Shanghai, under dates of February 10, 11, 13 and 20.
V/ Import figures are those estimated by the trade. See The Cotton Situation,
January 1937, page 10.


-8-











Eeavy forward orders for all kin.s of cotton 7ere placed in December
due to the ir.:encdinc e::chnn-e control, accordin- to reports. The brief period
durin-i; -hich ir-.orts of cotton ere n-rohibited an. the use of foreign exchange
for its -urchese waSs banned, ho"'ever, .-al:e it see:.. unlikely that the cotton
trade w:as seriously' disturbed by the en.erZency re ulntions. The very Tlarre
i.-norts of .11 kinis of cotton into Japan anf. the hi"h level of Jae.anese yarn
production do not indicate any i-ortrnt l.isru-tion of the industry. Yarn
output in Jap-n was 326,000 bales in January or al-ost the sane ns in December
and ,:as a record hiLh for the nlonth.

The Cd.ta onimnorts for January' annd for the 5-r.,onth Septe nber-J.nuary
"eriod indicate that, while A-ioricpn cotton has recovered considerably fro.'
the very lo:. de ;ree of ii.nortance occupied duarin: the Ilst -jart of the 13-5-36
season .n'C. the first :ionth or tvo of the -resent season, its share in totpl
cotton i..rorts is still considerably less than in the corresponding period
last year. As -reviousl:y pointed out, i:niorts of all kinds of cotton in the
5-ronth "eriod rere 23 -crcent larger thn in the snme months a year earlier,
but i:-,orts of Ar.ericIn cotton were 3 percent smaller. Vost of the increase
in total it:.orts resulted fro: larger ta!:in.-s of Indian i nd v-rious sundry
7rowths, of rich B3rzili.n n7-s the ,nost ir-ort-.nt. whilel e irn'orts fro:., Zr.zil
probably rill not be resumed on Pny considerable sc-le before this co..in"
su-A.ier, l.rre cro-s nov .novinc or to move into trade ch-nnels durin- the next
few ..ioths front several of the sr.1-ller oroducin:- countries, esnecirlly fro:.1
H:exico, "eru, Ufandr and Arcentina, :.r-ce it seem ro')rble th-t Aneric-n
cotton vill receive :-ore co:-netition durin.- the reo:iinder of the se'-son fro.!
these sundry cottons thr.n hs been the case in ,nst years. The la.re crop in
India indic-tes the likelihood of continue he-vy i:-.ort-tion -nd consuz~.ticn
of Indian cotton. The --rice of Indian, however, -.aC; be raised so.e::-.hat
relative to A-.eric-n, nnd the rurch-se of the latter rendered so:..evh-t nore
attr-.ctive if considerable quantities of loan-stoc!: cotton enter consizrrtion
channels in the United States between February 1 and A-ril 1. Farther.ore,
it is reported that there has been a rise in frei,ht rntes on cotton shi- ,ed
fro:: Indian -orts to Jrapan. This should have a tendenc.i to r-ise sli. tly
the -rice of Indian relative to Aieric-n.

As is indicated b-: yarn --roduction and by in.norts and mill tokin:-s of
raw cotton, -n esneciallr high de-ree of activity characterized the Jrnanese
cotton textile industry in Decer.Ter and Jnnu-ry. Yarr. production was stinulrted
by very hirh --rices for ,-rn and stron- de:..nnd for cloth in toth the homer
and forei.-n -rrkets. Total yarn production in the calcendr year 19363 a.:ounted
to 3,007,000 tales of vP-aroxirm-tely 400 pounds each conrrred i-.*ith 3,b,-1,0'C
bales in 1C35.

A shar- s-urt in cloth er:,orts too]-k lace in Dece-iber .-;hich br-u ht
total x-oorts for the 1336 calendnr year ,ol.iost u- to the hi h level *f 1`'5.
Exports in Dccei:er "ere 260,000,000 squire ;ards co ..arcd vith X'3,0.M1, \.
square arcs in the corresnondinr" : month a Pq'j14F'lier. E-erts in the
calernd-r year 1936 anountod to 2,709,000,0t0. 0nrds co.ipare i:it 272-1, -' O
in 19335.


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The curtailment rate for the first quarter of the 1937 calendar year
is 25 percent of spinnin: capacity but it is reported that it will be raised
to 27.4 percent of capacity in the second quarter. During December 661,000
new spindles were installed. It is reported that this very sharp increase
in the number of ne-:. spindles in the space of one month was due to the
desire of individual members of the Japanese Spinners Association to have
a larje basic copcity so that the application of rates of curtailment in
the future vould allow then the largest possible volume of output.

China.- Heavy arrivals it Shanrhai, large deliveries of Chinese
cotton to mills and a brisk demand and high prices for yarn and cloth
characterized the Chinese cotton situation durin,- January.

Arrivals of all kinds of cotton at Shangjhai totaled 844,000 bales
in the --month period October through January and were two-thirds again
as larse as arrivals in the corresponding period a year earlier. Arrivals
of Chinese cotton of 811,500 bales were 74 percent above those of a year
earlier while arrivals of American and Indian cotton '.-ere much smaller.
Deliveries of all growths of cotton to Shanghai mills in the same 4-month
period totaled 762,000 bales and were 72 percent above those for the corre-
snondin. period of the 1935-36 season, and the largest for any like period
in history. The increase over 1935-36 was entirely accounted for by large
deliveries of Chinese cotton for, while there was an increase in deliveries
of r.iscellaneous frov'ths, deliveries of all cottons other than Chinese,
taken as a whole, were smaller than a year earlier.

Hills rre reported to be vorkin- .t almost full capacity and are ex-
pected to continue to operate at very hi-h levels for at least two or three
months due to the co,-Tpratively la?.re volume of unfilled orders on hand.
The .rarin between yarn prices and rnw cotton -rices is still such as to be
very profitable to spinners. Demand for piece ooods continues to be very
brisk; more looms are bein:" installed in existing factories, and plants
for..erly closed down are being reopened. It is reported that the coming
spring se-ison will probably strengthen the cloth n rket still further.

Production, Acrcp-e, and Croo Conditions

India.- The fourth and final estilnte of the Indian Governnent places
the 1936-27 cotton area in India at 25,050,000 acres, or slightly more than
the final revised estinatce for last season of 25,136,000 acres. In the 10
years ended 1932-33, the cotton area nverpeed 24,761,000 acres. Production
in 1936-37 is estimated at 4,937,000 bales of approxi:mitely 478 pounds net,
an increase of 4 oprcent over the 1935-36 crop of 4,793,000 and of 12 percent
over the 10-year average output of 4,466,000 bales.

Of especial significance with respect to competition between Indian
and American cotton is the increaseLd production of American varieties of
cotton under irrigation in the Sind area in Northwest India. The total
are- re-orted sov.n to cotton in Sind between Mlnrch and June 1936 amounted
to 961,766 acres cor.-pred with 826,660 in the 1935-36 season. A considerable
increase in cotton acrenge has taken place every season since 1932-33. In
the 5 years cnded 1934-35 the area under cotton in this irrigated section
of Since rc-resented about 1.9 percent of the total area under cotton in the
whole of India. In 1936-37 it renrescnts nearly 4 percent. The recent ex-
pansion, of cotton growing in Sind has been due mainly to the completion of








extensive irrigation works in 1932 whichh have enabled a much larger area
of land to be irrigated by canals. More than half of the total cotton
area this season consisted of Americrn varieties of cotton directly
competitive in grade and staple with cotton produced in the United States.
Production is estimated at 334,0 bales of 478 pounds.

Egypt.- Ginnings of all kinds of cotton, including Scarto, up to
February 1 nou-nted to 1,647,000 bales of 478 pounds, compared with
1,407,000 bales ginned to the corresponding date last season. Innings of
all important varieties shared in the increase. The 1936-37 crop is
estimated to be a record high of 1,957,000 bales.

Trade reports state that weather conditions were reasonably good
in Upper Egypt during January, that the ground was being prepared for the
new crop and that planting would start early in February. Large sales of
seed for planting are reported in lower Egypt as well as increased buying
of Sakellaridis seed which indicates the probability of some recovery of
acreage and production of Sakell-ridis in the 1937-38 season.

Brazil.- Reports from Brazil continue to indicate that a lrge in-
crease, amounting to about 30 percent, took place this year compared with
last in the quantity of seed distributed for planting purposes in S.o Paulo.
The planting of the 1936-37 cotton crop was completed in the state of
Sao Paulo during ITovember. If this increased distribution of seed should
mean a comp.crable increase in acreage, with normal growing conditions, the
expanded production in southern Brazil in 1936-37 compared with 1935-36
would more than offset this seasbints sm.c:ldr crop in North Brazil.

Russia.- Reports continue to place the 1936-37 Russian crop -.t more
than 3,000,000 bales. As pointed out in The Cotton Situation for Ja-nuary,
however, in previous years early estimates of the crop made by the Russian
Government and other agencies have subsequently been revised downward. For
this reason the Bureau of Agricultural Economics is retaining its estimate
of 2,800,000 bples.

The Plan of the Soviet Governnent for cotton production in the 1937-38
season provides for a further increase in output but apparently a smaller
increase is expected than has been planned for in earlier years. According
to statements in the press, about 3,4159,000 bales of 478 pounds of ginned
cotton is the goal for cotton production in 1937, This would be an increase
of nearly a half million bales over the Bureau's estimate for this reason
but is only about 200,000- b-les larger than the latest Russian estimate of
this season's crop. The acreage under cotton is to be increased only slightly,
the Plan calling for a total of 5,164,-(0 acres as compared with the
5,026,000 acres actually sown in 1936 and the 4,979,00C planned for 1936.
The acreage of irrigated cotton grown in the so-called "old cotton regions"
of Middle Asia is to remain the same with a.11 the acreage expansion to ta-le
pla-ce in the "new" non-irrig.ted regions. These "ntw cotton regio:.' are
to increase th- acreage from 1,100,000 acres in 193C to 1,28C,C C z.creLs in
1937, according to the Plan. It is of interest to note that for t1. first
time the Plan specifically mentions Egyptian cotton, t:.r ccrt*-ge of which is
expected to Eaount to 309,000 r.cres in 1937. While thiz apparently is not
much more than was actually planted in 1936, the above fiurc indltc':- e t.uat
the cultivation of high grido cotton h as bern definitely ..tabl i.'~': in Riuasia


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