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U:;ITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Econ(mncs
-B,.- -- : April 26, 1938.
T E C 0T T C S I T U A IC
PO TORY Summary
The general cotton textile situation for the most part remained un-
favorable during March and early April, according to reports received by the
Bureau of AgriculturEl Ecrrncmics. These reports indicate that in a large
proportion of the c ,tton manufacturing countries of the w-rld cotton textile
sales and production continued much lower than in the earlier part of the
season. In some instances the sr.all sales a.,d reduced unfilled orders appear
to have resulted in still further curtailment in activity and the rate of o*tton
consumption during AMrch and the first part of April.
In Indie, Gerr:any, and Italy cotton mill activity and cotton consumption
apparently have held up quite well so far this seas-n despite declining business
conditions in many other countries. In each cf the-e countries cotton con-
sumption in March as well as in the 8 months ended with March probably equaled
or exceeded that of a year earlier. While the situation in France in March was
much less favorable than a year ago or than earlier in thu; season, there was a
material improvement in cotton textile sales duo at least in part to the de-
S cline in the foreign exclinge value of the frrnc.
United States manufacturers' sales .nd production cf cotton textiles con-
tinued quite low during most of March and early April. During the second week
of April, however, sales of gray goods are reported to have increased consider-
ably and apparently have exceeded the heavily curtailed production. Prior to
this increase in sales many mills had announced plans for reducing mill activity
still further, even though the March index of cotton consumption, adjusted for
seasonal, was only 89 (1923-25 = 100) compared with 136 in March last year and
CS-18 -2 -
an average of 117 for the first quarter cf the current season.
During the first 8 months of the current season t'tal domestic mill con-
sumption of cotton was 1,274,0'-. bales, 24 percent less Than in the corresponding
period last season. This, togEuher with the low current rote of consumption, the
very high rate of consumption from April to July last season, and the situation
with respect to manufacturers' cotton textile stocks and unfilled orders indi-
cate that total consumption for the season probably will be about 1,750,000 to
2,125,000 bales less than the record consumption of 1936-67.
Tctal mill consumption of cotton in foreign countries for the first 7
months of the current season was equivalent to an annual rate of about 8 percent
less than the actual consumption in 1936-37. The current rate of consumption,
however, is much lower relative to last season. Consumption of American cotton
in fcreign countries from August through February was equivalent to an annual
rate about 6 percent above last season's consumption. In view of the con-
sumption so far this season and the outlook for the next 3 months it seems quite
likely that mill ccnsumntion of cotton in foreign countries will be about
1,750,000 bales less than the record consumption of 193C-37. Consumption of
American cotton, however, probably will exceed the comparatively low level of
the previous season.
The outlook with respect to world consumption and present estimates of
supplies indicate that the world carry-over of cotton on August 1, 1938, may be
about 10 million bales larger than a year earlier and 5 million bales larger
than the previous high reached in 1932. The carry-over of American cotton is
new expected to approach 13 million bales, almost equal to the peak of 1932 and
more than twice as large as a year earlier. It is possible, however, that the
1938-39 world production may be sufficiently below that of the previous season
to completely offset the prospective marked increase in carry-over.
During March domestic cotton prices declined about three-fourths of a cent
per pound which is about the same as the adivanne during February. On April 1 the
price of Middling 7/8 inch cotton in the 10 designated markets, at slightly above
8- cents per pound was about the same as in early February but around three-
fourths of a cent under the level of early March. From April 1 to April 7 a
further decline reduced the price to 8.43 cents, the lowest since the early part
The February advance in cotton prices apparently was due primarily to the
passage of the Agricultural Adjustment Act of 1938. The advance occurred despite
continued unfavorable developments with respect to demand. The March and early
April decline appears to have been due largely to continued unfavorable develop-
ments in the demand for cotton nnd cotton textiles and perhaps to the legisla-
tion increasing the 1938 United States cotton acreage allotment by about li to 2
From April 7 to April 22 a net advance in domestic cotton prices of about
one-half cent resultt.e in an average price of approximately 9 cents for Middling
7/8 inch in the 10 markets. This is one-third cent above the price in late Feb-
ruary and early March ,nd about 1-1/3 cents above the low point of last November.
This recent rise in domestic prices probably was due in part to the announce-
ment of proposed Federal expenditures and other aids to business.
In Liverpool the price of American cotton in March and the first half of
April in relation to the rice of Indian and Egyptian Uppers was less favorable
to the consumption of American cotton than for the past several months, but
more favorable than for most months from 1933-34 through 1936-37.
Exports of American cotton in March amounted to 426,000 running bales
compared with 468,000o in March 1937. For the 8 months ended March 31, domestic
exports totaled 4,657,000 bales, compared with 4,389,000 in the like period of
1936-37. For the first 8 months of the season, therefore, exports were still
h percent above the corresponding period a year earlier, even though in Feb-
ruary and March they were 20 and 9 percent, respectively, lower than in the
corresponding months a year earlier.
From August through March, exports to Japan were only about one-third
as large as during the first 8 months of 1936-37, whereas exports to most of
the other important markets were about equal to or substantially larger than
in the like period last season. Exports to Japan in the first 4 months of the
current season were only about one-eighth as large as in the corresponding
months last season, ranging from 15,000 to 27,000 bales per month, and in
December they totaled only 36,000 bales, compared with 118,000 bales in December
a year earlier. Ordinarily these are the months of heaviest exports. How-
ever, the deferred purchases, together with the comparatively large Japanese
consumption of raw cotton, apparently accounted for the fact. that in January,
February, and March, exports to Japan totaled almost three times as much as
during the preceding 5 months and were only 32 percent less than the unusually
large exports of those months last year.
- 4 -
Exports to the United. Kingdom and It.aly, for the first 8 months this
season, were about onp-half larger than a year earlier. Exports to Germany
during this period were also substantially larger than a year earlier and
those to France about 9 percent la-rger. However, as a result of the decline
in soles and production of cotton textiles in there courtries during the
past few months, exports to there countries since January hav? been about
the sane as or considerably smaller than during the corresponding period in
1937. In noting the comparison between exports this season and those of
1953-37, it is sign-ific,.ant to bear in mind that the 1937-38 domestic supply
of American cotton is rboit cno-fourth larger than that of the preceding
season and prices so 'far this season have been 15 to 35 percent lower than
in the corresponding months of 193C-37.
DEI 'TD A COSUMPTI01T
IUITITED STATES: Cotto:i to.til.e sales lo-' but inr.Trovecrnt s'horn
ManufacturarnI 1clcls of cotton textiles apprarntly averr-.ed some-
what less than the gr-n-t!.- r-stricted output duiri.ng most of the past 4 or 5
weeks. In the weet: e ".de.L Anril 1,, however, trade reports indic ..ts that
sales improved cons-id-:rably- and probabl- exceeded production. D,-spite the
improvemei-t in the second week of April, it seems quite likely that for the
4 weeks ended Anril lo, tVe do-iistic mills sold less thni they produced,
with a r3sultinE incrr-se in stocks or d crcese in unfilled ordae-s.
Domestic mill consumption of cotton in Mprch totaled 511,00C running
bales. This wa- one-third less than the record hi-gh of M'arch last y.ar and
the lo'vest for the rmoth since 1935. Consunpticn for the S months August
to March totaled, 4,0U4,000 brles, 24 percent less than a y-ear ;-rlier, about
the same as in the like period in 10-6, and consideribl:- larger than in
the corresponding -nriods of 1930-31 to 1934-3:5. In comparison with Feb-
ruary, mill consumrit ion in ,March showed ar. increase of less than L percent
when reduced to a Torkirx day basis, whereas there is ordinarily a small
decline in the dp.il;- rate of consumption frror. February to March.
Despite a recent increase in domestic prices of gray goods, current
prices are said to still be below production costs anr. mnny mills are re-
ported to be planning a further restriction in their output. The prospective
mill stopprges and elimination of third shifts in a:t least. some sections of
the industry are said to have contributed to the -cdvance in sales and prices
during the second week of April.
Unless manifactu-ers' sales of cotton textiles improve considerably
during the next few -.eeks, it is not unlikely that mill activity will d.e-
cline to somewht lci.er levels. On the other hand, it is quite possible
that scme increase -ver current Ipve s in mill activity and cotton consump-
tion will occur before the end of th3 1937-38 season. 0'o-" the last 4
months of the season as a "hole, however, it probably is safe to expect the
daily rate of consumption to average -it" in 10 percent of that for M.arch. In
this cvelit, the total JUn.itLd States cnsumntion for the 1937-38 reason would be
between 5,70D,0:0 ;ond ,1.00,000 b:.les compared with 7,950,000 bales in 1936-37.
In all probability tho season'. domestic c n.sumtion of foreign cotton will
total within 10 percent of 150,000 boles.
FOREIGN COU.SUMPcTICNI: Total for Au .-st-Febru-r.r down. An'ricrF: abo-,e yar rcirlier
From Augi-st through Februry, mill consumption of all kinds of cotton in
foreign countries amounted to 12,374,C00 bales, according to reports of the :iew
York Cctton UIxchlango Servico. This a'.7s 6 percent less than a year earlier and
e.quiiva.lent to an ninual ri.t. appro-'imrtely g percent less than actual consumn-
tion in 1936-17. Cc-svmption io n hbrai'-'.y, however, :.s 14 percent lower ti.Lan
in Febru-.ry last yea.r, a'rd indication azr that I.:-.rch cor.uiintion was as much
or more b,.lov, a yonr earl i3r- 8:- "'is csnsumntion in F'br ..ar,.r Should. consuLption
in foreign countries durinr-u tlhe 5 ~mo-ths ,':rch through July this season be the
same relative to consumotion in Febrinr; as has been the case, on the average,
for the last 10 yoArs, then totr.l fo-'ein mill conciumption of all cotton for
the 1937-38 season wo-uld total about 20,O50,000 bales. This would be 2,400,000
bales or 10 percent less than tl.h record consumption of last season.
Foreign consumption of American cotton during the first 7 months of
the current season r--s b.c estimc-ted at 3,306,000 bales cor.parol with 3,063,000
bales from Auiitst t.hr..'.gh Febr-ary lrat scan. The annual rate of foreign
consuoLnption 'c" the -_erioe was 6 percent larger than the 5,325,000 bales ac-
tually cc;-isujr d in 1936-37. Unfortunately, though, the February an.d March
rate i, scrin.3-h at less th in thae oarli.r months of the season. Should foreign
consumption of Arnericin cotton ixce-rd that of last season by 5 1:'rcent, the
total for 1937-38 *'.ould "le 5,600,000 .-Ples, the smallest with the exception of
last sensor since 1923-2`4. in ii-ght -f the situation with respect to manufactur-
ers' cotton textile stocks and ',-fill *(i orl.rs, it seems unlikely that this con-
sumption figure will be ma.trially e
EUTROPE: _/ rUnfvor.o1e drvelcomonts o'tweigh f-vorable onre
Tnfr:v.or '.l!e developments definitely outweighed fa-or.,ble developments
in tho Eurcpecn cotton ar .I cotton textile situation during iMlrch. Lack cf con-
fidence w.c r.c- t.t ted b.- the renewed sag in raw cotton prices, the continued
lag in exnort .i.;mand for cotton goods and political developments in Central
1/ Ba.ed larpeel, uncn r report .repar..d. ty Lloyd V. Ste.re, Agricultural
Attache, Berlin, Germany, dated Ar-.'il 9. Information on the Unit d Kingdom
supplied by C Taylor, Agricultur-'.l Attache, London.
Europe. As a result, the end-of-LMarch oldir a.d stocks pooition of the EuroDean
cotton inc-ustr-y, rs r tna "ihoe,nl,; sEea to haiv boon even slightly less encouraging
than p. month earlier.
!:&rch reports were g :errTll" frvo.t-'.oe rnl- ir the case of Germany, where
the dma::-.d for goods continues t.-o be of arg:e proportions, and where the raw
material position has shown decide". iLprov-.uint iin r.;c-nt months. French reports
hc-,wvcr, rilo ir.dicatd. some pic-K-up in crd.urs for the Lil.l, This may arise in
pyrt from the wcakness of the fran:c, tut is nlso considered evidence of require-
nmnts that '7vill be rmt ",,h.c-n the orico &..itlook" beco.as more settled.
Uitod Zgi.cm.- Io imrpJ rov t in d.en-nd was e-eriencei in any import-
ant branch of the cotton textile i.ductr,- i. Great Brij.tain during LMarch, and
most of the rc-Forts i-dicLte f-rth-r recePsicon in .sa ls and mill activity. The
cloth market -_pr.sc'_tedo a .enern.ll- .L. iu-lrr?.vr bl* picture, although for home trade
volume was -about aiin.taiied. A f-Lir inqn.ir:' ..:nas received from India, but appar-
ently only at offers at which little lbus'nazs could be accepted. Some of the
South Amenrican narlhLts are still b':rd,,njd v7ith goods bo'ight at the higher prices
of a year ago, hr.il] .on the Cortinetnt th.n u.fa.or-ble economic conditions an.d
the ge:.er-.ll:' sac': stn.te of t'. t.xtil tr.e .r r of non help to the imnortation
of British yarns or f-brics.
February v'as the sev'"th Siaccscivc. ncnth i. --.hich British piece goods
exports ieclir.-d, the oobruary firess cl0o wi: n decline of 29 percent in com-
parison with Felru'-.ry 1937. Fe'ru.'ary -a. like.7ise the esi'-hth month; of declin-
ing yarn ':.xport3 (b%.rr1:"-; two minor -.:ceOtior'.s), --;:ith the figu.Lres down 20 per-
cent from a ; c. earlier. Clot'il expots in I'March -ere considerably (10 percent)
larger th-.n in Ferb'r.iary as is g-.,ner'lly the case, due at IcLast in part to the
longer month but rere 2c, percei.t lcss t.han ,a ear1 o ".rli'r. And for the g
months, A,'u.cst thro-v.th M.-arch, cloth exports were 13, percent los.. t-.a.:i for the
same period laost sr.-.son.
Tr-.i.e re'rt iicstte "- incr.:'3sad stopna'a.- of mill machine-ry rand
st-te that more would be stoprpd bu-t 'for th;' hope that ar early upturn in
business will make profitablel! opertic"'".L the les: costly alt:rna:ti've. Tex-
tile unicmlo.--7. nt figures in Yh'r;:r.l ar hi'trher t:-an a a iny time since the
textile strike of S;:pt._r."'c-r 1953. Th' spinrnir. and printing br:-nches reported
99,763 out of work in Februar:-, na cc.i- e.rod :'ith 147,g47 in October. The
spinning branch, which for some tinm fiarje-1d. "tter than other sections of the
industry, is now, fin'ing~ ';roat3 r diifficulty; in bookir. new orders and was re-
ported as selling only bout half of current production in .Mr..rch. Ring spin-
:ners ruJIced nar"gi-,-. ob" about ld., per po-in'd on March 22 -u-.d.:r their .,rice main-
tena.ce agr.?-.r it. Some result-ant i. iprovem,- it in business is i.oped. for, but
the general niis-nosition of manufacturers is to buy cautiously until -here is
more certaint. .ni.c t future devloorcments.
Imports Df Americ-,n cotton into the United wiin.or. wore seasonally lower
during M.arch, but for the first 8 months-of the current scoaron amounted to
1,383,000 running bole-, compared ith only 943,000 during the correspondig.-g
rjeriod last senscn, ani. 1,0'67,000 in the relatively favorable se-son 2 years
St cks cf cctton in rlat Britain rose to new high levels during M.~ arch,
the visible sir;ppl: of 'Aer'cl.n, on March 25, amounted. to 794,000 runninr- bales,
as comp-red with 423,0C 00'" :.--rar ago, and even smaller quantities in the two
nravious y'c-rc. The n.ar-st approach to this figure during recent years was
Syer-rs anL -:hen stocks ALerican at the end of March amounited to 527,000
bales. At tl-h crrert rL-e ...f nill takings, these stocks of kAerican cotton
rereesnt o'.-:r C30 .e.l:s' c_-.'ly. Stocks of other staples, on the other hand,
are gen-rall:. F...1llr th:.'. n :;e-r ago; they total 409,000 running bales con-
prerle with 54 ,-,' .. ::ar'h 26, 1937.
Germ.rn-.- C-.nitions in the German cotton textile industry stand in
sharp cor.trast to th-, o in -ir-t other European countries. German mills con-
tirnue to orcrate at -.i-1- lc-"ls, with clo-nstic demand reported keen for both
the yarn and cloth 'ranches, an, with exports of cloth being maintained at
strikin-1 bi-h fih-ric.
The textile rni7 natorial supply situation continues its recent more favor-
able trend, -itl-i imr .rts o.f cr.tton, cotton waste a nd recl.a,.i.ied cotton rising
and domestic rr.Lduct i.n of staple fiber steadily e.:panding. The improvement in
the cotton s'.ul--' sl;iatio: was reflected in total nill stocks on January 31,
1938, of 227,000 b1?.es aginr.st h7,O00 on July 31, 137, ard 90,000 on January 31,
1937. St'ple fiber rroduztion, which totaled.224,869,C00 pounds in 1937, is
expected to repch a'-u.t 331,,00000 pounds in 1938. fle latest figures on
German toetile raw m:rterial supplies are given in the following table.
The irmroveme.nt in raw cotton supplies is attributable chiefly to the
decline in world prices, which has enabled materially larger purchases for an
equal a-.iouut Df foreig-: exchange.
Ic'twih:.tar.di:-.; the easier supply position indicated by these figures,
however, th-er is still a -ery obvious gap between supply and consumer de.-and.
The mills, a? -'or m r.:: months past, are still having to ration their customers
in both se5ii-fiishoCI- and finished cotton goo's. More recently, also, they
have ben. botr.'nd by: new rcgilations requiring coarser spinrnin of raw materials
in various' cpas. A.-ide front the economy aimed at, this means a certain
tendency. tco-ai:-1. s-.or'er .7..king time and therefore redii.ced income for the
workers. This, it i f crd,. by manufacturers, mny cause a drift of labor to
other industry s.
The outstanding de.velopr.ent in March, however, has been the union of
Austria and G=rnarny:, an 6'.rent which cannot be without certain effects upon the
cotton industry particularly: that in Austria, and more especially the spinning
CS-18 8 A
Supplies of specified fibers in Germany, 1932-37
Commodity 192 1933 1934 1935 1936 1937
: .il .31b. Mil.lb. TI.il .lb. Yil.lb. Mil.lb. Mil..1b.
Cotton 1/ ...........: 770 909 782 817 721 803
Wool 2/.............: 212 229 229 223 157 181
Flax / .............: 53 62 117 99 106 132
Artificial silk 3/ ..: 68 71 97 101 97 123
Cell wool 2 ........: 7 11 33 32 110 236
Hemp / .............: 37 37 46 71 73 119
Jute / .............: 163 238 231 251 212 240
Other hard fibers l/.: 1?1 130 134 179 132 198
Silk 4/ .............: 2 4 18 22 15 7
Total ........... 1,433 1,691 1,687 1,825 1,623 2,039
German production of :
Quantity ......... S 93 130 14 295 454
total supply ...: 6 5 8 11 18 22
Wochenbericht des Instituts fuer Konjunkturforrchung, ilo. IC, Ivarch 9, 1938. These
figures take into account net imports of yarns in terms of raw materials; however,
they do not include regeneratfed fiber or stocks.
I/ Net imports.
2/ Net imports plus domestic production.
3/ Domestic production plus nec irnFcrts or net exports.
SFigures up to 1936 include Artificial Floret silk.
In the first place, a great change in tie raw material situation seems
certain, since Austrian spiniers, who have enjcyed free access to world cotton
markets, will now be brought into the Cermran s:,rytem of controlled supplies and
widespread use of substitute fibers. This will inevitably mean greatly increased
use of staple fiber, cotton waste and reclaimed cotton, ev:-n though new regulations
effective April 1 2/ will enable special consideration for Austrian spinners, who
exported about 45 percent of their total cotton yarn production in 1936 and 1937,
or nearly 30,865,000 ncunds annually. Austrian spinners hive been using much more
cotton per spindle than Gernman spinrL.crs, and a certain leveling out is no doubt
inevitable, even allcving for preferential tre3ttment cf experts. Reports indi-
cate that stcps have already been initiated toward erection cf staple fiber plants
2/ Anordnung B 16, March 10, 19'8 (Exceptions From The. frcccssing Regulations on
exportt Crders), permitting raw cotton processing quotas to be exceeded by the full
amount of export orders.
Austrian and German cotton consumption per 1,000 spinners
Half-year Germany Austria
: Bales Bales
Jan. 31, 1938 53.1 123.9
July 31, 1937 52.8 130.1
Jan. 31, 1937 58.6 119.7
July 31, 1934 76.8 76.2
Jan. 31, 1934 75.2 81.9
Aug. 31, 1913 157.9 170.52
Textilzeitung, March 19, 1938.
The comparative figures on the consumption of raw cotton per spindle
suggest that Austrian cotton mills, judging from German developments, may
face a reduction in 1938 of as much as 50 percent from early 1938 levels in
the quantity of raw cotton consumed per spindle. This will depend, however,
upon whether substitute materials can be provided and whether the mills are
brought under the same system of rationing in effect for cotton mills in Germany
proper. The Austrian market for raw cotton, therefore, may shrivel from nearly
200,000 running bales yearly to as little as 100,000 bales. The United States,
which has been the source of slightly less than half of the cotton consumed,
would prftably stand to lose an even greater than proportional share, in view
of German policy on such imports. Austria came into the union with sernian
with only very limited stocks of cotton on hand at the mills, i.e., about a
6 weeks' supply, judging from the mill stocks of 23,000 bales reported for
January 31. This leaves very little leeway, and may necessitate special treat-
ment for the immediate future while other supplies are being developed. The
immediate effect of the union apparently has been to increase mill activity
somewhat, particularly in the weaving section, but this may be only temporary
and largely incidental to extraordinary demands for flags, streamers, election
The general effects of the merger upon Austrian trade in cotton tex-
tile products is still somewhat obscure in view of the raw material supply
problem, and the uncertainty about restrictions on both foreign and domestic
trade. Austria is a net importer of cotton cloth, but a not exporter of
yarn by an amount (about 30,865,000 pounds) virtually equal to German net
imports. Therre a indications, however, that Austrian yarn exporters will
be encouraged to retain their export outlets in the Danube, since German im-
port roquireLints r'n more to special yarns, notably English. It also has
been announced that sharp control will be maintained over Austro-German
goods movements to prevent any undue drain or strain, in either direction,
during the period of adjustment no-. faced. This would seem to signify that
no marked changes in trade are desired or planned, even though in the long
run the cotton industries of both countries may well benefit from the merger
of the two market areas.
The relative size ci the cotton spinning industries of the two countries
is shown by the following data.
Cotton consumption in Cerrany, Austria and 5re.-ter Germany, 6 months
er,ddd July l1, 1937 and January 31, 1938
: Ealf yar ended July 31, 237: Helf year ended Jan. 31, 1938
Kind : : :Greater : : : Greater
Germany Au-tria Germany Austria Gea
: : Germany : : Germany
: ,OCO 1,00 1,000 l1,00O 1,0CO 1,000
runrin- running r':xnig running ruiring running
Sales bales bales bales bales )ales
American .......: 134 44 173 148 41 189
Indian ........: 88 18 106 68 14 82
Egyptian .......: 65 11 76 60 11 71
Sundries ,....... 254 28 282 273 26 299
Total. 541 101 642 549 92 641
Die Textilzeitunf, .-.1l-38.
Number of spindles in place in Sermany and Austria
: : Greater
Year Germaunv .u stria
: _: : C arrrany
I: 1,CO 1,CO0 1,000
Jan. 31, 1938 ......... : ]0,323 742 1.1,065
July 31, 1937 .........: 10,236 776 11,012
Jan. 31, 1937 ......... 10,247 776 11,026
July 31, 192E ........: 10,109 773 ]0,882
Die Textilzeitung, 3-19-33.
The cloth section of the Iustrifn cotton industry has a present capacity
of approximately 17,000 looms, an average monthly production of r-bout 8,475,000
yards and annual exports of some 3,281,000 yards. Ths impcrts of cloth, hcw-
ever, are larger than exports.
SNew regul'-tions governing the allocation of raw material to the Germ.an
industry have just been issued (Deutsche Reichsanzeiger of April 7, 1938,
Ancrdnung B G 16 of the Supervisory Office fcr Cctton Yarn and Fabrics),
retroactive to April 1, 1938. The principal provisions of this new decree
relate to the fixing of a new basis for the allocation of raw materials.
Hitherto the quantity of rnw materials actually spun in 19L3 and 1934 was
taken as base; the new basis is the quantity actually used in 1937. The
purpose of this modificticn is to giv recogniticn to thu increased domestic
production of spinning matri-.]s and also to the present special needs for
particular ccttan goods, in other words, the chortages which have developed
at certain points. It h,-s been point,.d cut that this change, as well as
the changes under date of Mrrch 10, 1938, in allocating raw material for ex-
port orders (see footnote on page 8), do not imply an increase in the amount
cf raw material allocated to cover domestic market rcquiruments.
- 10 .-
- 11 -
Czechoslovakia.- The. decided setback in order experienced by the
cotton textile industry in Czechoslovakia during the closing months of 1937
h-s extended into 1938. Spinning mill activity -has dropped to an index figure
of 74 in J-inuary (1932 = 100) from 90.1 in No'-ember and 92., in December 1936.
March reports indicate that this downward tendency showo.l sifns of hav-
ing come to an end. Some branches were still experiencing recession, but others
wre teginninin to pick up, especially on seasonal orders, and exports w-3ro
nmintaining recent le--els. Moreover, considerable benefit was being: anticipated
'from the n2w Czech-Ai-rican trade treaty for various specialty branches.
A very unf-vora.ble develo-pment for the Czechoslovakian cotton inrdust7r,
however, is viou'-lizrd in the union of Austria with Germany. Czech textile
exports to Arstria in 1976 rere valued .at $12,1 44,000 of which about two-thirds
were finished .c C~ :2.::d one-third yarn. The industry now fears a marked reduc-
tion in this trr.-e, nhich in lS~j represented a fairly important quantity cf
business for the Czech industry. It is also feared that the important in-
direct trade in cott-n textile products, done in Danubian countries through
Austrian intermedir-les in Vienna will.also suffer. The not effects, it is
thought, are likely. te be a further' ccoleration of the post-war te::dency
toward curtnilr-ni of cotton textile nill capacity in Czechoslo-.Jki,.
The i-nf'' or),ble developments in the cotton textile situation in recent
months hr-ve revived sfforts'by the industry to induce the Government to pro-
vide some form of Prcuragement to exYort business. As yet no definite
progress Y a been reported and it a-.eErs that the Gov-..-rr-.cnt will at least'
await the result s cf thienerotiations hich--thve been (..i: on during Mprch
among the varinos tranchcs of the textile industry in. Czechoslovakia looking
to modification and -prolorration of the cartel scheme hithrto in effect.
These negotiations are understood to be progreisi-g with favorable prospects
of an agreement.
France.- MrWrcl- reports from 'rench cotton textile centers ha"e been
enerall.r more favcrible than for some months past. Recent improvement in
orders fr the cotton industry has been at least partially attributable to
the weakness cf the franc, since export business has be :n of a 7-ry satisfac-
tory character despite the general slac1-k-ess in world. to-tile export trade.
Domestic buE-s..es, ho-ever, was also definitely more active, and there are
numerous reasons to believe that a considerable biac'lcl of requirements is
waiting to be filled.
An encc'ragirn5 feAture of the nark:et in March was.the pick-up in the
cloth section, where stocks have been declining an here it seems possible
that srme rise in production will cone about before lon:. The last week in
March brought a noticeable increase in orders for cotton cloth, it is said,
with the mills now Fenerally-booked up to the end of June, and manufacturers
are no longer willing to sell at' a loss to keep looms goir..
CS-18 12 -
Belgium.- The Belgian textile market continues to report a rather un-
favorable situation and outlook for the immediate future. Belgian manufacturers
do not appear to have shared in the revival of export orders recently booked by
the French mills. This wLs probably due to inability- to quote competitive
prices against the steadily weakening French franc. Stocks of both fabrics and
yarns still held in Belgium seem likely to delay any early increase of mill
operations, unless there is a quick turn for the better in respect to new orders.
Holland.- March reports from Holland indicate that the Dutch textile
industry, like that in mount other countries, has been definitely affected by
the prevailing slackness of demand for textiles. Holland has imported relative-
ly large amounts of raw cotton, particularly American cotton, so far this season,
but it is stated that these represented forward purchases in 1937. With
spinners now relatively well covered, and with orders for yarn and piece goods
continuing smnll, it is to be anticipated that a decided decrease will show up
before long in Dutch raw material imports, since actual purchases have been
very small in recent months.
Itily.- Despite reports of dull conditions in the home market and some
indications of difficulty in booking export business, which is highly important
for the Italian cotton industry, all reports indicate that the mills in Italy
are still operating at high levels. Annual reports of textile producers indicate
that 1937 brought the highest profits the industry has enjoyed in many years,
and manufacturers also professed optimism about 1938.
If export business (which is based to a considerable extent upon un-
restricted use of raw cotton) should continue to fall in 1938, however, it
seems almost certain that a decided fall will occur in the Italian consumption
of raw cotton, since domestic market demands nre being taken care of to a con-
siderable extent from substitute raw materials, the production and use of
which, it is stated, will see further marked expansion in 1938.
ORIEITT: March cotton mill consumption about unchanged in Japan, lower
in India, and slightly higher in China
,Japan .- Trade reports during March and early April indicate that
Japanese mill consumption of raw cotton continued on a restricted basis with
the scarcity of raw cotton and, in turn, of cotton textil-s; the result, high
prices for cotton goods. This is said to have restricted consumption of
cotton textiles and to have been of some importance in restricting Japanese
exports of cotton cloth.
On the basis of the estimated production of yarn, it appears that
cotton consumption by Japanese mills remained about the s-me ir March as in
February, but nearly one-fourth less than in March last y.-rr. !.(arch yarn
production was equivalent, on a cotton content basis, to c2 ,000 bales of 400
pounds of pure cotton yarn which it is estimated required about 238,000 bales
of 478 pounds of raw cotton. This is about the same as the quantity of cotton
3j Basec primarily on radiogrmms of April 20 and 21 front the
Bureau's Shanghai office giving data furnished by American Consul
Kenneth C. Krantz at Osaka.
forwarded to Japanese mills in March f'nd approximately the snune as the average
monthly irUport quota allotted by the Feieral Goverrmernt for an inr'efinite
period berin:inn April 1. Actual imports during March were reported at 305,000
bales of .500 pour.ds. It would appear, therefore, that imports in April will
probably be ccnsiderably less than in March unless the import quota is changed.
Despite the fact that from Decirber to -Irch the oonu.!r-tion of raw
cotton in Jappn was from 17 to ncurly 25 percent less than a year earlier, total
consumption for the first g months of the s ra---.'. were only about 9 rprcent less
than the ccrrespoTdi7-.- period last ser.Eon. This is largely accounted for by
the especially high rate of con.o'-ition .l rir. the first 3 or 4 months of the
season. Sho'ld JSpoanse imports and mill conssurption of raw cotton from April
through J-ly be restricted to an average of 238,000 b,-les per month, cotton
consumption in Japan for -he 1937-38 season would tot:l between 3,200,000 and
March exports of cotton cloth from Japan -shoed co:sider~'bly more than
the usual increase. over February and ere only 3 or cont less than a year
earlier, 5 percent less than March 1936, rnd 16 percent less than March 1935,
the all-time high for the ..:nth.. In January and Fi'br-:.ary,, cloth exports were
15 and 9 percent, respectively, less than in the correspording months of last
year. For the g months A'ugust trough March, cloth exports totaled 1,736,000,000
square yarCs. This total was lower, by from less than 1 percent to 5 percent,
than in thu ccrresporting period of the 3 previous seaszcn but h.i~her than for
the same period in an". season prior to 193.4-35.
China, includiU: M,.chtu;ria -.- Iill consumption of raw cotton in China
showed a further increase in March with total corsu:ption estimated at 110,000
bales of 500 pounds c.,-,pared with 95,000 bales in Fcbrnary and 85,000 bales in
January. Irdicqtions are, ho-ever, that the increaco between February and March
was due largely to an i:.crpsse in the number of working days rather than to
increased mill activity, although apparently s.uie increased activity occurred
in the Jap- nese-onmee. mills in Shanghai.
The demand for cotton yarn is reported to have increased materially
during March as the r'eslt of an incre*:.-:.d d ..,-'nd from south China. This, to-
gether with the low yarn stock' and c:x-1.k--:e control brought a pronounced ad-
vance during the month in ;.orn prices at Shan:vai.
Arrivals of Chinese .cotton at Sih:nrhai durinY March continued small and
cane front nearby areas occupied by Japanese. The commitments of cotton other
than Chinese were estimated at 25,000 bales, of which about one-half was Indian
an-i the other hql.f vn.ry largely Anerican, Brazilian, anC. Ebyptiar-. Lenpite
low yields per acre in 1937, the low le-rel of mill activity in China thus far
this season has re'slted in a comprarati-ely snall proportion of the 1937 crop
having been consumred so for this senzon. Furthermore, it is quite likely that
even if nills in Chinr further materially increased activity,ve.r little cotton
_ Based largely on a radiogran frcn the Bureau's Shanghai
office datel April 12.
- 14 -
will be imported. In fact, except for the ?.ifficrlty of marketing the crop,
ruch lirL-er quantities of Chinese cotton would have been ex-porte., .nd it is
estin:mted that even under the adverse circir stances exports for the year end-
ing Se.pt.eber 193 zaa;- total close to 4r00,000 bales compared. with 24i5,000
bales during : the previous season.
Final plans for the restrration of Japanes:e nill.- in T.inm-tao are
reported to have been approved ly the Japanese C-o.-ermrentt. Under this plan,
9t0,500 sT.in'les and 7,000 loons are to be installed, construction of which
is to be started in the near future and co-pl].fted' by Janl-ary 1939. This
number of s'indles is equivalent to roughly three-fourths of the number in
place in Tsinrtao prior to the comnencemnnt of hostilities. It is not now
known whether this ~,c inery; is to be new 'r n-.t. Jap.-nese mills h-.ve offered
to take over the 17 Chinee-cwned cotton miller locat n. in the occuriec area
of Shanghai, but this offer is sani tu have been refused by the Chinese owners.
India.- In -arch, the cotton mills of In-.ia. are reported to have con-
sumed 251,000 b:.les of 400 -,oui-s nf Indier c.,tton .ccorling to reports by
the l:e York Cotton Excha"-.-e S.rvice. This reres~r-+ts a 16 p-rcent decline
from the record con.n;umnpticn of rFb:'uary, .1it it w-s 16 percent larger in
March last year which up i.t this year r"LS t'e. lirOnest Mlrch concsumtion in
the history of cotton manufacturing i in Ind.ia. -.rc.h nnad the ninth consecutive
month in which the Indian r:i.ll used a 1-xrger quantity, cf Indir'n cotton than
in the corresponrdinp month of .,ny rreviou's ye'tr. For the 9 months, Auigst
throu-1- March, Indian mill. conr-u.me sli:-.tihtly ..ore than 2 million bales of
Indian cotton, the largest consauption for the period en record, ard 14 per-
cent larger than in 1934,-35 when: consumption excee.od that of ar4y similar
period prior to the current season.
The unusually hi-.h le-rel cf cotton conmi-.ptinn in India .nrin, the
current season is acco'untod 'or in part by the reduced i 'orts of cotton tex-
tiles from Japan and the "United Kinrdcim From Augiut throu>ch January, total
imports of cotton piece go'ds into India were only 36 percent as large as in
the correspcn.iin; period l-.st season,
CARRY-O'' R, AUGUST 1: TotaJ. likely t__ gre.itly exceed, ani American
al.r.:st eurpl, 1eak ro !3'2
The outlook with respect to cotton consumrntion in the Unite-. States
n.nd forei--n countries (ree rDEMIAiD AND CONSULMPTIO, pa.es 4 to 14)
and. the present estimates of the 1937-38 supply in.nslca.te that the ,.voril carry-
over of commercial cotton on August 1 may be ab'-.ut 23 million b.:les. This
wr.uld be somet.iin- like 10 million 1b.le1 (r.bcut three-fourths) larger than
on August 1, 1937, and ab.-ut 5 million bales (or one-frurth) larger than the
previous high reached in 1972.
- 15 -
Developments so far this season and fe outlook for the remainder of the
season indicate that the world carry-over of Americua cotton on Au-ast 1 will
not miss 13 million bales by more than 2 or 3 hundred thousand bales. A
carry-over of this amount would almost equal the pe:ik of 1932, when the esti-
mated carry-over of American was nearly 13,300,000 bales, and would be nearly
7 million bales or i hrc than twice as large as a year e:..rlier.
With the indications pointing toward a carry-over of foreign cotton
cf about 10 million bales, there is no question but that the August 1 carry-
ove'r of this cotton will show an, marked increase over that of August 1 last
year. Should it prove to be a-r.-ro.imantely 10 million bales, the increase
over carry-over on August 1, 1937 (the new high up to that time) would be
real, 3 million bales or about t"-o-fifths.
93_-3W, IORLD PRODUCTION: .xpoct d to show share decline
As indicated last ronth, there are a number of factors which mako it
seen quite certain that the 1938-39 world production of cotton will show a
sharp dr.jp in comparison with the extraordinarily large 1937-38 crop.
No official fo-'ec.st of the 1938 domestic crop will be released before
August 8. An i:.portant factor pointing towa-rd a marked reduction in the 1938
United States crop, however, is the fact that -.,r.r-ge United Status yields in
1937 of 265 pounds per acre were 47 percent above the average for the preceding
1I years.xd .4l per.cen.t .abov. tle ave.ra;, .for the preceding 5 .-ears. Further-
more, despite the recent legislation increasing the acreee allotm'vntt by-
about l1 to 2 million acres, the 1938 acreage allotment is 6 to 6-,- million
acres iro.. 17 to 21 percent) less than the 1937 planted acr:age.
A recent radiogram from the Bureau's Shanghai office states that the
1938 cotton ncreage in China is expected to be materially reduced. This is
expected because of the difficulties of marketing last season's crop, the
necessity of assuring grain crops for food and the poor yields per acre in
1937. Because of the materially lower level of cotton prices and the fact
that producers in some countries other than China probobly sold a consider-
ably smaller proportion of their 1937 crop than usual, it is expected that
1935-39 foreign cotton acreage outside of Ch:;i will also be less than in
the preceding season.
It is quite possible that the 1938-39 world production may be suf-
ficiietly below that of 1937-38 to completely offset the prospective marked
increase in the August 1, 1939, world carry-over. It sees quite certain,
howev-er, thit at le;ist a sub3:-..tial part of the increase in carry-over will
be offset by a declir.e in production.
UNIVERSITY OF FLORIDA
3 1262 08900 4336
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