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UNITED STATES DEPARTMENT OF AGRICULTURE
Bureau of Agricultural Economics I
CS-25 November 28, 1938.
THE C COTTON S SITUATION
This month's issue-of The Cotton Situation consists
largely of the regular annual outlook report on cot-
ton, first released by the Bureau on November 1 and
now slightly revised in keeping with more recent
estimates and subsequent developments. Also in-
eluded is a brief review of developments during re-
REVIEW OF RECENT DEVELOPMENTS
Little net change has occurred -in domestic prices of spot cotton
during the past -m nth..following a net-advance of abcut two-thirds of a
cent per pound during the preceding month. For the most part, Middling
7/8 inch cotton in the 10 designated markets fluctuated within a few points
above and below.8.-2/3 oents between October 22 and November 23. The Bureau
..of-Agricultural E-onomies further reports.that, while domestic- exports of
domestic cotton continue very low, the "free" supply ofAmerican cotton has
been farther reduced by increased-Government-loan stocks, and the outlook
for the domestti i actton textile industry has been improved.by- further gains
in domestic industrial production.and payrolls.
Sales-of cotton textiles by domestic manufacturers in the past 4
weeks. appear to have equaled or exceeded the relatively high output. The
October United States index of industrial production of 96 was the highest
for 11 months, .and represented the fifth c-nsecutive.month in which a gain
over the.. preceding month has been recorded. Weekly data .indicated still
further increases in the first 3 weeks of November.
The October index of United States cotton consumption, adjusted for
seasonal variation, showed a small decline compared with September but was
slightly higher than in October last year. Trade reports indicate that acti-
vity in the first 3 weeks of November was well maintained and was perhaps 10
to 15 percent above the corresponding period last season. During the first
quarter of the present season, domestic mill consumption was less than a year
earlier by about 90,001 bales or 5 percent, but the annual rate of consumption
was about 15 percent above total consumption in the 1937-38 season.
In most foreign countries, cotton mill activity as a whole appears
to have continued on a restricted basis during October and the first 3 weeks
of November. For the most part, reports indicate that manufacturers' sales
of cotton yarn and cloth continued relatively small. However, evidence of
some general improvement has been reported in the European cotton situation
since the easing of international political tension at the end of September.
In many of the European countries there are indications of at least seasonal
gains in mill activity over earlier months. A seasonal increase of trade in
the yarn and cloth markets has also been noted. Import buying of American
cotton has, however, been retarded in a number of countries by a combination
of adverse circumstances.
Spot prices of American cotton in Liverpool continued strong relative
to Indian and Brazilian growths during the past few weeks and on November
18 were relatively higher than for about 2-1/2 years. In addition to the
lower relative prices of foreign cotton the larger supplies of this cotton
relative to American in regular channels of distribution are no doubt also
contributing to the reduced exports. The unusually high prices of spot
cotton relative to futures contracts have also been unfavorable to exports
and to foreign mill takings of American cotton.
In October, exports of American cotton were less than in October last
year by 334,000 bales or 42 percent. For the 3 months August through October,
the 1,054,Q00 bales exported were nearly 600,000 bales or 36 percent smaller
than a year earlier and the smallest for the period since 1920. Experts, as
reported to the New York Cotton Exchange, from August 1 to November 17 were
less than in the corresponding period a year earlier by about 850,000 bales
or 38 percent.
United States Government loan stocks increased about 1,150,000 bales
during the 4 weeks ended November 23 and on that date totaled approximately
9,860,000 bales. Assuming no net change in these stocks during the re-
mainder of the season, the world supply of "free" American cotton for the
current season would total about one-eighth less than for last season. On
the other hand, the latest estimates indicate a world supply of foreign
cotton practically the same as in 1937-38.
- 2 -
- 3 -
THE COTTON OUTLOOK FOR 1939
(Revised as of November 25)
World Cotton Supply at New high
The 1938-39 world supoly of commercial cotton is now (late November) ex-
pected.to be about 50,900,000 bales,-which is slightly larger than the record sup-
ply of the previous sc-snn ei-li 28 percent grec.ter than the 10-year (1927-28 to
1938437.) average. Thi- woul- be the third consecutive season in which world
supplies" reached a nvw igh. Thc world carry-ever of cotton of 22,600,000 bales
on Augusr 1, 1938 was 8,A0000CO0 bales larger than a y.ar earlier and 4-1/4 mil-
lion bal-s larger than the pruvio:.s peak -of 1932. This marked increase in
carry-ovcr, however, is largely offset by a sharp reduction in the United States
crop and some decline in foreign production.
The world supply of American cotton is expected to total nearly 25.7
million running bales which is materially larger than that of the previous sea-
son and nearly 'nu-fifth larger than the 10-ycar average, but 2 percent less
than the record supply of 1932-33. The estimated 1938 domestic production is 35
percent -less than the record harvest of last season and 8 percent below average,
yet the reduction this year was less than the increase in carry-over. At the
beginning of the current 'scas'on, the world carry-over of American cotton totaled
13.65 million bales compared with 6.2 million bales a year earlier. It was 62
percent above average and considerably larger than the previous peak reached in
Despite a prospective decline in foreign production of commercial cotton,
the indicated 1938-39 world supply of foreign cotton is now estimated at
25,200,000 bales or 478 pounds net weight. This is slightly smaller than the
record supply of the previous season, 38 percent above the 10-year average, and
nearly two-thrids larger than in 1932-33. The world carry-over of 9,000,000
bales of foreign cotton on August 1, 1938 was one-fifth larger than the record
carry-over a year earlier, 56 percent above average, and three-fourths larger
than in 1932. Although the 1938-39 f reign production of commercial cotton,
now estimated at 16.25 million bales, is 10 percent less than.the record crop
of last season, it is 29 percent above the 10-year average and 55 percent larger
than the 1932-33 crop. Present estimates indicate that much of the decrease in
the 1938-39 production will result from a sharp decline in the Chinese crop and
a greatly reduced Egyptian crop. While a substantial proportion of the net in-
crease in foreign production compared with either the 10-year average or with
1932-33 has occurred in the larger producing countries, the increase which has
resulted from the marked expansion in many other countries has also been im-
Should the acreage planted to cotton in the United States next spring
total about the same as in 1938, this acreage with abandonment, yields per acre
and bale weights equal to the average for the last 10 and 5 years (ending with
1937) would give a 1939 crop about 800,000 to 1,600,00) running bales smaller
than the present estimate of the current season's production. Although it seems
probable that the world carry-over of American cotton on August 1, 1939,
will be somewhat larger than a year earlier, such a crop would probably result
in a 1939-40 world supply of American cotton not greatly different from that
of the present season. The indications are that the carry-over of foreign cot-
ton on August 1, 1939 may be somewhat smaller than or possibly about the same
as at the beginning of the present season, It is quite possible that foreign
production in 1939-40 may also be somewhat smaller than in the current season,
World Cotton Consumption Shows Material Decline
Total world mill consumption of 27,565,000 bales of cotton in 1937-38
was 10 percent below the record consumption of the previous season but was
2,000,000 bales larger than the 10-year (1927-28 to 1936-37) average and.the
third largest in history. Of the 3,100,000-bale decline in world consumption
last season, American cotton accounted fcr about 2,200,000 bales and foreign-
cotton for less than 1,000,000 bales.
Partly as a result of larger supplies and lower prices of American cot-
ton relative to foreign growths, last season's consumption of American cotton
outside of the United States represented a slightly larger proportion of the
total mill consumption of all growths.than in the previous season. But, de-
spite this, the quantity of American cotton consumed in foreign countries last
season was slightly lower than in the previous season and the smallest since"
1923-24. It was 27 percent below average. Largely because of the marked re-
cession in general business conditions in the United States, domestic consump-
tion of American cotton was smaller by nearly 2,200,000 bales or 28 percent
than the record consumption of the previous season and was 6 percent smaller
than the 10-year average.
The decline of about 1,500,000 bales or 56 percent in cotton consumption
in China last season, chiefly because of the conflict with Japan, was partly
offset by increases in mill consumption of foreign cotton in Russia, India, and
a few other countries. In most other foreign countries, consumption for the'
year ended July 31, 1938 was not materially below that of the preceding season
despite a marked declined during the latter part of 1937 and the first half of'
Cotton consumption in the United States during the first 3 months pf'the
current season, averaged considerably above, the average for 1937-38. Further-
more, stocks of cotton textiles in channels of distribution were considerably
beinw a year earlier. These factors, together with an expected improvement in'
domestic business conditions and consumer incomes, should result in a substan-
tially larger United- States consumption of cotton in 1938-39 than occurred in ',
the past season.
In most foreign countries, however, cotton consumption in the early part
of the current season was somewhat below the average for the last season and
mill activity was being further curtailed. This and prospects for little im-
prevement in general economic conditions in foreign countries during the first
part of the current season and increased restrictions on cotton consumption in
Japan make it seem probable that the total consumption of both American and
other cotton in foreign countries would be lower during the 12 months ended
July 1939 than in the past season. The European political crisis makes the
cotton and cotton-textile outlook especially uncertain, but it is expected that
an increase in United States consumption of American cotton may about offset
Cott on ut] ook
the prospective decline in the foreign consumption of this cotton. It seems
probable that the 193g-39 foreign and in turn, the world consumption of other
cotton (other than American) probably will not exceed, and may be somewhat
smaller than, that of 1937-38.
Cotton Prices Pecline Gross Farm Returns from Cotton Decrease
The weighted average 'rice of S.4 cents per pound received by domestic
cotton producers for lint in the 1937-38 season was 3.5 cents or 32 percent
less than in the previous season, the lowest since 1932-33 and one-third less
than the average for the 10 years ended July 1937. In the first quarter of the
present season, farm prices of lint cotton averaged slightly less and cottonseed
approximatel- 11 percent more than in the 12 months ended. July 1938. Should
prices continue at about present levels during the next few months, this together
with the fact that the quantities of cotton and cottonseed available for market-
ing during the current season are estimated at about one-third less than last
season, would. result in the gross farm returns from the 1938 cotton crop being
materially less than the comparatively large returns received from the large
1937 croo and the smallest since 1932.
Farmers' 1938-39 returns from the disposition of their cotton crop will
be supplemented by about $265,000,000 of Government payments with resrpct to
cotton, compared with $72,000,000 of such payments last season. :cve ..-reless,
the total farm returns from the 1938 cotton crop, including Governmn.t :.yrmnts
with respect to cotton, may be substantially blow those of the previous season
and considerably smaller than the 10-year average.
With the large 1937 crop and despite substantially lower prices, total
farm returns of $795,000,000 from lint cotton during the past marketing reason
were $31,000,000 larger than in the previous season, the largest since 1929-30,
and only 1 percent less than the 10-year average. Cottonseed prices were also
much below those of 1936-37 and the loviest since 193 -34. Gross farm returns
of $123,000,000 from cottonseed, while lower than in the previous year, despite
the large marketing, were larger than in any other year since 1929-30 and 19
percent larger than average,
The combined gross farm returns from cotton and cottonseed in 1937-3",
excluding Government payments, were slightly large- than in the previous season,
the largest i!' 8 years, and somewhat larger thT.: the 10-year average. Including
Government payments with respect to cotton, thlse returns w7cre a little less
than in 1936-37 but more than twice as large as in 1932-33 ind considerably
World Carry-Over Greatly Increased: Rpaches Iew Hie_
The world carry-over of 22,600,000 bales of all cotton at the beginning
of the 193g-39 season was ,800,000 bales or about 64 pe:-ce3:t larger than a year
earlier, nearly one-fourth larger than the noevious record carry-ov-r of August
1, 1932 and nearly three-fifths greater than the 10-year (1927--6) average. A
large proportion of the increase in total strcks during the 1937-38 season was
accounted for by a rise of 7.4 million bales o 119 percent in American cotton,
although the carry-over of foreign growths increased 1,400,000 bales or 19 per-
cent. The approximately 13.65 million bales of American cotton on hand through-
out the world on August 1 last was considerably larger than the previous high
--- -6 .-
reached in 1932 ad- 62 p-'reeret larfrr .tman .the 10-year average. The large increase
in the stocks of f-reign cotttdn- during the.past 'season (largely because of gains.
in sundry growths) raised such stocks above the record high of P. year earlier
and resulted in a total carry-over of foreign cotton which was 56 percent larger
than the 10-year average. .
The exce-tionally large increase in.tho stocks of American and foreign
cotton in the 1937-38 season was chiefly the result of the record production
of these growths, the marked recession in general business activity and its
effect on cotton consumption, the disrupted economic conditions in Japan and
China, and the further impetus for the substitution of synthetic fibers for
cotton because if nationalistic and military activities. In vie-7 of present
prospects for c:nsunption and production in 1938-39, it seems probable that the
world carry-over of Anerican cotton on August 1, 1939 will increase somnorrhat.
The carry-over of foreign cotton. soenis likely to be about the sane as or somewhat
smaller than o. Aucust 1, 1935,
courercial: World carry-over .by gro--.ths, specified periods
SAu u0st 1
1938-39 as per- Percent
of average S.6
of 1937-33 : 156.2
Sundry Total All
grths: : American : -ro .ths
gro7ths foreign crod^hs
bales /*. bales i
Percent Percent Percent
'bales -./. ""
Conoiled frrnr ropo.-ts of the :Tew York Cotton ExchanCe Service.
I/ America. in. running bales (counting round as half bales) and foreign in baleal
of a-proxinately 475 pounds not. / Prelininary.
: .. :
World Production Greatly Decreased Largely Beca',se of Decline -'-
in the United States
The world production of corzercial cotton for the current season ib x-
nected. in late october t;: be about 2g,250,000 bales, which is approximately :
5,300,000 bales or almost one-faurth less than the record production of 1937-3v .
Such a crop, however, would bo, about .10. percent. larger than the 10-year (19273C.,
average and the third' largest .in history. ..On the basis of present estimates,
approximately three-fourths of the decrease in comparison with last season
would be accounted for by a decrease of 6,400,000 tales in the United States
The 1938 United States crop which according to the Toverit?r estimate of
12,157,000 bales of 478 pounds net is expected to he equivalent to about
12,000,000 running bales, including an allowance for the city crop. This is
more than one-third smaller th-an the record 1937 crop and the smallest, with
two exceptions (1954 ..nd IJ.''. in 15 years. It is 1,100,' -O `Ua'les or 9
percent less than the 10-year average. The marked decrease in the current
American crop as cormpeed with that of 1957 is accounted for by a reduction
of about one-sixth in the indicated yield per acre and one-fifth in acreage.
The rather sharp decline in the 1938 harvested acreage reduced it to one-fourth
less than the 10-year average and to the smallest figure since 1900. While the
indicated average United States yield per acre is 47 pounds less than in 1937,
it is higher than any cther year since 1898 and 22 percent nigher than the
10-year average yield. Although insect d;m._ge was greater thah in the 2 pre-
ceding years, the high indi cLted yield of the current season, like that of
those years, is probably largely accounted for by the use of more productive
land and improved cultural practices.
The production of commercial cotton in foreign countries in 1938-59 is
expected (in 1,te Toveriber) to total about 16,250,000 bales of'478'pounds
net.. This is approxirLtely 1,900,000 bales less than the record crop of the
past season but is the third largest in history and is 3,700,000 bales or
nearly 50 percent larger than the 10-year average. The prospective decrease
in the current crop in comparison with the 197,-38 production is largely
accounted for by expected large decreases in China and Egypt, and small
decreases in northern Brazil and a number of the smaller producing countries.
These same countries, together with Russia, account for :. Inrge proportion of
the increase over the 10-year average. Should the total 1938-39 foreign
production-decline, .s is now expected, the average rate of increase in
foreign production since 1932 would be greatly reduced. But in spite of this,
the annual rate of increase in the 6-year period, 1932-38, would average nearly
1 million bales. During the preceding 10 years, the annual rate of increase
was 0.3 million bales and in the 25 yecrs ending with 1972-33 was less than 0.2
million bales. The lower prices received, for the 1937 cotton crop in most
foreign countries and the unsettled conditions in China are important factors
that have at least temporarily halted the marked increase in foreign production
that has been under way since 1952.
Cotton, commercial: World production by growths, specified periods
to 1936-37 ...
:Egyptian: Indian : Sundry
: : : growths:
bales 1/ bales 1/
1938-39 as per-
average .........: 102.6
1937-38 .........: 70.7
Compiled from reports of the
1/ American in running 'bales
of approximately 478 pounds n
2/ Excludes Burma.
Percent Percent Percent
105.5 152.8 129.2 91.5 110.0
98.7 89.2 89.5 65.2 77.2
New York Cotton Exchange Service.
(counting round as half bales) and foreign in bales
Should the referendum held under the provisions of the Agricultural
Adjustment Act of 1958 show that two-thirds or more of the cotton growers
favor marketing quotas in 1939, acreage allotments v ill again be made to
individual producers ah in 1938. Should allotments, if made, be about the
same as the total of 27.4 million acres allotted in 1938 and should farmers
plant the same proportion of their allotment, next year's acreage would be
approximately the same as in 1938. Such a planted acreage with abandonment,
yields per acre and bale weights equal to the average for the 10 years, 1928-37,
would give a crop (including an allowance for city crop) of 10-1/3 million
running bales, and with averages equal to the 5 years 1933-37, 11.2 million
The outlook with respect to cotton production in foreign countries is
uncertain. The low prices being received for the current crop in most countries:
and the possibility that in many countries other enterprises may prove con-
siderably more remunerative relative to cotton production than in most of the .
past 5 years, may result in some reduction in the 1939-40 cotton acreage.
,- i: |
- 9 -
World Supply Again Reiaches New High
The record world carry-over on August 1, together with the prospective
1938-39 production, giv.s an indie;ted world ipinly of all cotton of 50',900;000
bales. This is about 500,U 0 bal. s Jarger th .n the 1937-38.supply and 11,000,000
balLs or 28 percent larg.-:r th-,n t:e 10-y-ar, 1927-23 to 19:;6-37 vvor-ge. A
supply such i.s is now indJic ,ted would result in the world -Lpply.reaching a new
record high for the third consecutive q r. Pres-nt (late NovLin"cr) estimates
ov r r t ie )I,,:. V. s ,Io ), P
indicate that in incr:,_ e/"l' LC-OJ, ,'D .IOEs in the supply of Anorican is
partially offset by a a-iall Iinc in the su ply of foreign cotton. 'In com-
parison with thi 10-y .'-r v t..e (1927-36), however, the indi cted supply of
Americf.n cotton for the current s..-son sho.vs an increase of.4,ib00,000 bles,
whcre':s the supply of foreign cottcn, as now tEtirrted, shows an increase of
The 1933-59 supply of American cotton is now estimated at 25,650,000
running bales, While this is. 1 percent larger than last season's supply, and
nearly one-fifth Lkrgur tha t the 10-year aver .i.C,, it is ne;-rly 600,000 bales
less than the record supply of 1932-53. On IIovember 23, approximately 9,860,000
bales of the indicated total 19Z8-39 uorld sunply of American cotton w~ere re-
ported as being held as collclt.ral against Govrrnment loans on cotton. The '
deduction of such- stocks from the indicated totol world supply would.:give:a-a --
supply of so-called "frc-," Arkmrican cotton about 12 percent smaller than the,
supply of such cotton in the preceding.season .nd much smaller than the 10-year
average. Present mcrkrt prices in relation to the 1938-loan values, together
with an increase of 1,150,000 b-.les in the reported loan stocks during the 4
weeks ended l.ovember 23, and the fact that a considerable proportion of the
1938 crop is still in the possession of farnmrs, suggest that the supply of
"free" American cotton may be further reduced by a substantial quantity.
The estimated 1938-39 world commerci-:l supply of foreign grown cotton,
of 25,200,000 bales, is 2 percent smaller th.,n th t of last season, 6,900,000
bales or 38 percent above the 10-year (1927-28 to 1.936-37) average and 9,600,000
bales or 61 percent *lrgcr than in 19-2-33. A supply such as now indicated
would make the first year since 1931-32 that the supply of foreign cotton has
shown a decline in comparison with the preceding season.
By fir the greater part of the increase in the supply of foreign cotton
in the last 5 or 6 years has occurred in sundry growths (foreign cotton'other
than Indian and Egyptian). A considerable pert of thisincrease, in turn, has
been due to increased production in Russia, here there has been an approxi-
mately corresponding increase in mill consumption. Supplies of Brazilian cotton
have also increased greatly during the last several years as has the supply of
" cotton grown in many of the smaller producing countries. .The production and
supply of Chinese cotton increased greatly between 1932 and 1936 but has since
- 10 -
Cotton, commercial: World supply by growths, specified periods
Season : : :
beginning :Egyptian :Indian : Sundry : Total : American : All
Aug. 1 : : foreign: : kinds
: 1,000 1,000 1,000 1,000 1,000 1,000
Average 1927-29 ; bales 1/ bales 1/ bales 1/ bales 1/ bales 1/ bales 1/
...... 2,666 7,207 8,462 18,335 21,564 39,899
1932-33 ...........: 2,485 5,994 7,094 15,573 26,224 41,797
1933-34 ...........: 2,829 7,368 .8,464 18,661 24,521 43,182
1934-35 ...........: 2,604 7,546 10,163 20,313 20,277 40,590
1935-36 ...........: 2,596 7,817 11,453 21,856 19,536 41,392
1936-37 ...........: 2,667 8,475 13,985 25,127 19,373 44,500
1937-38 ...........: 2,960 2/8,151 14,584 25,695 24,647 50,342
1938-39 3/ ........: 2,691 2/8,106 14,413 25,210 25,652 50,862
1938-39 as per- : Percent Percent Percent Percent Percent Percent
centage of :
average ..........: 100.9 112.5 170.3 137.5 119.0 127.5
1937-38...........: 90.9 99.4 98.8 98.1 104.1 101.0
Compiled from reports of the New York
1/ American in running bales (counting
bales of approximately 478 pounds net.
2/ Excludes cotton produced in Burma.
Cotton Exchange service.
round as half bales) and foreign in
Although prospects point to some increase in the carry-over during the
current season, the total world supply of cotton for 1939-40 may not be greatly
different from that of the present season. For reasons already mentioned (see
production section), there is some possibility that the 1939-40 foreign acreage
may be slightly blow 1938-39. While the 1939 United States acreage may be
about the same as in 1938, average yields per acre might easily result in.a
crop considerably smaller than that of the current season.
World Mill Consumption Below Average
World cotton consumption in 1937-38 of 27,565,000 bales was 10 percent.
less than the record consumption last season but 8 percent more than the average,
for the 10 years ended with 1936-37, World consumption of 10,930,000 bales of.
American cotton was 16 percent less than a year earlier and 17 percent less thae
the 10-year average. In the United States, consumption of American cotton de-
creased about 2,200,000 bales or 28 percent from the new high record for the
preceding season. In foreign countries, however, consumption of American cotton
was about the same as in the previous season, but was about 27 percent less then
average. World consumption of cotton other than American in 1937-38 was about
16,635,000 bales, which was about 5 percent less than in the previous season,
but was about one-third more than the 10-year average. Although consumption
of Indian and Egyptian cotton hes increased in recent years, most of the sub-
stantial increase in consumption of foreign cottons since 1932-33 has been in
sundry growths. Last s-ason, however, consumption of Chinese cotton in China
was down about 1,500,000 b-tles or more than 50 percent from the record con-
sumption of the previ us season, and this drop was nearly double the decline
in the world consumption of foreign cotton. Consumption of other sundries
cotton continued to increase and sundry cottons other than Brazilian, Chinese,
and Russian constituted, in the aggregate, about a fifth of the total increase
in sundries for 1937-38, as compared with the 10-year average.
Cotton: Mill consumption in the w-.rld
beginning: United States : Foreign countries : World
August 1 :
:American:ForEi M_ Total :American:Foreign: Total :Americcan:FDreign_ Total
: 1,000 ..,000 1,000 1,000 1, ,1 1,000 1,000 1,000 1,000
Average : bales bales bales bales bales bales bales bales bales
1927-28: .1 -w -w xr / w iw
193 6,166 7,264 12,125 19,389
13,237 12,31 25,555
1933-34 5,533 147 5,700 8,227 11,675 19,902 13,7o80 ll,22 25,602
1934-35 : 5,241 120 5,361 5,965 14,162 20,127 11,206 14,282 25,488
1935-36 : 6,221 130 6,351 6,282 15,075 21,357 12,503 15,205 27,705
1936-37 : 7,768 182 7,950 5,325 17,714 23,039 13,093 17,596 30,689
1937-3 2j 5.616 132_ 5,748 5,314 16,503 21,817 10,930 16,635 27.565
1937-38 as percentage of 10-year averagece and of 1936-37
10-yr.av 94.0 68.4 93.2 73.2 136.1 112.5 82.6 135.0 107.9
1936-37 : 72.3 72.5 72.3 99.8 93.2 94.7 83.5 94.5 89.8
I/ American cotton.in running bales -nd foreign in equivalent bnias of 478 pounds
net weight. 2/ Preliminary.
Bureau of Agricultural Sconomics. Compiled from reports of the New .:ork Cotton
In the United States, the decrease in industrial activity, employment,
payrolls, and general purchasing power, -'hich began in the late sum'or and early
fall of 1937, was an important factor in the sharp reduction in domestic and in
world consumption of American cotton. But large stocks of cotton goods in channels
of distribution in the United States at the beginning of l-st season also tended
to restrict mill sales of unfinished cloth and yarn.
In foreign countries, the recession in business was not nearly so pronounc-
ed and came later than in the United States. In many of these countries, armament
manufacturing helped to sustain consumer purchasing power and midl consumption of
cotton. But military operations in China resulted in a drastic reduction of cotton
consumption there and in Japan during the latter part of the season. Increased
production of rayon yarn and staple fiber, especially in Germany, Italy, and Japan
displaced considerable cotton and resulted in a smaller consumption of all growths.
On the basis of present conditions, total world consumption in 1938-39 is
not expected to exceed materially that for last season and may be considerably
smaller. Present indications are that consumption of American cotton in the United
States will increase during 1938-39 but this will be largely offset by decreases in
the use of American in Europe and Japan. World consumption of foreign growths may
about equal that for last season. Information now available points to decreases in
Japan and in Europe, except in Russia, but these may be counter-balanced by a sub-
stantial increase in Chinese consumption and some further expansion in India, Russia
and in a few other less important cotton-consuming countries.
United States Consumption Expected to Increase in 1938-33
Consumption of about 5,800,000 bales of cotton in the United States in
1937-38 h.as the smallest since 1934-35. It was 28 percent less than the unusually
large consumption in the previous season but only 7 percent less than the average
for the 10 years ended with 1936-37. Although consumer-buying of cotton textiles
decreased during the 1937-38 season, stocks of finished goods in channels of
distribution are now considerably smaller than a year ago. And with prospects for
increased industrial activity and payrolls, larger cloth sales by mills are expected
in 1938-39 than in the previ us season. Mill activity for the first 3 months of the
current season was substantially above the low point reached in the last half of the
previous season and above the average for the previous season but was below the
comparatively high level for the corresponding months a year earlier. On the basis
of these conditions, the probabilities are that consumption in the United States in
1938-39 will exceed that for last season, and may exceed the 10-year average.
Foreign Consumption Expected to Decrease Further in 1938-39
Total mill consumption in foreign countries of about 21,800,000 bales in
1937-38 was 5 percent loss than in the previ-us season but about one-eighth more
than the average for the 10 years ended with 1936-37. Consumption of 5,300,000
bales of American cotton outside the United States last season was approximately
the same as in 1936-37 but 27 percent less than the 10-year average. Total con-
sumption other than American cotton in these countries of 16,500,000 bales was 7
percent less than in the previous season but more than one-third larger than
average. American cotton was 24 percent of the total consumption outside the United
States in 1937-38, against 23 percent in the previous year and 37 percent during the.
10-year period 1927-36. Increased competition from rayon has reduced the total
consumption of cotton, especially in some of the most important cotton-consuming
countries but substitution of foreign growths for American has accounted for the
sharply reduced proportion of American cotton used in foreign mills during recent
Total cotton consumption in foreign countries in 1938-39 is expected to be
somewhat smaller than last season but the outlook in both Europe and the Orient
is very uncertain.
Cotton: Miill consumption in principal foreign regions
Season : Europe Oriert Elsewhere
beginning: __ : _
Aug. 1 American: Foreign:_ totall :Americacn:Forcign_ Total ;Amc rice.n:Fo'eign;: Total
S1,000 1,000 1,000 1,000 1,000 0 1000 100 1000 1,000
beles blles brl3s bl.es bales bales beles beles bales
Average : / I 1/ -/ 1/ 1/ 1/ I1
1,574 5,995 7,869
: 5,633 5,043 10,676 2,321 5,779 8,100 273 853 1,126
: 3,6o 6,055 9,735 2,032 7,009 9,041 253 1,o09 1,351
4:,258 6,708 10,966 1,757 7,264 9,021 267 1,103 1,370
3,596 7,s68 11,464 1,420 8,269 9,699 309 1,277 1,586
S3,398 7,975 11,673 1,322 7,os5 S,407 294 1,443 1,737
: 1937-38 as percentages of ]O-year average and of 193--37
71.9 152.0 112.3 70.5 118.2 106.g 119.0 163.4 153.7
102.8 101.4 101.g q3.1 85.7 S6.8 95.1 113.0 109.5
SCompiled from reports of thi New York Cotton Exchange Service.
/ American cotton in running bales and foreign in equivalent bales of 475 pounds
Europe. Total consumption of cotton in Europe during 1937-38 was about
11,700,000 bales or slightly more than the unusually large consumption in the
previous season and about 12 percent more than the 10-year average. Consumption
of American cotton increased a little in 1937-38 but was 28 percent less than
average. Consumption of foreign cotton was up slightly from the previous season
and about 52 percent more than average. Exports from the United States to
European countries increased substantially in 1937-38 and European stocks of
American cotton at the beginning of the current season were considerably larger
than a year earlier. Rayon is expected to displace additional quantities of cotton
this season, since forced substitutions are likely to continue in some of the
major cotton-consuming countries. Present indications are that consumption of
cotton, particularly American in Europe in 1938-39 will not exce-d that for the
previous season, and it may be considerably smaller.
Cotton: Mill consumption in Europe
eason Uited K Continent, excluding
Season : United Kingdom : Continent Russia
Aug. 1 _Americ an.FoTeji_ TAmeri:American:Fdreign: Total AmericanerForeign I Ttal
: 1,000 ,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
:bales bales bales bales bales bales bales bales bales
Average V: I/ f / j/ I7 FT I/
1936-37 : 1,369 1,313 2,687 3,774 3,929 7,703 3,627 2,078 5,705
1933-34 : 1,403 1,256 2,659 4,230 3,787 8,017 4,150 1,902 6,052
1934-35 : 941 1,650 2,591 2,739 4,405 7,144 2,704 2,556 5,260
1935-36 : 1,295 1,541 2,836 2,963 5,167 8,130 2,874 2,805 5,679
1936-37 : 1,150 1,887 3,037 2,446 5,981 8,427 2,446 2,833 5,279
1937-38 2/: 1,144 1,481 2,625 2,554 6,494 9,048 2,554 3,008 5,562
1937-38 as percentages of 10-year average and of 1936-37
10-yr.av. : 83.6 112.e 97.7 67.7 1K5.3 117.5 70.7 144.7 97.5
1936-37 : 99.5 78.5 s6.4 104.4 108.6 107.4 104.4 106.2 105.4
Compiled from the reports of the New York Cotton Exchange Service.
j/ American cotton in running b-les and foreign in equivalent bales of 478 pounds
net weight. 2/ Preliminary
In the United Kingdom, total consumption of 2,600,000 bales in 1937-38 was'
16 percent less than in the previous year and about 2 percent smaller than the 10-
year average. American cotton was 44 percent of the total in 1937-38, against 38
percent in the previous season and 51 percent during the 10-year period ended with
1936-37. British exports of cotton cloth during 1937-38 were 21 percent less than
the preceding season ard 36 percent smaller than the 10-year average. Although
cotton-textile exports may increase a little in 1938-39, they were down for the
first quarter of the season rmd there is little hope now for a substantial improve-
ment over the total for last season. Sales of cotton textiles within the United .
Kingdom in 1937-35 were fairly well sustained but some concern is expressed in
recent reports about sales in the domestic market during 1938-39. Considering
prospects for both exports and for the home market, early-season indications are
for total cotton consumption not likely to exceed that for last season but American
cotton may share a somewhat smaller percentage of the total than in 1937-38.
On the Continent of Europe, total mill consumption was 9,000,000 bales in
1937-38, or about 7 percent larger than that for 1936-37 and 18 percent more than
T.he 10-year average. Consumption of foreign cotton has increased substantially,
whereas consumption of American has decreased during recent years. Consumption of
American cotton was 2,550,000 bales in 1937-38 or 28 percent of the total, against
e3 percent in the previous year and 49 percent during the 10 years ended with
1936-37. Cotton consumed on the Continent of Europe, except in Russia, is nearly
all imported. Excluding Russia, the consumption of American cotton on the Con-
tinent was 46 percent of the total last season, or about the same as in 1936-37 a
compared with an average of 64 percent during the 10 years 1927-36.
-- 15 .-
It seems probable that total consumption of cotton in Europe would have
been considerably larger last season than in other recent years, had not
substantial quantities of rayon boon used in clothing and household articles
in those countries. While rayon has benr a factor, the use of foreign cotton
has-accounted for most of the decline in the consumption of American cotton.
Special trade arrangoe.nts bet:won certain importing countries and a few
foreign cotton producing countries, during the last few years, tended to
increase the use of foreign cotton relative to Anerican in these importing
countries. But. it. seems likely that even without thcse arrangr.i.nts- alr'.oct
all of the substantially increased supplies of forciLn growths would have
found their v.ay into world :ills, although prices received by, producers of
the growths involved in barter arranr-;.-. nts probably would have been sor.idwhat
.The situation on the Continent of Europe is currently so uncertain that
the outlook for cotton consumption ther- cannot be stated with r.:uch hope of
accuracy. St best, however, there Sic.:s little prospect cfr an increase in
the total consumption of cotton in cor.tinental Europe in 1933-39 over 1937-38.
The Orient. Mill consum-ption of only 0,400,000 bales of cotton in
the Orient- was about 1,200,000 bales loss than in the previous season but
about 500,000 bales roro than thd 10-year average. Consumption of ;r.erican
cotton was slightly sL=allor than -in the previous season ind 30 percent less
than tho 10-ycar average. Most American cotton consuncd' in the Ori:ent is .
utilized in Japanese mills, since those in China and India r.ainlt use native
cotton. In 1937-38 there was a slight decrease in the consumption of
ATcrican cotton in Japanese cills and this vwa only partly offoet by a largeg
p'rccntago but small actual increase in consumption by Indian cills. Con-
sumption of foreign ,rogwths decreased about 240,000 bales in Japan and
1,500,000 bales in China during 1937-38 as cor.pared with the previous season.
Despite the military disturbances in China, consumption in that country is
expected to increase in 1938-39 b'ut is likely to be substantially less than
in 1936-37, and total consumption in the Orient in 1938-39 r.ay be all.ost
equal to th-.t-for 1937-38.
In J'pan, the consur..ption of about 3,500,000 bales in 1937-38 was
about 10 percent loss than the record consur.ption ii 1936-37 but 3 percent
nore than the 10-year average. Consu.mption of Ar.crican cotton dcoreosed
somewhat ar-d represented about 35 percent of the total or about the saune as
in the previous season and 47 purccnt for the 10 years 1927-36. Indian cotton
is still the principal competitior of A'.:erican cotton in Japan but imports
of sundries have increased substantially in recent years, comprising 30 percent
of the total in 1937-38, against a 10-year average of 8 percent.
Japan, in recent years, has become the world's leading producer of
rayon, and Governcent decrees issued in the succr.r of 1938 apparently require
the use of rayon in r..ost textiles for consumption in Japan and in other areas
under 'Japanese control. This would seen to indicate that considerably more
cotton rmay be displaced by rayon in 1938-39 than in other rucont years. Cotton
textile exports from Japan slumped during the late summer and fall months,
and although some increase from present low levels is anticipated, total cloth
exports probably will be smaller in 1933-39 than for last season. These,
along with severely reduced stocks of all growths of cotton in Japan and
current shortages of foreign exchange, seeo likely to hamper consumption this
season, and the total is likely to be substantially less than last season.
Cotton: Mill consumption in the Orient
beginning:_ Japan China India I
Aug. 1 :ALirica an:Foreign:Total:American:Foreign:Total:American:Foreign:Total
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
:bales bales bales bales bales bales bales bales balos
: 1/ 1/ 1/ 1L 1/ L/ ./L L
1936-37 :1,43.8 ..1,68 3,Z076.. 363.._ 1,992 2.355. ... .68 __ 2,.o4 2,132
1933-34 : 1,857 1,432 3,289 423 1,981 2,404 41 2,061 2,102
1934-35 : 1,737 1.911 3,648 247 2,313 2.560 39 2,338 2,427
1935-36 : 1,619 1,930 3,549 83 2,358 2,441 34 2,454 2,488
1936-37 : 1,367 2,514 3,881 21 2,747 2,768 13 2,450 2,463
1937-3.l 1,209 2,276_ 3, 5 16 1 ,214 1,230 l 2,814 2,867
: 1937-38 as pcrcontages of 10-year avcra ao and of 1936-37
10-yr.av" 64.1 138.9 103.3 4.4 60.9 52.2 77.9 -136.-3 134.-5
1936-37 :88.4 90.5 89.8 76.2 44.2_ 44_.A _k0 *7 114.9 11.6*4l
i/ American cotton in running bales and foreign in equivalent bales of 478
pounds net cvight.
2/ Prclir.;inary. Compiled from the reports of the
New York Cotton Exchange Service.
In China, mill consumption of growths other than American, principally
Chinese cotton, decreased to about 1,230,000 bales in 1937-38, which was less;
than half as much as the record consumption in the previous year and less than
two-thirds of the 10-year average. Consumption of American cotton continued
very small and substantially less than the 10-year average. On the basis of
present conditions in China, total consumption is expected to increase in 1938 .
but it is likely to be much less than the peak consumption for 1936-37 and
somewhat less than the 10-year average. Consumption of American cotton will
probably continue small.
In India, total mill consumption of 2,870,000 bales during 1937-38 was
about 16 percent moro than in the previous year and about a third larger than.l
the 10-year average. Since displacements of imported cotton textiles by the .
output of Indian mills is expected to continue, total mill consumption in Indoi
in1938-39 will probably be at least as largo as in the previous season.
Other countries. Foreign countries outside Europe and the Orient
consue:.d about l,.70,00' b.tlcs i, 1937-3C, which was the largest on record
and about 54 porce-t riorc t:'an the 10-year av..rage. Coniiu..rption of A..iorican
cotton, .lost of whi.h ,wa i.. C:.na; ,'.cerc..cs sli.-.tly, but c.. st one--fifth
larger thua the l10- rc..r ;.vtra.L CoCrLu..K',ticn of cotton other Lt.-n A1..-rican
incrcasci a ,d ;:'as ai.:ost t.v'-thirds large-r th L. ave -. c. Incrt '3es in con-
surnpticn of native cotton in Brazil, I:exico, al.d the; lots inl-r;tant cotton-
producing counLricr of ilcrl: a d southh .ilric-a accoui.tc f.-,r ,cst of the
incron.c i.i ti co.3 pti:r- c3tt:-: other t:.?.n A ;... .icar. 1.asu ac.asor. in
"other countries", a: coI..p ;id w'.ith the previous scu.eon a.d the 10-:. ar average.
And t'he upwa.rd tren:d in c -i:,u.:upt ion of those growth; scr..s li'kcl" to csnt inue
Frine and Income
Cotter priccs- decline
Thc avcrane price ci" 0.o.6 ccnts for ,.;ildli., 7/3 inch actton ir the 10
designated ;.iri:ots for the 5-37-3j sc'as'-n as 4.04. c4nts prr ,cund levor than in
the previous scesonr a:.l 3.7- c.ints bjlo;. the :ivcraro for tnc 10 years 1927-30,
The weighted avr.?-':c ,rice rcceivd by gro.:crs during the 1937-38 season of
approxir.:.tely 32.4 cLts was 3., cent s lou.cr rL fn for th; pD-'rcvious season and
3.9 cents belo., the 1927-36 averag;e. The decline in cotton prices was associa-
ted with substantial i::crLasu in the supplic of both Ar.,orican and forci-n-
rrovm cottonz-, a severe recession in onoeral business activity, a sharp reduction
in cotton e -iill activity, and. r-.arkeod declines in prices of other raw r.aterials.
In the first quarter of thle lproesnt season prices of MAiddling 7/S inch cotton
in the 10 I..arklcts aver:aed 0.69 cents lower than in the ccrrespcnd.ing period
a year earlier. In the first' part of the 1930-39 season prices of futures
contracts declined considerably in relation to prices of spot cotton, reflect-
ing the strengthening influence of the Governcent loan on spot prices. Such
an advance in the basis tens tc increase the hazards of aecunulatini and
carryinC stocks of cotton.
Prices of Indian, Egyptian, and Brazilian cottons declined relatively
loss than prices of American in Liverpool and in 1937-38, were so;.ivwhat higher
in relation to Ar.:erican than in the previous season, and considerably higher
than the average for the 10 years 1927-36. During the first 3 :..onths of the
1938-39 season Liverpool prices of Amnerican cotton averaged so:-.cwhat higher
in relation to prices of Indian and Brazilian cottons than in the 1937-33
marketing season, but averaged soi.iewhat lower in relation to prices of Egyptian
Uppers. As prices of cotton of one growth increase or decrease in relation to
prices of other growths, consui.;ption of the relatively cheap cotton tends to
increase in relation to the total consu:..ed. Such shifts in consur.mptirn tend
to readjust the comparative prices of the various growths in line with their
difference in quality or spinning utility. Over periods of tir.:e long enough
for adjustments to be madc, price differentials depend on the differences
in spinning utility and the relative quantities consumed depend on the relative
quantities produced. These adjustments in prices to differences in spinning
utility and in consui.uption to quantities produced apply not only to different
growths insofar as they represent differences in quality but also to cotton of
different qualities of the sa..o growth.
Cotton: Spot price per pound of specified growths at Liverpool
As a percentage of
Actual prices of spot cotton As engage of
: : American middling
Season :American: Indian :Egyptian:Brazilian: : :
:Middling: average: uppers :Sao Paulo: Indian :
August 7/ : of : F.G.F.: fair : / :Egyptian:Brazilian
: inch__:J tyles ..-: .. : : : .
SCents Cents Cents Cents Percei.t Percent PerCent
Average 1927-26 :
to 1936-37 ... : 14.50
11.07 17. 0
8.61 86.6 125.2 101.0
12.20 74.0 110.6 90.3
13.36 72.3 108.0 97.4
13.45 79.5 114.5 99.8
14.12 79.8 119.0 96.6
10.10 83.9 126.7 98.7
9.50 75.4 127.0 96.3
1938-39 as a : Percent Percent Percent Percent Percent Percent Percent
average .......: 68.1 66.4 73.2 67.5 100.1 107.7 98.6
of J7-3. .-...: 95.7_ 90._ 0 95.6 __ 93.3.... 93-.... 100.2. 97.6
Computed from reports of the Liverpool Cotton Association.
SAs a pcrcentago of LAmrican middlinC and low middling.
1/ ..verago prices for August, Suptomber, and October.
Farm returns from cotton decreases
Should cotton prices continue at about present levels, such prices together,
with the greatly reduced 1933 crop would result in thQ gross farm returns from
cotton in 1933-39, including Government loans and payments with respect to cotton,
being substantially' loss than in 1937-30, and considerably smaller than the 10-year'
&veraog. Zxcluding Government payments but including returns from Government loans.i
total farm returns from the disposition of the 1938 crop would be less than for
any crop since 1932. Government loans to cooperating producers on the 1938 crop
are provided on the basis of 8.30 cents per pound for Middling 7/C inch cotton with
specified premiums and discounts for cotton of other eligible grades and staple
lengths. Should the proportion of the various grades and'staple lengths for the
1938 crop be approximately the same as for the 1937 crop, the qualities specified
as being eligible for the loan would include about 90 percent of the crop. The
1938 Agricultural Conservation payments are at the rate of 2.4 cents per pound
on the normal yield of the cooperating producers 1938 cotton acreage allotment.'
In addition, price adjustment payments which will average about 2.9 cents per
pound on 60 percent of each cooperating producers' 1937 cotton base production
are being paid during the 1933-39 marketing season. Total Government payments
with respect to cotton during the 1933-39 season will amount to approximately
$265,000,000 compared with S72,0000000 last season and the previous record
payments of $100,000,000.
- 19 -
With an increase of about 53 percent in the size of the United States
crop, gross returns to farmers from cotton and cottonseed in the 1937-38
marketing season were slightly larger than in the previous season, despite the
decrease in prices, and about the same as the average for the 10 years 1927-36.
The combined returns to cotton growers from cotton and cottonseed, together
with Government payments with respect to cotton, in 1937-38 was slightly less
than in the previous season, more than twice as large as in 1932-33 and about
9 percent larger than the average for the 10 years 1927-36. When adjusted for
changes in prices of things farmers buy, gross returns from cotton and cotton-
seed in 1937-38, including Government payments, was about 3 percent larger
than that of the previous season and almost 10 percent above the 10-year
Cotton: Domestic prices and returns, specified periods
:Spot prices oflint
Gross returns during marketing season
Weighted Average :
average :for 10
:Centsper Cents per Million
: pound pound dollars
Gov- *:Total, including
ernment :-Governmrnt payments
:Cotton-: pay- :Adjusted to
:seed : ments : Actual:the 1910-14
/ : :level of prices
S: : :paid by farmers
Million -Million Million Million
dollars dollars dollars dollars
g/ Payments with respect to cotton.
The domestic supply of American Upland cotton of staples 7/8 inch and
shorter for the 1938-39 season apparently will be considerably less than in the
previous season but somewhat larger than the average for the 10 years 1928-37.
(The only 10-year period for which such data are available). In addition, the
total supplies of Indian and Chinese cottons for the 193S-39 season are expected
to be somewhat less than in the previous season, with the result that the total
- 20 -
world supplies of cotton with staples 7/8 inch and shorter in 1938-39 probably
will be considerably smaller than for. the previous season and somewhat
smaller than the 10-year average.
Cotton Domestic supply L/ by staple lengths of American Upland
Year : Staple length (inches)
beginning :Shorter: 7/8 :15/16 : 1 :1-1/16 :1- 1/g :1-3/16
Aug. 1 :than : and : and: and : and : and : and
: 7/8 : 29/32 : 31/32 :1-1/32 :1-3/32 :1-5/32 : longer
S1,000 1,000 1,000 1,000 1,000 1,000 1,000
: bales bales .bales bales bales bales bales
to 1937-38 1,787 6,802 4,803 3,074 1,482 958 287
1933-34 .......: 723 6,990 6,197 3,795 1,492 1,204 320
1934-35 .......: 1,017 6,017 4,168 2,894 1,503 1,233 278
1935-36 .......: 1,843 6,004 4,434 2,679 1,399 906 264
1936-37 .......: 1,713 5,432 3,876 3,464 1,780 923 266
1937-38 .......: 2,441 6,835 5.898 4,186 1,934. 1,106 218
1938-39 /....: 1,921 6,o48 6,188 '4,932 3,096 1,086 .302
:Percent Percent Percent.Percent Percent Percent Percent
of average ....: 107.5 88.9 128.8 160.4 208.9 113.3 105.2
of 1937-38 ....: 78.7 88.5 104.9 117.8 160.1 98.2 138.5
1/ Carry-over plus estimated production.
SPreliminary estimate, based on information available early in November.
The indicated domestic supply of American Upland cotton with staples
15/16 inch to 1-3/32 inches for the 1938-39 season showed a substantial in-
crease over that of the previous season and is about 52 percent larger than the
10-year average. The increase in indicated supply of medium staple American
Upland cotton for the 1938-39 season is expected to be supplemented by in-
creases in supplies of Brazilian, and other foreign grown cottons of medium
staple lengths, with the result that the total world supply of these lengths
is expected to be substantially larger in 1938-39 than for any other year of
The indicated 1938-39 domestic-supply of.American cotton with staples -
1-1/8 inches and longer is slightly larger than in the previous season and
somewhat larger than the 10-year average. This increase in supply of long-
staple American cotton, with prospects of some decrease in supplies of
Egyptian cotton, is expected to give a world total supply of these lengths for
the 1938-39 season considerably smaller than in 1937-38 and about the same as
Discounts for 13/16 inch staple early in the 1938-39 season were some-'
whet loss than a year ago but were about 63 percent larger than the average f
the 10 years 1927-36 despite the substantially reduced price level. Prices of
Indian relative to American cotton at Liverpool were somewhat higher early in
the 1938-39 season than in the previous season but were about the same as the
10-year average. The relatively large world total supplies of short staples
is conducive to a continuation of relatively wide discounts for short staples
throughout most of the current season.
- 21 -
Premiums for staples 15/16 inch to 1-1/16 inches, inclusive, continued
to decrease with the decline in cotton prices and eerly in the 1938-39 season
averaged 21 percent smaller than in the previous season and 33 percent smaller
than the 1927-36 average. Early in the 1938-39 season prices of Brazilian Sao
Paulo Fair relative to American Middling in Liverpool were somewhat lower than
in the previous season and slightly lower than the 10-year average.
Premiums for staples 1-1/8 inches and longer were well maintained
despite the decline in cotton prices and early in the 1938-39 season averaged
somewhat greater than during the 10 years 1927-36. If the rate of -eneral
industrial production and payrolls increase as now seems probable, any im-
provements in the demand for fine clothing and for industrial goods requiring
long-staple cotton, as a result of these increases, would be favorable to
maintaining relatively high premiums for the
1938-39 season despite increased competition
longer stapled cotton during the
Cotton: Staple premiums and discounts from prices of 7/8 inch
Year Discount: Prices: Premiums 31
beginning :for :of Mid.:
Aug. 1 :13/161/:7/ 2 : 15/16 1 1-1/16 1-/ :1-3/16 1-1/4
:Cents Cents Cents Cents Cents Cents Cents Cents
Av. 1927-28 :
to 1936-37 : 0.60 12.42 0.38 .g8 1.38 2.01 3.02 5.52
1933-34 ....: .23 10,81 .22 .62 1.10 1.55 2.69 5-12
1934-35 ....: .36 12.36 .32 .81 1.15 1.40 2.36 4.79
1935-36 ....: .39 11.55 .36 .85 1.21 1.68 2.51 4.60
1936-37 ....: .84 12.70 .67 1.36 2.00 3.36 4.34 5.54
1937-38 ....: 1.03 8.66 .39 -73 1-13 2.43 3.95 5.48
1938-39 /.: .98 8.34 .30 .56 .92 2.09 4.02 5.66
:Percent Percent Percent Percent Percent Percent Percent Percent
of average ..: 163.3 67.1 78.9 63.6 66.7 104.0 127.8 104.3
of 1937-38 ..: 95.1 96.3 76.9 76.7 81.4 86.0 97.7 105.1
I/ Average discount at Houston, Galveston, and New Orleans prior to season
1937-38. Beginning 1937-38, ten-market average used.
/ Ten-market average.
Average premiums at Memphis.
Average for August, September and October.
The relatively wide premiums and discounts for staples in central markets
along with the premiums and discounts provided in the 1938 Government loan
to growers, developments in connection with a classification service to
growers in communities organized for quality improvement, and increased available
supplies of planting seed of improved longer stapled varieties are favorable
to further improvements in the staple length of American cotton in 1939.
THE COTTONSEED OUTLOOK FOR 1939
The United States supply of cottonseed for the 1938-39 season is now
(late November) expected to be about 5.8 million tons, which is about .one-third
less than-the record supply of the previous season and 4 percent less than the
average for the 10 years, 1927-28 to 1936-37.
Oil mill stocks of cottonseed at the beginning of the season were at
record levels but these larger stocks will be much more than offset by the sharp 2
reduction in the size of the 1938 cotton crop. Total stocks of cottonseed oil
and of linters and mill stocks of other cottonseed products on August 1 were
also at exceptionally high levels but production during the marketing season
will probably be some 30 to 35 percent smaller than during the preceding season...
Since stocks of all cottonseed products, except linters, on August 1 were a
comparatively small percentage of probable production, the supplies of these
products for the current season will also be very materially smaller than the
record supplies of 1937-38.
On the other hand, the indicated supply of feed grains which materially
affects the price of cottonseed cake and meal and hulls is 6 percent.larger
than in 1937-38 and 13 percent larger than the 10 year average. Furthermore,
the indications are that the domestic supply of fats and oils other than
cottonseed oil for the 12 months ending July 31, 1939, may be somewhat larger
than in the preceding 12 months.
The larger supplies of the important competitive products and the lower
level of general demand conditions largely account for the fact that current
prices of cottonseed and cottonseed products are only slightly higher to.
considerably lower than last season, despite the materially smaller supply of
most of these commodities for the current season. It is-expected that the
consumption of cottonseed products during the 1938-39 season will be-considerab
larger than production with a consequent reduction in stocks on August 1, 1939.:
The domestic supply of cottonseed oil (exclusive of imported cotton-
seed oil), the principal product of cottonseed (which on the average represents.
about one-half of the total value of all raw cottonseed products), for the
1938-39 season as now estimated is 22 percent smaller than the record supply
of the preceding season and slightly smaller than the average for the 10-year
period 1927-28 to 1936-37. This decrease might have been considerably greater
except for the fact that August 1 stocks were considerably larger than a year
earlier and the fourth largest in history. Despite the decrease in the
indicated United States supply of cottonseed oil, prices of cottonseed oil in.
the early part of the current season were only slightly higher than the
average for the preceding season. Prices of lard, an important competitor
of cottonseed oil, however, averaged 15 percent lower in August and Septemberi
1938 than during the 12 months ended July 1938. The commercial supply of lar
for the 12 months ending July 1939 is now tentatively estimated to be about
8-1/2 percent larger than in the preceding 12 months and the largest in 5 -
Supply and price of cottonseed and s ecified fats and oils in the United States
Cottonseed Cottonsced Lard :Corn, soybean, peanf.
-: : oil, crude : :cocoanut and 'aln oil:
S:.son : weighted : 'Price : : Price :ProIuc-.Stocks:
beginning :Sunply: average:Supply : of :Supply : of : tion : on :Avail-
August 1 : /: arm : 2/ :-orie : 3j :refined : plus :July : able
Price : :suw.er: :Chicago : net : 1 :supply
:y: yellow: : imports:
:1,000 Dollars Million Cents Million Dols.per MilliornMillionMillion
Average :tons per ton pounds per lb. pounds 100 lbs. pounds nundspounds
25. 9 1,909.4 7,95 1,541.S 10.95 1,09r,3 288,0 1,334,3
1, 900 0
1939-39 as per-Percent:Percent:Percent:Percentcent ercnt:Perc-ent:Percent:PercentPercenr
of average : 95.7 84.3 99.5 95.5 76.5 0s.4 174.2
of 1937-33 : 67.5 111.0 77.5 100.6 10S.5 G3.2 140.S
SMill stocks on Aucust 1 plus production. 2 Total stocks on August 1 plus
production. 3/ Stocks on August 1 plus production under Federal Inspection.
/ Preliminary estimates of supply. Average --rices for August, September, and
Total domestic stocks on June 30, 193s of five of the principal veg-table
oils which compete more directly with cottonseed oil .?ere about 41 percent larger
than a year earlier and 74 percent larger than the 10-year average. The stock
situation, together with very rough estimates cf probable :-roduction and imports
during the current cotton-marketin-c year, indicates that the competition from
these oils may be as great nr greater than during the 1937-,7 season.
Domestic disappearance of cnttonseed oil for the 1935-39 season in all
probability pill be materially less than the record disa pe.r.nce of the previous
season, but seems likely to exceed production by a substantial amount. Stocks
of cottonseed oil on August 1, 1939, therefore, should be considerably below those
of August 1 this year.
Cake and Meal and Hulls
Conditions in late ITovember indicate that the supply of both cottonseed hulls
and cottonseed cake and meal in 193S-39 will be roughly one-fourth less than in
1937-30 and 6 and 1 percent, respectively, smaller than the'cveraie for the 10-year
period ending with 193'-37. Mill stocks of cake and meal at the be,-;i:ining of the
season were the largest on record and stocks of hulls were the third largest on
uiNivcaioiT U r PLUKIUA
IIl I Jlilll li II Illl lllilIll K I II UI II llllll ill
24 3 1262 08900 4294
record. Such stocks of these products, however, were still only 10 or 11 percent
as large as the nrospective production during the current season.
Average prices of cottonseed hulls during the first 3 months of the season
were approximately 1 percent lower than the average for the 12 months ended July :
1938 and nearly one-third lo7cr than the 10-year average. Prices of 41 percent
protein meal were slightly lo-a-r than the average for the pr.st season and one-
fourth lower than the average for the 10-year period. In addition to the price-
depressing effect of :the lowrr level of general domestic demand conditions, Unite4. .i.
States supplies of feed gr.i 's are -newav epeoted. to-be about .6 Dercent larger than '
in 1937-38, one-eighth larger than average, and the largest in 6 years. ,
Supply of feed grains, a..d cottonseed hulls, meal, and linters in the
: U.S. : Hulls Coke and Meal :Linters, F.O.B. Mill Pointsi
Season :supply : : :Prlce of: Average price of
beginning :of fecd:Supply : Price : :neal-41%:Supply : ....
August 1 :grains : 2 : at :Supply :protein : / :
: 1/ : :Atla-ita: 2 : at : : No. 2 : No 6
: ; :Memphis : : : *
:Million 1,000 Dollars 1,000 Dollars 1,000 Cents Cents
Average tons tons per ton tons per ton tons per lb. per 1'b.
1927-28 to :
1936-37 : 3.3 1,306 10.16 2,158 29,06 1,290 4.87 2,68
1932-3 : 122,6 1,1-75 7.17 2,208 15.80 1,367 2,48 1,03
193P-35 : 5,9 944 12,24 1,739 32.31 1,149 5,75- ,0
1935-36 96,9 1,064 10,0o 1,936 22,40 1,171 5,49 3.1
1936-37 : 71,2 1,168 11,43 2,097 34,3 1,393 5,00 3,12
1937-38 :104.3 1,668 7.20 2,572 22.36 1,8 3.57 1.63
1938-39 4/ 1 109. 1,226 7.12 2,128 21.32 1,8 5 3.45 i.41
1938-39 as : Percent Percent Percent Percent Percent Percent Percent Percen.-
of average: 111.3 93.9 70.1 98.6 73.4 13.0 70.8 52.6,
of 1937-38: 104.9 73.5 98.9 74.1 95.3 100.6 96.6 86.5
IT Stocks on June 1, July 1, or October 1 (depending upon the kind of grain)
plus production. 2/ Mill stocks on hand August 1 plus production.
3/ Total stocks on August 1 plus production. / Preliminary estimate of
supply. Prices are for August and September.
The 1938-39 production of linters may be about-one-third less than in
preceding season. But with the August 1, 1938 United States carry-over of lint
approximately two and one-third times as large as a year earlier, the indicated"
domestic supply for the current season is about the same as the record supply .
the previous season. In comparison with the 10-year average, the indicated
1938-39 supply of linters represents a 43 percent increase. The average prices'
of the better qualities of linters in the first quarter of the current season
were very little lower than the average for the 1937-38 season but the prices .
the lower qualities were materially lower, Grade No. 6 averaging 14 percent
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