The Cotton situation

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Material Information

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

Subjects

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

Notes

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

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 020142316
oclc - 01768374
lccn - 63045282
Classification:
lcc - HD9070.1 .C78
System ID:
AA00013000:00026

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Full Text

S.

UNITED STATES DEPARTMENT OF AGRICULTURE : -.-
Bureau of Agricultural Economics
Washington "'

CS-11 September 28, 1937

THE C OTTON SITUATI ON


Summary

Spot cotton prices at the 10 markets in the United States are now at

their lowest level in more than 4 years. Prices declined from an average of

12.12 cents in July to an average of 10.23 cents in August as compared with

12,07 cents in August 1936. Prices have been below 9 cents since early in the

present month and on September 24 averaged 8.18 cents.

The dominant price-depressing influence continues to be the favorable

conditions affecting the United States crop. Other factors include the slack-

ening rate of mill activity in the United States, the downward tendency in

prices of leading internationally-traded cormodities, and the military opera-

tions in the Orient.

As announced on August 30, cotton growers will be permitted to borrow

through the Commodity Credit Corporation 9 cents on Middling 7/8 inch or better

and smaller amounts on the shorter staples and lower grades. Growers who co-

operate in the 1938 Agricultural Conservation Program will be eligible to re-

ceive adjustment payments for that portion of their 1937 marketing not in ex-

cess of 65 percent of their base production, equal to the difference between the

10-market price and 12 cents, but not to exceed 3 cents.

World consumption of all kinds of cotton was at a record high level

during the season just passed. Utilization of American cotton in the United

States was the largest in history, but consumption of American cotton by for-

eign countries wAs pxtremnly small. Small consumption of Aknriran by foreign

mills was due part--l to import restrictions, the substitution o' synthetic







CS-11 2 -

fibers, and relatively high prices for American cotton. Perhaps the most

important factors responsible for the decreased importance of American cotton,

however, were larger supplies of foreign cottons of a grade and staple directly

competitive with American, and alternations in spinning machinery and technique

which have permitted the larger quantities of short staple cottons to be more

readily substituted for American medium staple.

The outlook for the next few months seems to be for a maintenance of a

high level of mill activity and total cotton consumption in Europe. In the

Orient, however, consumption undoubtedly will show a decline, largely due to

the shutting down of a large part of the Chinese cotton manufacturing industry.

Foreign consumption of American cotton will tend to be increased to some ex-

tent by larger supplies of and the prevailing lower prices for American. In

the United States, however, consumption of American cotton is expected to de-

cline because of a continuation of the moderate reduction in mill activity

which has been going on for the past 3 or 4 months. The reduction continued

through August and into September. Utilization by domestic mills in August,

however, was the highest for any August on record with the exception of

August 1927.

Total world supply of all cotton for the 1937-38 season is preliminarily

estimated by the New York Cotton Exchange Service at more than 48,000,000

bales, the largest supply in history. This extremely large world supply is

due to an indicated supply of American about 2,800,000 bales more than in

1936-37 and a new record high supply of foreign cotton. Carry-over of Ameri-

can cotton on August 1 was smaller than a year earlier but indicated pro-

duction of 16,098,000 bales is nearly 3,700,000 larger than the 1936 crop.

The larger prospective supply of foreign cottons in 1937-38 as compared with







CS-11 3 -

1936-37 is based on a greater carry-over at the beginning of the present sea-

son than a year earlier and a prospective increase in foreign production.

DOMESTIC PRICES

Spot Prices Lowest in 4 Years

Spot cotton prices at the 10 markets averaged 10.23 cents in August com-
pared with 12.12 in July and 12.07 cents in August 1936. Averages for the weeks
ended September 4, 11, and 18 were 9.20, 9.05, and S.?75 cents, respectively.
The downward movement of prices which started in late July carried the 10-
market average to 9.70 cents on September 17 and 18. These were the lowest
daily averages since August 1933. The dominant price-depressing influence has
continued to be the generally favorable growing conditions affecting the United
States. crop. Other factors .have been the slackening rate of domestic mill
activity, the downward tendency in prices of the leading internationally-traded
commodities, and military operations in the Orient.

Average prices at the 10 markets

Year : : : :: Year : :
beginning Aug. : Sept. :eason beginning Aug. : Sept. : eason
Aug. 1 : : :average :: Aug..1 : : : average
: Cents Cents Cents Cents Cents Cents

1928-29 18.72 17.72 18,67 1933-34 9.24 9.19 10.81
1929-30 : 18.04 18.01 15.79 :: 1934-35 13.12 12.85 12.36
1930-31 11.14 10.15 9.61 1935-36 11.37 10.48 11.55
1931-32 6.57 5.83 5.89 1936-37 : 12.07 12.05 12.70
1932-33 : 7.08 7.40 7.15 1937-38 10.23 1/8.94

1/ Average of September 1-24.

Growers can Borrow 9 cents to Receive Adjustment Payment

The Commodity Credit Corporation announced on August 30 that it will
lend producers of the 1937 crop 9 cents per pound on Middling anr. better 'rade
not shorter than 7/8 inch in staple, 8 cents on Middling and b'ttor 12/16 inch,
and 7- cents on cotton below Middling not shorter than 7/f in h'. :No :otter.
will be eligible for a loan which is of a grade not dcliveruble on futures con-
tracts, and no loan will be made on 13/16 cotton b',low -;iddlini gzrndo.

growers are to rocc iv,; adjuztmrn nt pMrT nts ':cual to thh" di ffi'rIcr,.C.Is
between the 10-markct price on the day whr n the. producer s, lls his 'tton and
12 counts. The maximum payment is to Lb 3 rcints pt r pound, howvwr, and only
those growers will recu'ivt: a payment who noone rate in the 19.. adjust !.t
program. Payments will b( made on only .5 3p.crcent of Cgro.- rs' bisL', pro-
duction (basu equal to about 16,150,000 bales) unicss fun.is pr,.rd t puymL nt on
a larger percentage. WTith 313.0,0C0.,000 avail~bh. for this prro-ram, the' slhart of
total production on which paneiyment will bu r-l'c'ivd will d.pi-dA upon thc extent to
which growtrs cooperate in the 1938 prorirri. and t- :oize of the pay-mt nt for pound.








CS-11


DEMAND AND COTISUMPTION1

World consumption of American cotton below pro-depression level
despite record high utilization of all cotton

According to estimates of the lNew York Cotton Exchange Service, con-
sumption of all cotton in the world in 19353-37 totaled 30,900,000 bales or 11
percent more than in 1935-36, and was the largest consumption on record. The
extremely high level of total world consumption resulted mainly from the record-
breaking utilization of foreign cotton. Consumption of foreign growths amounted
to 17,800,000 bales, an increase of 17 percent over the preceding year and 64
percent more than the 1928-32 average.

World cotton consumption, American, foreign and total


: __ American
: Percentage
Actuial .


Foreign
: P


percentage


Total


: .. : of total : of total :
:1,000 bales Percent 1,000 bales Percent 1,000 bales
Average
1928-32 13,243 54.9 10,879 45.1 24,122

1933-34 13,780 53.8 11,816 46.2 25,596
1934-35 11,206 44.2 14,119- 55.8 25,325
1935-36 12,529 45.2 15,190 54.9 27,729
1936-3.7 : 13,055 42.4 17,840 57.6 30,900



Consumption of American cotton in the world by major divisions of
the cotton textile industry

: United : Total : United : Continent: : Else- :
Season Orient Total
: States : foreign: Kingdom : of Europe: : where :


1,000 1,00 1,000
bales bales bales


1 ,000
bales


1, 000
bales


1,000
bales


Average
1928-32 :

1933-34
1954-35 .
1935-36
1936-37


5,683

5,553
5,241
6,221
7,766


7,560

8,227
5,965
6,31.8
5,289


1,392

1,403
941
1,295
1,150


4,002

4,230
2,739
2,963
2,446


1,943

2,321
2,032
1,793
1,384


223 13,243


273
253
267
309


13,780
11,206
12,539
13,055


Compiled from records


of the New York Cotton Exchange Service.


-Recent reports indicate that mill activity and cotton consumption through]
out the world as a whole was comparatively high in August and September. In
several important countries, however, including the United States, the United
Kingdom, and Japan, the outlook for the future is clouded by a considerable ex-
cess of mill output ovwr new orders with a consequent tendency to decrease the
/volume


Season


: 1,000
: bales


A t 11a


- 4 -





CS-11 5 -

of unfilled orders and bring about an accumulation of stocks. Other things
remaining the same, buying from mills should pick up, to come extent at least,
when raw cotton prices cease to decline. Total world consumption undoubtedly
is being adversely affected at the present time by military operations in
the Orient. A large part of the Chinese industry has been destroyed nr shut
down as a result of hostilities.

Domestic mill activity still relatively high, but lower
than in recent months and tending downward

Mills in the United States consumed 7,915,000 bales nf all kinds of
cotton in 1936-37, nearly 1,600,000 bales or 25 percent more than the 6,351,000
used in 1935-36. This was the largest consumption on record, the next largest
consumption being 7,190,000 bales in 1926-27.

Utilization during August, the first month of tne new marketin- season,
amounted to 604,000 bales, or .5 percent more than the correzspnding month a
year earlier, and was the highest for any August on record with the exception
of August 1927. During the past few months, however, mill activity has been
tending to decline, and the decline continued through August and into Septemoer.
According to the New York Cotton Exchange Service, mill output by the middle
'of September was at a lower level than at the same time lact zeazon.

Mill sales of goods have been below production since mid-Liarch cr fcr
more than 6 months. Trade reports state that distributors are having difficulty
in moving higher priced goods. Steady or strong prices for raw cotton d-ubtless
will exert a tendency to increase mill sales. Margins for 17 constructions of
medium and coarse grey cloths averaged 15.14 cents for the 4 rceks of August.
Margins declined further in the first part of September and are now nearly
4 cents lower than the peak rf 18.58 rents in April. Aszuming that general
business conditions remain substantially unchanged, the outlook wvuld seem to
be for a further moderate recession in mill activity and cotton cor.su'.ption
during the next few months.

Margin between average price of raw cotton per prund and wholesale
price of unfinished cotton cloth (17 construetionn-l)'25-26 to date

Year Aug. )Sept.. Oct.. Nov.. Dec. Jan. .Feb. .Mar. .Apr. :..ay "June *July

1925-26: 15.21 16.36 18.41 17.61 17.37 16.44 16.9n 16.25 15.65 lh.l1 13. 1.-45
1926-27: 14.61 16.34 17.45 16.34 15.77 15.31 15.33 15-46 15..0 114.41 14.81 14.14
1927-28: 15.27 16.53 16.12 15.11 14.67 1l.87 14.604 1$j.4 C. 1..73 11.9n 1 .66
1928-29: 14.00 14.3r 14.55 14.34 14.12 13.86 13.35 13.00 1 .41 1 1 5 1257 12.53
1929-30: 13.95 14.38 15.r5 15.45 13.51 12.714 13. 5 12'21 11.51 11-7l IL.39 12.1l
1930-31: 12.01 12.97 13.51 13.42 13.05 11.18 1l1.J 11.78 11-.) 11.5- 11.23 11.16
1931-32: 11.39 11.no lr.23 9.59 9.07 9.1 9.61 ').b. 7.61 F?.!4 7.93 7.63
1932-33: 8.39 1r0.1 9.77 8.65 .-22 7.75 7.50 S.3" C.L7 I.'5 l-.. 18.13
1933-34: 17.97 15.-2 15.47 14.02 13.5 13.91 1-.11 13.7 1. lU 1. 11. 5 11.8b
1934-35: 12.61 13.58 12.-2 11.70 11.)T 1.'.13 11.72 11.ib 11i1. 11.'7 11.11 .1.43
1935-36: 11.61 12.87 13.-31 12.80 13.02 13.7 13.-6 1-'.7 l1.1-1 11.i 11- 12I 7I
1936-37: 13.72 14.03 14.s8 16.6o 17.10 18i.22 17.816 17.8- 188 17. 1L..18 15.59
1937-38: 15.14






CS-11


- 6 -


Mill activity and cotton consumption in foreign countries
very high in past season 1/

Total European mill consumption of raw cotton during 1936-37 maintained
and even slightly exceeded the good levels reached in the season of 1935-36.
The increase in 1936-37 occurred in considerable measure as a result of the
continued expansion in the United kingdom Increases in mill consumption of
raw cotton also took place in Czechoslovakia, Belgium, Switzerland, The
Netherlands, the Scandinavian countries, and Italy. The growth in Italian
cotton consumption resulted from a strong upturn in the second half of the
season, incident to a remarkable revival in exports of both piece goods and
yarns. On the othpr hand, there was a consid-rable decline in Germany where
the increasing. substitution of artificial and reclaimed fibers enabled the
textile industry to dispense with even more raw cotton than hitherto has been
the case. There were slight declines in cotton consumption in Poland and
Austria and a drastic decrease in Spain.

Most of the increase in the total utilization of cotton by foreign
mills occurred as a result of increased consumption in the Orient. Utilization
was very high in Japan, China, and India, but the increase as compared with a
year earlier was especially marked in China.

The share of American cotton in foreign :,:ill consumption
very lo in 1936-57

Cotton mills in foreign countries used approximately 23 million bales
of all kinds of cotton in the season just passed, or about 7 percent more than
in 1935-36 and 26 percent more than on the average from 1928-29 to 1932-33.
Utilization of American cotton, however, was only 5,300,000 bales in 1936-37,
or 16 percent less than in the preceding year and 30 o*ercent less than the
1928-32 average.

This small consumption of American cotton can be partly accounted for
by import restrictions and the use of substitute fibers, most important in
the case of Italy and Germany, and by high prices for American cotton relative
to foreign cottons. The decreased importance of American cotton, however, is
chiefly accounted for by the fact that in every year for the past few years
there has been an increase in the supply of foreign cottons (such as Brazilian
of a grade and staple directly competitive with American and by the further
fact that in the same period spinners have been altering machinery and techniqg
so that foreign cottons like Indian and Egyptian which differ signifi-cantly
from American in grade and staple length can be more readily substituted
for American.
I/ Information, applying particularly to the European countries, received by
special report ftom Agricultural Attache'Lloyd V, Steere at Berlin. Information
on the Orient furnished by cable from Agricultural Com.-missioner Dawson at
Shanghai.






CS-11


- 7 -


The British market has always been free to all cottons. In 1936-37
consumption of all cotton was lar.-er in the United .inzdom th'.r. for several
years past. But the utilization of Ame"ican cotton was 11 percent less than
in 1935-36 and the lo'.:est for-any year on record with the exception of
1934-35 and 1930431 when total contumption of all cottons was considerably
less than in the season just passed.

Taking the Orient as a whole, no ner'.trade restrictions :-ere instituted
affecting the consu_-iption of American cotton during thn past year. Consumption
of all cottons by Oriental mills .:as a :-eccrd high in 1936-37, but consumption
of American w.,as 23 percent less than.in 1935-36, 32 pe.cen-.t les; than in
1934-35, and 29 percent below the 1928-32 average.

As was pointed out in The Cotton Situation for Augist, the price of
*foreign cottons (those most closely competitive with American) relative to
the prices of American were about the same during 1936-37 as th-ir average
relationship during the 1920's. Hov.ever, foreign cottons have been consumed
in much larger qiuntities than in earlier years, and have replaced large
quantities of American in spite of the fact that their prices expressed as
a ratio to the price of American have been about the some as in years when
their utilization v:as considerably smaller.

The following table shows the important place held by Americcn cotton
in foreign mill consumption up to and including 1733-3h. The share of
American cotton in total foreign consumption was som:ew\hat smaller ir. 1333-34
and on the average from 1928-32 than in thie 192n's. The share of American
cotton in total world. supply of all cotton also would appear to be smaller
if the supply of American cotton in trade channels :rr-r sho:.i instead of the
total supply of American. This is true because since 193)0 zinifica-nt
quantities of American cotton were held in Government-financed stocks in the
United States. In 1934-35 the supply of American was sharply contracted.
At the same ti.,e, the supply of foreign increased, and the price of Indian
and E,-yptian cottons '-zere much lower relative to American than in earlier
years. Foreign consumption of A-ericen cotton declined, and the utilization
of foreign cotton expanded. In 1933-36 American as a percc-ntajc of total
foreign consumption w:as slightly vnaller than in 1).4-35., and a further sharp
decrease in the share of Americ-an in 1336-37 br-iught its proporti-m. nf total
foreign consumption to about half of what it '.'as on the aver;.-:e from 1920 to
1929. However, the price of Indian relative to .4neric.tn w.-as ;Lb-ut the Came
as in the 1920's and the price of E.yptian was getting back toward its
pre-depression relationship to American. During the entir-. period u-nd.r rE-view
the price of Brazilian Gna Paulo Fair retained about thL ze'.i-. relationship to
American since it is comparable in grade and staple :.ith American Middlinc.

"This indicates that to the extr-nt that there i-. an increa-.cd product-
ion of foreign cotton ci..ailar in ,rade and :t:lplc to Ar., rican,and to the extent
that spinners alter machinery ar.d techniouc i-. that forli.-L cotton can be
more readily substituted for Ame-rican, ccnsi:-tntly lar -,r qunntititz of
foreign cottons can be used to replace Americ'n wi thcut th. pric'S )f foreign
cottons being low compared Ai the pric, 'f American i.: world .aark-tc." 2/
2 The Cotton Situation, Aug4-.:-t 25, 1937, p-'i-;L .






CS-11


Cotton: Foreign mill consumption, world supplies, and price ratios, speci-
fied periods

: Consumption in : Supply of :For- :Per- :Price as a percentage
: foreign countries :commercial cotton 1/:eign :cent- : of the price of
: : : : : : :cons.:age : American
of :supply:Three :Egyp- :Brazil-
:Amer-:For- : Total:Amer- :For- : Total:Amer.:Anori-:types :tian : ian
Year :ican :eign : :ican :eign : :as p.:can is: of :Uppers: Sao
:ct.of: of :Indian: :Paulo
:total:t-t.l : 2/ : / :Fair
:for. : 2 : : : 2/
___: : : : : : :cons.: : : :
:1,000 1,000 1,000 1,000 1,000 1,000 Per- Per- Per- Per- Per-
:bales bales bales bales bales bales cent cent cent cent cent
Average:
1920-29:7,268 9,127 16,395 18,715 13,732 32,447 44.3 57.7 79.3 127.2 95.4
1928-32:7,561 10,669 18,230 22,226 15,792 38,018 41.5 58.5 79.0 118.9 97.7

1933-34:8,227 11,669 19,896 24,521 18,172 42,693 41.4 57.4 74.0 110.8 98.8
1934-35:5,965 13,999 19,964 20,277 19,653 39,930 29.9 50.8 72.3 108.8 97.4
1935-36:6,318 15,060 21,378 19,536 21,301 40,837 29.6 47.8 79.5 114.8 99.8
1936-37:5,289 17,666 22,955 19,345 24,521 43,866 23.0 44.1 79.8 119.0 96.6
1937-38: 22,145 26,200 48,345 45.8 85.7 142.2 96.6


Consumption and supply compiled from records of the New York Cotton Exchange
Service. Relative prices based on data compiled from reports of the Liverpool
Cotton Association.
I/ Only raw cotton produced for factory consumption. Does not include large
amounts grown in India, China, and other countries for consumption on hand
spindles or in other ways in the homes without entering commercial channels.
Supply for 1937-38 preliminary.
2/ RelItive prices for 1937-38 for month of August.

Outlook for all cotton consumption favorable in Europe, uncertain in Orient

Prospects for the European cotton textile industry during the next few
months point to a maintenance of most of the gains which the industry has made
during the past two seasons. It appears that mill consumption of raw cotton
probably will be about the same as in the corresponding months of last season
in spite of the likelihood of a further substitution of artificial fibers for
cotton in Germany and Italy, the possibility of the loss by European countries
of their export trade in cotton textiles with China, and the possibility of
a slump in mill occupation in several countries.

Over and against these unfavorable factors are two decidedly favorable
influences. These are the large supply of all kinds of raw cotton and the
prospect for a fairly active consumer demand for textile goods in the world
as a whole. It is true that, while demand for cotton goods probably will


- 8 -







CS-11


continue comparatively high by domestic markets in important cotton
manufacturing countries such as the United Kingdom, France, and Italy, the
outlook for their export trade has not, up until recently r.t least, been
considered so favorable. There is a possibility, however, that military
operations in the Far East may benefit the export trade of these European
exporting countries through a curtailment of Japan's export business. It
also is possible, however, that Japan will increase her efforts to e:rpand
exports in order to secure foreign exchange. As far as the situation in
the F.r East is concerned, it would seem that all countries exporting textiles
to China would suffer a loss of most of their exports to that country.
Regardless of these possible unfavorable factors affecting the outlook for
cotton textile exports from European countries, definite gains have been
made during the past season by the United Kingdom, Germany, Belgium, the
Netherlands, Switzerland, Czechoslovakia, and Italy, and it is not unlikely
that these countries will be able to maintain their total export trade in
cotton textiles in the future. An important factor which will tend to :nike
this possible is the high prices for foods and raw materials which :-ill tend
to increase the demand of importing countries.

The outlook in the Orient is much less favorable than in Europe.
Over half of the Chinese cotton textile industry is located in areas in
which large scale military operations are now taking place. Not only are
nearly all of the mills in these regions shut down, but it is reported that
all of the Japanese-owned mills in China have ceased operation. How long
the Chinese industry will be so profoundly disrupted will depend upon the
extent and duration of the conflict. It is certain, however, tnc.t the
Chinese industry will be severely crippled during the next few months.

In Japan, the necessity for obtaining foreign exchange to purchase
munitions and other supplies relative to military operations has resulted
in a severe curtailment in the number of permits granted for the importation
of raw cotton. On the other hand, exports of cotton textiles make up such
a large proportion of total Japanese exports that it seems doubtful hnaether
Japan will restrict imports of raw cotton to the point vThere it would be
necessary to curtail the manufacture of cotton goods for export. It is
quite possible that the effort to expand exports of cotton goods will be
redoubled in order to provide foreign exchange for the purchase of necessary
imports. For the months of September October, and November, ho-:'ever,
foreign exchange for the purchase of cotton has been materially restricted.
Everything considered, it seems probable that mill activity and cotton con-
sumption in Japan in coming months will recede somewhat from present -igh
levels.

Somewhat larger foreign consumption of American possible

It seems likely that larger supplies of American cotton and lo-:cr prices
for it relative to the prices of foreign will tend to make for an incre-.se
in the ratio of American to foreign cotton thed by foreign mills during the
next few months as compared with the corresponding months last season. How-
ever, supplies of foreign cotton likewise probably will be larger t.- n 1:.at


- 9 -






CS-11


- 10 -


year, and the relatively large supply of American and lower prices for it
relative to prices for foreign cottons cannot be expected to result in as
large a foreign consumption of American as would have been the case a few
years ago. Furthermore, it is likely that China and possibly Russia will
export considerable quantities of cotton during the 'nrbscnt season. With a
large'portion of the domestic market destroyed, considerable amounts of
Chinese cotton probably will move to foreign markets either through sale to
neutral countries or as a result of confiscation by Japan. Russia also may
ship significant quantities of cotton abroad this year since it is reported
that the cotton textile industry does not have sufficient equipment to process
all of the extremely large prospective Russian crop now being harvested.

SUPPLY

Largest world supply of all cotton in history expected in 1937-38

The world supply of commercial cotton in -1937-38 is expected to amount
to about 48,300,000 bales according to the estimates of the New York Cotton
Exchange Service. This is 10 percent more than supply in 1936-37, 27 percent
more than the 1928-32 average and 49 percent more than the 1920-29 average.
The estimate of supply for 1937-38 is, of course, very tentative and may be
materially revised in the light of any developments affecting American and
foreign supply or both.

Supply of both American and foreign materially larger

The supply of American cotton for this season in running bales is
estimated by the New York Cotton Exchange at 22,145,000, an increase of 14
percent compared with 1936-37, about the same as the 1928-32 average, and 18
percent more than average supply from 1920-29. The prospective commercial
supply of foreign cotton is 26,200,000 bales, a new high record, an increase
of 66 percent over the 1928-32 average, and nearly twice as large as the
1920-29 average.

Carry-over

World carry-over of all cotton about same as year earlier

Total world carry-over of all cottons on August 1 last amounted to
about 13 million bales, or slightly less than the world carry-over on the scene
date in 1936. This is the smallest total carry-over since August 1, 1930.

World carry-over of American smaller; stocks of foreign larger

Stocks of American cotton in the world at the beginning of the present
season were 6,245,000 bales. This was the smallest world carry-over of
American since 1930. Carry-over of American cotton in the United States
amounted to slightly less than 4,400,000 bales and carry-over in foreign
countries to about 1,840,000 bales. Of the carry-over in the United States
at the beginning of this season, about 1,650,000 were in Government-financed




r --


CS-11 -11-

stocks rn' hence with'.raRm fror trade chan-nels. Of last season's stocks in
the Unite. States, 5,336,090 bales, arnroxi..iately 3,200,000 bales were in
Gover.ment-finance. stocks. Carry-over of foreign cotton in the -orl. on
Au-ust 1 was between 3,700,000 ar.n 6,800,000 bales, an increase of betuceen
300,000 and 700,000 bales, or about 10 percent over the carry-over in 1936.

Carry-over of cotton, American, foreign and total

Leinning American : Foei Total
of In United : Worl! *. all kinc.s
senson : States :::
: 1,000 bales 1 000 bales 1,000 bales 1.00C bales

1920-29 2,930 5,417 4,306 9,723
1228-32 4,94 7,630 4,3-n0 12,510

1933-34 8,01. 11,309 4,773 13,5 :2
1934-35 : 7,:348 10,701 .353 17,057
1935-36 : 7,138 9,041 5,534 14,575
1933-37 3,336 6,9G2 6,111 13,073
1937-38 4,397 6,245 6,721 12,936
Comn-ilec fro:.: rccori.s of the Nov 1or. Cotton. Exc'.nr..--e Service.

Pro iuc tion

UniteJ States nrou.'iction of 15,l23.000 'ales iniicatet.;
1338 Conservation Pror-r.'ji announced

T..e in.icrted --ro.uiction of cotton in t'he United St-tes on Sootc.-.'er 1
wis 1,,C028,000 bales of 478 po'n.r's net -- -L increase of 505,000 bales over
Au;ist 1 indic-tiors. A finol outturn of this -nmount would nean the l.r-est
U.iite.'. States cotton -roluctio:. since 1321-'"2. The iL.'ic-tee. ;iel. ,er acre
of 223.5 -;ounds is the h.i.hest on record.. E"herv imoort.nt cotton -r)'2cinE
State shove' an increase in iniic-to. yicld ov-r -ct',c yield last ./car with
the exception of South Carolina and Hlississirni -.`,ere ',ield-s were cxcentionally
lar e last season. The fieldd in every Strte is :..aterially above t':o nverr(e
for the 10 years 1923-32.

Tra''c reports rele-se-' i.rin.- Sentenber irlic-te t:-.t t..e cr?.' is
continue.,. to .aake -ood Toro ross, with. noder-to d--image by weevil na..' rai:. in.
t'.io Eat being offset by better than avr',n c conditions in the central and
western parts of the Belt.

The outline of the 1976 A, ricultural Conservation Pro -rn ;'.ic.. er-
tablishes national, statc, nn1'. county -onls for soil-lenlctin- crrn F t for
soil-b,1ilc inc- crops and oracticcs :r'.s .nlA-ou01cc'. by Sccrct.-r:, of A ric'Llt'L.re
V\Hllacc on A-.i-uqt 30. G:,nls for soil-.onlctin- cron, were fixo. ar. c:-'.erva-
tio:,n .rnacuroe nd to assure nn ii ple nn: bnl'i:;ce' "-')Ily of fou'., 3.ee "' :-
fibLr cr-'pe. As o-ic of the r-ost iporta.nt s.il- 'enleti': c'.ns, c tt-.S 'cc u ies








CS-11


an important place in the -rro ramn The 1933 acreage *onl has been set at from
29,000,000 to 21,000,000 acres. In lli rc.Dions, 'nymnents will be divided
between landlord and tenant in tle -ro-oortion that they share in the principal
crop or all crops and practices on the farm, according to the above arran. earaent.
The total soil-depleting crop goal, including the general soil-depleting crop
goal anz. the special soil-depleting crop ,oals for cotton, tobacco, corn,
potatoes, peanuts, and rice, will be divided between state, county, and individual
far.is. within n each state, county coals will be established by the Agricultural
Adjustment Adninistrativn and the State Agricultural Conservation Co-.aiittee.
County roals for cotton, tobacco, and rice will be established for each county
where such crops are grovwn.

Under the previous pro::rr;., separate rates were established for diversion
from soil-depleting to soil-conservin: crops nnd for the carrying out of eaclf
soil-building practice. In 1933, however, the maximuri payment for each
producer will be calculated at the borinnin; of the crop year and the attain..ent
of the soil-depletin- crop -oal and the soil-building crop roal will be set as
conditions of each naynent. Each producer will 'now what he :nust do for complete
cooperation. This chan-e is exoocted to result in a greater .-".eree of co;ipliance
and a more effective pro' -r.. The oay..ent 2ade to cotton growers under the
alan will be r..ad.e as follows: (1) $1.50 per acre, adjusted for the prodcuc-
tivity of the fa.rm, for each acre in the general soil-depletin: crop goal,
(2) 77 cents per acre on either the soil conservation acreage or one-fourth
of the total soil-depleting crop coal established for the farm, whichever is
greater, (3) 2 cents per iound of the farns' normal yield per acre of cotton
for each acre in the cotton .oal.

Record-breakin- crops in Russia and China ma/ rean lar.-e exports

Russia.- It is still too early to form;-:ulate a definite opinion as to
the outturn of the 1937 Russian crop, but present prospects are reported to be
favorable. The original plan issued early- this year provided for a crop of
3,482,000 bales of ginned cotton, but later reports mention n fi .ure of about
3,732,000 bales. These plans compare with a production of 3,250,000 estireted
by the Bureau for 1936-37. The setting of a higher oeal than originally
planned -orobably is due to the fact that last year's plan is reported. to have
been exceeded by a .,ood margin.

The upward trend in cotton production in Russia is due al-:.ost entirely
to rapidly increasing- yields per acre, since no significant change in acreage
has taken place since 1932. The 1937 ncreace under cotton is tentatively esti-
mated at 5,164,000 acres, the figure set by the Plr.n, and which was reported
as fully executed by the riddle of Mlay. The final acrcn e may fall sovlewhat
short of the above, but acreaLe is not expected to be much below last year's
area of 5,024,000 acres. The upward trend in yields per acre is reported to
be the result of several factors. A steadily increasing share of the total
cotton planted is bein., sown on fallow plowed land early in the season. The
quality of seed is reported to have i-.1proved considerably. The cultivation and


-l?-






CS-11


-13-


irri-ntion of cotton fields is also better, Vith the avora:e number of cultiva-
tions orr.cticrlly doubled between 1933 and 1933. An increased aonlicition of
mineral fertilizers and the r.ech.niz.ation of field -"ork also nave helped to
increase yield per acre.

The estirn-.ts of Russian cotton production being carried by the Bureau
of A-ricultural Economics are still considerably smaller than estimates received
from Russian sources. An pointed out in previous issues of The Cotton Situation,
early estimates of the crop made by Russian authorities frequently ..ave been
revised downt.ar-' later in the season. With respect to the 1335-33 crop, it is
believed that nuch of the cotton reporters as horvosted was daragma or doc+royed
before it reached market. Bureau estimates of the 1935-35 and 19335-37 crops
are 2,250,000 nnd 3,250,000 tales, respectively, corpoared with 3,250,000 and
3,550,000 bales reported by Russimn sources.

As -ointed out in the discussion of -ros-ects for the consuintior. of
Aperican cotton in forei--r countries, Russia .n.y enter the world m.iarket as an
important exp-crtcr of cotton this season. S.?.2ll qu,.:-tities of cotton "'--ve been
exported ir. recent years, but on the v.hole there lhas been no actual net oxrorta-
tion of cotton. Ho-rpver, with the domestic cotton textile industry unable to
.7ork up all of the 1973 -,roduction of raw cotton an.'. with a still lar -or crop
in p-rospect for 1937, it is possible that exports of rav cotton will be considera-
bly in excess of inports. TWhether this trldes -.l-Ace will depend ver/ l-r-cly
unon gLovcrn:.ent no licy. Since there is a lar-ce unsatisfied demand for cotton
goods in Russia, it may vbe that t.-e coverraient will decide to build u1) stocks of
octton against the time when t.he capacity of the textile industry can be expanded
sufficiently to process a much larger quantity of raw cotton.

It is reported that the third 5-year plan (period ending 1942) vill con-
tain an ambitious program for the expansion of'Russian cotton production. A
possible Poal for 1942 is 5,670,000 bales. This would be an increase of almost
60 percent over the Russian estimate of 1936 production. This figure has
been criticised by other Russian observers as being too conservative, and the
opinion has been advanced that fertilization, iechanization, and better irri-
gation would enable the attainment of a crop _ore than 8,000,000 bales. This
anticipated increase would result from higher yields per acre. Of course, all
of these tentative figures may differ widely from those finally ado-tei for the
official F--year plan, but they indicate that further large increases in Ore-
duction are planned.

China.- Weather conditions in the Yangtze Valley during August and cnrly
September were favorable for the harvesting of cotton which was progressing
satisfactorily except in small arens affected by military activities. In North
China excessive rainfall and military operations are reported to have been
damaging to the crop. As in the case of Russia, the inability of the domestic
textile industry to consume all of the larwc output of raw cotton now estimated
at 4,400,000 bales cor.pared with 3,870,000 in 1936. However, the Chinese may
have difficulty in getting cotton out of China dao to military ictivit-.




- 14 -


Cotton: Estimates of nrod,--ction 1/, specified countries, 1920-21 to date


Season : United
: States
: 1,000
: bales
:479 lbs.


: *
.* *
*, *
*. *
*. *
*. *
*. *
.. *
*. *
*. *
.. *
*. *

.. *



4 :


net
13,429
7,945
9,755
10,14-n
13,630
16, 105
17,978
12,956
14, 477
14,325
13,932
17,097
13,00 3
13,047
9,636
10, 638
12,399

Argecn-
tina
1,000
bales
478 lbs.


: n : Chine.
: India : 2/


1,000
bale s
447j lbs.


i
1

r
1.
1~
1
1~
1.


1

L


: ne t


1,000
bales
473 Ibs.


: Russia


1,000
bales
478 lbs


Egypt
1,000O
bale s
47S lbs.


* Brazil
1, 000

476 lbs.


let net net net not
5,013 2,406 56 1,251 476
),752 2,197 43 902 )&59
,4245 2,510 .5 1,391 4U4
4,320 2,406 197 1,353 552
5,095 2,510 453 1,507 7hO
5,201 2, 45 782 1, 650 561
t,205 2,301 830 1, 56 493
,990 2, 24 1,06 1, 261 4264
",838 2,720 1,172 1,672 430
t,3S7 2,458 1,229 1, 768 571
5,373 2,615 1,5u7 1,715 43
5,353 2,192 1, 4S 1,323 555
5,698 2,720 1,].6 1, 02S 450
1,274 2,9S1 1,o37 1,777 1,014
0,o65 3,243 1,738 1, 56 1,359
,965 2,667 2,250 1,769 1,765
b,278 3.6370 3,250 1 887 1,712
4. 40oo
Uganda :Ar.glo-Egyp Chosen : Foreign
:tian Sudan: (Korea) :
1,000 1,000 1,000 1,000
bales bales bales bales
478 lbs. 473 lbs. 478 lbs. 475 lbs.


net


ne t


1920-21 .. 26 68 26
1921-22 ..: 17 40 20
1922-23 .. : 26 74 24
1923-24 ..: 59 108 33
1924-25 ..: 67 164 41
1925-26 ..: 135 151 106
1926-27 .. 5" 110 130
1927-28 ..: 115 116 111
1925-29 ..: 113 171 112
1929-30 ..: 150 13 139
193C-31 .. : 139 153 106
1931-32 .. 169 173 206
1932-33 ..: 150 247 121
1933-34 ..: 200 239 135
1934-35 ..: 295 212 227
1935-36 ..: 373 272 210
1936-37. 4/: 145 276 265
1937-31 4/:
Compiled from official sources and reports


net
101
$2
103
112
123
123
143
133
150
139
149
101
136
14W
136
189
119


ne t
7,921
S3,25
9, 545
9, 30
11,530
12,135
10,942
11,934
12,403
12,035
12,293,
10,723
11,317
13, 43
4,2014
16,052
18,h01


Peru : Mexico


1,000
bcles
476 lbs.
noet
177
1G6
199
212
215
21C
246
246
225
303
271
234
242
278
345
393
374


:Estimated world
:total incl. Chir
1,000
bales
478 lbs.
net
21,350
15,970
19, 300
20,020
25,16o
23,240
23,920
24,890
26,880
26,860
26,230
27,820
24,320
26,890
23, 040
26,690
30,800


of the International Institute of Agric


ture or estimated b-y the Bureau of Agricultural Economics.
l_/ Includes large amounts of cotton grown in India, China, and other countries, I
consumption on hand spindles or in other ways in the homes without entering comment
cial channel.
2/ Includes Manchuri,.. 3] Comoarable dita not available. 4/ Preliminary.


1920-21
1921-22
1922-23
1923-24
1924-25
1925-26
1926-27
1.927-28
1928-29
1929-30
1930-31
1931-32
1932-33
1933-34
1934-35
1935-36
1936-37
1937-38


CS-11


1,000
bales
478 lbs.
net
31
147
202
175
196
200
360
179
278
246
17S
21n
102
260
223
251
361





- 15 -


Cotton: Estimr.tes of acreage, soccified countries, 1920-21 to date

: Un i ted : : B *
Year States : IndiL. Chinc. 1/ Russia Ernt Brazil Peru Mxico
: 1,000 1,000 1,000 1,000 1,000 1, CC' 1,000 1,000
: r.cre s acres acrcs crcs acres acres acres acres
1920-21 ..i 34,408 21,339 5,503 315 1,.97 9-8 2%; 2J
1921-22 ..: 28,678 18,451 S?. 296 1,339 1.257 26- 2?41
1922-23 .. : -1,361 21,J34 5,5014 174 1,o9 511 275 -h1
1923-24 : 35,550 23,631 5,425 527 1, 7o 1,550 2,l 292
1924-25 .-: 35,501 26, 01 5 .01 1,2- 3,)35 1,912 272 346
1925-26 .. 44,386 28,403 5,000 1,4h1 1,993 1.542 293 425
1926-27 ..: 44, 60 2u ,22 5,500 1,631 1,854 1,422 7.lo 613
1927-28 ..: 38,312 24,761 6,000 1, 98 1,574 1,376 316 326
1928-29 ..: 12,143 27,053 5,351 2, 400 1, 5 1,393 283 502
1929-30 ..: 13,232 25,922 5,964 2,6o8 1,911 1,726 316 '92
1930-31 ..: 42,1.) ?),312 6,o0S8 ,911 2,162 i.,694 V30 390
1931-32 ..: 33,70c 23,722 5,613 5,281 1,747 2,000 314 319
1932-33 ..: 35, Q1 22,4.3 6,772 5,367 1,135 1,671 3C4 192
1933-34 ..: 29,383 2h,137 6,721 5,070 1,373 2,851 322 424
1934-35 ..: 26,8 6 23,972 7,078 4,787 1,798 4,067 368 L18
1935-36 ..: 27,640 25,999 6,250 4,327 1,733 5,139 400 599
1936-37 3/: 3C,02 25,21- 8,447 5,023 2.,71 6,125 445 786
1937-30 3]: 33,736 q,545 2,053
Crop : Arpen- : : A.glo-EZy-o- Chosen : n :Estimpted -vorld
U ForeintI
year : tina : 'grl : tir'.n Sudan: (Korca) :_ :total in-1. China
: 1,000 1,000 1,000 1,nC.0 1,000 1,00,'
acres acre n.crvc cvres acres acres

1920-21 ..: 9 242 85 359 i],992 6,4o0o
1921-22 ..: 39 165 87 s62 29,222 57,900
1922-23 ..: 56 ,46 64 370 <9,49 64,820
1923-24 .. 15r ,l9 .16 39 6, 00 71,750
1924-25 .. : 258 573 17', 418 i].,279 SW, 78r
1925-26 ..: 272 Cll 23'7 hS ,3,'h4 S7 ,820
1926-27 .. : 177 570 21., 529 -'C,n62 84, 670
1927-23 ..: 210 533 239 503 ,3S 7880
1928-29 ..: 245 7',f 2Z3 503 ',S,36 s5,7,Y
1929-30 301 (-63 3J' he6 q7 -;. r., ,
1930-31 .. 315 74r) 337 473 [.,13 8L5,530
1931-32 .. : 36 '6. -3 72 14, 4;b 2,hC
1932-33 : 3112 1 ,72 325 390 h4, ) 73, 4:'
1933-34 *. 4.3r, 1,J -,Sg 432 4..,37 7,',
1934-35 .. 7"7 1,186 315 '47 '-1, 7'., 75, 6k"
1935-36 .. 763 1,7 ,2 .4 n 7-
1936-37 1': 713 1 ,.- k7T 1 5'. ':72 ,700
1937-3.': 7 :
Coma.iled from offirivl rorc, s .. i r-.ort: n. t.we, I t, r. ti .:1 I:i t; t t. t. of Agri-
ncult-.r.: or rstim:.ir:t b t-he 3 ~,r u of n tri,-.itur' 1 E-onomi'*.
1J Ii.cludus Manchurir. ? Compox.rbt b -t-, Aint vnilbli:. j/ Prcl iminnrv.


CS-11




UNIVERSITY OF FLORIDA
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